How Much of Your Salary Should You Invest?

Why this question matters

Deciding how much of your salary to invest is the single most impactful financial decision you can make. Invest too little and you fall behind inflation; invest too much and you might strain your monthly cash flow. The goal is a sustainable monthly plan that grows your wealth without causing stress.

A simple rule to start with

A practical starting rule is: Invest at least 20% of your monthly salary. This is a widely used baseline — enough to build a meaningful corpus over time while leaving room for expenses and savings.

If your salary is constrained by EMIs or family responsibilities, begin with 5–10% and increase by 1–2% every 2–3 months until you reach the target.

Refining the number by life stage

Your ideal saving percentage should consider:

• Age and time horizon
• Existing EMIs and mandatory expenses
• Dependents and family commitments
• Short-term goals (house, wedding) vs long-term goals (retirement)

Use this **practical guideline**:

Practical examples

Example 1 — Young professional

Salary: ₹40,000 • Age: 27 • Start: invest 20% (₹8,000). Suggested allocation: Equity SIP 70% (₹5,600), Debt/PPF 20% (₹1,600), Gold/Cash 10% (₹800).

Example 2 — Family with EMIs

Salary: ₹80,000 • Age: 35 • Heavy EMI obligations → Begin with 15% (₹12,000), increase to 20–25% over 12–18 months as EMIs drop.

How to increase your investable percentage

If you want to raise the percentage, consider:

• Automating small increases every quarter
• Reducing discretionary spend (subscriptions / dining out)
• Using tax savings (EPF / 80C) to free up cash
• Increasing income via part-time freelancing or side-hustles

How this ties to our calculator

Our Smart Salary Investment Calculator helps you convert any chosen percentage into a clean asset allocation (equity, gold, cash, PPF/FD, risky). It is useful to test different percentage levels and see how allocations change.

Also see: How to Invest Your Salary in India (2025 Guide) for a broader context and long-term strategies.

Common mistakes

• Setting a percentage that leaves no buffer for emergencies
• Reacting to market noise by changing contributions frequently
• Not revisiting the percentage after major life events

Quick checklist

1. Set an initial target (start with 20% if possible)
2. Automate the contribution (SIP / auto-debit)
3. Build a 3–6 month emergency fund before increasing risk
4. Review allocation every 12 months

Conclusion

There is no single “correct” percentage — the right number depends on your life stage, liabilities and goals. Start with a sensible baseline, automate, and increase over time. Use the calculator to experiment with exact numbers and allocations.