We are in the new year & if your goal is to increase your investment each year, this is a good time to start planning if you have yet to plan it. Each year, I will be going through my investment portfolio rebalancing to determine if my investment strategy is effective & I will also plan on how much or which portfolio should I increase my investment amount. Overall, I will be looking to increase my investment amount between 10-20% & it has been my practice for over 8 years. Normally I will determine to amount of increase by just looking at my current income, existing investing amount & based on my portfolio rebalancing.
If you are looking into increasing your investment amount, below are some of the tips & steps you can follow to increase your investment amount each year:
1. Determine The Amount Of Increase Based On Your Income Increment
Most of us will have income increments on yearly basis. It can be a lot or it can be at a minimum. No matter how little or high your salary increment is, you can set the investment increment by percentage or even set it as low as RM10. Assuming you invest RM50 each month & you plan to increase it, you can start by increasing it to RM60 instead of RM100 if you have a budget issue. Or you can set it higher if your income increment is higher.
2. Optimise Your Spending
You can also use your current spending savings to invest them into your investment portfolio. For example, if you are subscribing to Netflix Premium & have decided to downgrade the package to save more, you can use those savings to invest as well. It can also be from other expenses that you are able to optimize & save from.
3. Increase First, Decide Later
You can also plan your investment increment first by a reasonable amount where it won’t take a toll on your expenses & spending and determine how to cover back those expenses later. It can be from going out less, saving it from cheaper dining, or saving it from a cup of coffee.
4. Start With The Smallest Amount
Similar to the example in point 1, you can start to increase your investment from the smallest amount. Investing an extra RM10 is significant enough especially when you count it over a long period of time. Slowly increasing it is better than not increasing it at all.
5. Set A Mini Goal
This is what I usually set for myself on a yearly basis where I have a goal to increase my investment amount by 10-20% each year. You can set a similar goal by determining the percentage or amount to start with on yearly basis. Whether your salary increases or not, you can also set a goal with a gap to have a realistic investment increment each year.
6. Determine Your Investment Amount Based On Your Portfolio Rebalancing
This is a very important step, especially for those who do portfolio rebalancing each year. You can determine which existing portfolio you plan to increase the investment amount based on the market situation or you can also opt to invest in a new investment platform as well.
Conclusion:
I personally find that increasing your investment portfolio each year is a must, especially for those who are planning to invest over the long term for your retirement. Increasing the investment amount for your existing portfolio is not only important for your future, but it can also be a habit that you can look into. Every year, we expect an increase in income from our work salary or our business so why don’t we also look into increasing the investment amount? Imagine when you start to invest years ago, you may only start with RM50-RM200 based on the income that you earned during that year. As years go by, your salary or income may increase & ideally, your investment amount should increase too. These six steps can be a good guide for you to work on your investment increment & hope you guys can kickstart your new year with a higher investment amount.
OSS!
You can also check out my latest YouTube video on Why Do You Need Financial Planning?
