Stop Using The 15% Investing Rule

In this video I'll go through what the 15% rule of investing is and the biggest problem with it. After that I'll show you how much to invest instead.

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The 15% rule of investing is a guideline that suggests individuals should aim to invest at least 15% of their gross income toward retirement or other long-term financial goals. This rule is often recommended by financial advisors as a starting point for those looking to build a robust investment portfolio. Here's a breakdown of the key points:

Consistency: Regularly investing 15% of your income helps build discipline and ensures a steady growth of your investment portfolio over time.

Long-Term Growth: By consistently investing a portion of your income, you benefit from compounding returns, which can significantly increase your wealth over the long term.

Adjustments: Depending on your financial goals, risk tolerance, and life circumstances, the percentage can be adjusted. For example, if you start investing later in life, you might need to increase this percentage.

Retirement Planning: The 15% rule is particularly useful for retirement planning, ensuring that you have a substantial nest egg by the time you retire.

Budgeting: Allocating 15% of your income to investments requires careful budgeting and spending discipline, helping you manage your finances more effectively.

Overall, the 15% rule is a simple yet effective strategy to ensure you are on track to meet your financial goals, especially for retirement.

The problem is that the 15% rule only works if you're 25 years old. If you're older than that then adjustments will need to be made.

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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money.

[taurusthebull]

If you feel you won't have enough, just prepare to move to a country where the cost of living isn't as expensive.

[stewdogg]

I put 18% of my gross household income in retirement each year spread out over a Trad 401k, Roth IRA, and a HSA. If you add to that my employer match then I’m saving 23% in total. In addition to this I save 9% of my gross income in savings in a high yield savings account to be used for emergency expenses/ sinking fund.

[stephonregis]

I thought the 7% return was before inflation until I started digging deeper into my research. The 7 to 7.5 percent return is AFTER INFLATION. Before inflation, it's 10.5% with dividends included. I enjoy your channel and working on my own thank you 🙏🏾

[Lupin]

Goal is input max amount that can input into your 401k each year is $23, 000. Put as much as you can each pay period.

[bawathen]

Why do people use age 67 as retirement age? Average life expectancy of a male in the US is 73 years old. Please stop going under assumption that people work for almost 50 years just to retire for 6 years before dying. Of course it’s easy to save up millions if you work until 67, but go enjoy life

[getinthespace]

I started investing at 15%... now at 40, we are hitting 100% debt free in a few months.
Then, we are investing 50%+

[johnl]

I think 15-20 percent is just a guideline, but if you can afford to save more. That is even better, I've seen and heard a lot of people at age 65 years old didn't have anything beside social security check. My mom is an example and that scares me. Nowadays my focus is save and invest as much as I can afford to. I am not greedy, if I can get to 1 - 1.5 million dollars on my 401k by the time I retire. I think I will be ok, I can live with 40k - 60k a year. I've been live around 30k-40k all my life.

[carltice]

Can we get a link to a copy of that google sheet?

[rontina]

One divorce really does greatly effect your asserts, let alone 2 or more so pick wisely. Also staying married to the wrong person will also destroy your savings! So stay Single or don't let your eyes pick your future spouse. (lets not talk child support) How many divorcees Jarrad?

[gilbertoborrero]

Because everyone's individual ability to invest a specific amount varies, I always advise most who are just starting to start at whatever percentage they feel comfortable. After all it is more important to start investing than not to invest at all. Once they are in the investment arena, I then ask them to commit to increasing the percentage to least half their newly found increases or bonuses as they arrive. Doing it in this manor I personally found it to be less financially shocking to your daily finances. Applying an increase that was never previously there in the first place doesn't throw your numbers off and allows you to get closer to this 15% or more goal. Its like adding some sugar to much needed medicine.

[MeltingRubberZ]

Jarrad, you could have income calculated every year. 65k, then assume 3% increases every year. That is a column, then 15% of that calculated as that years input. Would be pretty simple.

[michaelswami]

I have no 401K. I use taxable brokerage and Roth for investments. I invest in excess of 25%.

[CA]

Whatever you save don’t do what I did. 30 out of the 37yrs I worked all my 401k was in the fixed 4% return fund. I understand compound interest but I didn’t understand how much of a difference 4vs 6, 7, or 8% would make. As a result I literally missed out on millions, yes millions. In the last 7 yrs before retirement I finally got into the market aggressively and it took off. But my ending value was down by nearly 2 million over what it could have been.
I was a high earner saving max into 401k and Roth and still saving into brokerage account. About 75k a year. So my ending value is mostly my own cash.

[ryebread]

Including: 401k, Roth IRA and HSA accounts- I invest 16% of my gross monthly income. Another 2% goes to savings. Occasionally I can save more

[MrTmenzo]

If you do not have employer sponsored health insurance HSA plans are nearly as expensive as other plans with a higher deductible.

[ICantSpellDawg]

If you get a million dollars cash, investing it into treasuries at 5.5% isn't the worst idea. You've already made your retirement egg, and future market returns are expected to be 6%

[michaelandujar]

Thanks for the reminder to hit that thumbs up button ar the end I almost forgot 😂. I was busy playing with my new mini fridge. Over 30% saving just compared to my old mini fridge. Not to mention it's got its own freezer door compartment 😂 now I'll unplug my full size freezer. I'm so pumped I'll be saving a ton of money 😂.

[rudyflores]

Follow the 7 Baby Steps by Dave Ramsey. You'll get there, no worries. Baby steps 4-6 you switched from intense to intentional. Baby step 7 live and give like no one else. 💪🙏🙌

[Ilovesports]

I have a 401k with a 3% contribution from my company with myself contributing 9% and outside of that I put $50 a week into my fidelity brokerage account that diversifies into the stocks I’ve selected.

[phattorangecatto]

Basically you can sum this up with everyone’s situation is different. Always invest as much as you can in every single situation unless you are in extreme situations.