Daily Investment Rate

In the last few months, one of my big money takeaways has been viewing investing as a percentage-per-day. I’ll explain this idea of a daily investment rate soon but first, the overall message is this: reduce (or eliminate) stress and an easy first step to saving more.

Investing as a Percentage

If you listen to the podcast, the you know Grant talks about investing $100 per day.

Personally, I prefer to stack this $-per-day approach with a percentage-per-day approach.

As in, a percentage-per-day of my income will go towards investing.

I looked back at my portfolio numbers from 2013, when I was fresh out of college, to see what $ amount I was investing. Back then, I was actually selling shares to cover expenses. Not the brightest of moves.

The following quarter, however, I bumped up my game and the results show it.

From a numbers perspective, I went from selling ~5$/day to investing $46/day.

From a percentage perspective, the numbers appear more drastic: -4% savings rate to investing at 36%.

This represented  the percentage-per-day of my after tax income invested. For more on our early days of starting off, check out this article.

Out of college, with over 40K of student loan debt, my first job paid ~$150 a day. AKA about a grand a week or 56K for the year.

After taxes, we can say the number is $100 a day, for simplicity.

With compounding interest as an incentive, we can’t help but want to invest at least 20-30% each day.

Wanting to invest and investing are two different things.

Daily Investment Rate

Provided that we start at 22, a daily contribution of $30 will add up to over $1.3 million in savings by age 65.

$100 a day is a perfect goal. In our case, our first year of investing together ended up falling short of that goal by more than half, but we were happy building smarter money habits.

After finally reaching our mark last quarter, we now plan on tethering our “investment rate” to our income as a percentage per day, rather than as a dollar per day figure.

By keeping up with a daily investment rate we also make it feel more like a game we play each day. Although last year’s amounts were not invested daily, I’ve started to pick up the habit.

Outside of automatic deductions such as a 401(k), I’m investing $10 daily until my Roth IRA is maxed out.

Have you ever viewed investing as a percentage per day of your income? How do you view investing?

-Matt

P.S. Have you seen the new course page?

6 comments… add one
  • Eliz23 Apr 20, 2017, 7:13 am

    Great blog as usual Matt! We are attempting to save $50 EACH PER DAY into our travelling fund at the moment. It has been so doable for us that we are raising the amount from May. the hope is to have $40k cash put away by Xmas 2017 to take a trip of a lifetime, 2 or 3 years travelling. I LOVE the per day approach as it narrows things down for me, 50 x 7 = $350. next month it will be 60 or even 65 x 7, I cant wait to see how much I can actually manage 🙂

    • Distilled Dollar Apr 21, 2017, 10:51 am

      Whoa! That would be a crazy cool trip! We also save and basically budget for nicer travel, but still relatively frugal travel in comparison! 🙂

  • Full Time Finance Apr 20, 2017, 8:18 am

    Funny you should ask that. In my cubicle at work I have a white board. In the corner of the white board are 2 numbers:
    The amount I save a calendar day and the amount I save a work day. I use it for inspiration at work.

    • Distilled Dollar Apr 21, 2017, 10:51 am

      Haha awesome! That is very encouraging to see the tangible benefits of each day! Keep up the great work.

  • Matt Apr 20, 2017, 10:12 pm

    I like this approach a lot – $10 or $20 a day is much easier to visualize (and connect with an action) than some of the huge numbers that get tossed out there. For example, I could save $10 by making dinner from what’s already in the fridge instead of stopping by the store after work or I could earn an extra $20 by giving some Lyft rides or doing some online surveys.

    • Distilled Dollar Apr 21, 2017, 10:50 am

      Things become so much easier when we see them daily, as least that’s the case for me. Thanks for the comment

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