How Much Should I Invest in 2022? (Real Estate & Stocks)

TL;DR

Learn how to calculate your investable assets for 2022.

Transcript

as we head into 2022 it's almost resolution season so if you're like me you're thinking about how much money should i be investing in 2022 what can i reasonably afford to do what type of investments should i make and one of the most common questions from new investors or people who are just looking to grow their investments or their rental portfoli... Read More

Key Insights

• The video focuses on how to calculate investable assets, essential for making informed investment decisions in 2022.
• Investable assets are calculated by subtracting necessary cash reserves from liquid assets.
• Liquid assets include cash, stocks, bonds, and other easily convertible assets.
• Maintaining cash reserves is crucial to safeguard against unforeseen financial emergencies.
• The recommended cash reserve is at least three months of expenses, but this can vary based on personal circumstances.
• Understanding your financial situation helps in determining how much you can responsibly invest in real estate or other ventures.
• A systematic approach to calculating investable assets can alleviate the fear of investing.
• The video encourages viewers to calculate their investable assets as a first step towards achieving their investment goals for 2022.

Questions & Answers

Q: What are the key steps to calculate investable assets?

The key steps include calculating your liquid assets, determining necessary cash reserves, and subtracting these reserves from your liquid assets to find the investable amount. Liquid assets are those that can be quickly converted to cash, while cash reserves are funds kept aside for emergencies.

Q: Why is it important to maintain cash reserves?

Maintaining cash reserves is important to protect against unforeseen financial emergencies, such as job loss or unexpected expenses. These reserves ensure that you do not have to liquidate investments prematurely, which can lead to financial losses.

Q: How do you define liquid assets?

Liquid assets are defined as cash and other assets that can be easily converted to cash within a short period, typically one to two weeks. This includes savings accounts, stocks, bonds, and potentially other assets like cryptocurrency or valuable items.

Q: What factors should influence the amount of cash reserves you keep?

Factors influencing cash reserves include your monthly expenses, job stability, risk tolerance, and personal circumstances such as having dependents. A minimum of three months' expenses is recommended, but more may be needed for those with higher risk factors.

Q: How can calculating investable assets alleviate investment fears?

Calculating investable assets provides a clear understanding of how much you can safely invest without jeopardizing financial security. This clarity can reduce anxiety and help you make more confident investment decisions.

Q: What is the significance of liquid assets in investment planning?

Liquid assets are significant because they represent funds that can be quickly accessed for investment opportunities or emergencies. Understanding the amount of liquid assets available helps in planning investments and ensuring that financial commitments can be met.

Q: How does the video suggest beginners approach investment calculations?

The video suggests beginners approach investment calculations by first identifying their liquid assets, determining the necessary cash reserves, and then calculating the investable assets. This structured approach simplifies the process and helps beginners make informed decisions.

Q: What role does personal risk tolerance play in investment planning?

Personal risk tolerance plays a crucial role in determining the amount of cash reserves needed and the types of investments one might consider. Those with lower risk tolerance may prefer to keep higher reserves and choose more conservative investments.

Summary & Key Takeaways

• The video provides a guide on calculating investable assets for 2022, emphasizing the importance of understanding one's financial position before investing. It outlines a three-step process involving liquid assets, cash reserves, and investable assets.

• Liquid assets are defined as cash and other assets that can be quickly converted to cash, such as stocks and bonds. The video suggests considering a range of assets while focusing on simplicity for calculation purposes.

• Cash reserves are a critical component, with a minimum recommendation of three months' worth of expenses. This ensures financial security and prevents over-investment in illiquid assets. The calculation of investable assets is straightforward: subtract cash reserves from liquid assets.