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