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How much can I afford and do I want to invest?

Step 5

Investing is something you do with money you can spare. But do you know exactly how much you can spare?

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It all starts by working out how much money you have left over at the end of every month. And then you also have to put some money aside for unexpected expenses. Having a savings buffer is, therefore, also important. In step 5, we will look at your income, spending, and savings buffer.

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What is your budget?

We cannot emphasise it enough: invest only money you can spare. Subtract your expenses from your income to calculate how much leftover income you have at the end of the month. A handy tool to use for this calculation is the personal budget advice service offered by Nibud, the Dutch National Institute for Family Finance Information. If you currently have little or no leftover income, investing is not a good idea or probably not right for you.

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Calculate your monthly income

First write down your and possibly your partner’s income. This should include income such as:

  • Net salary
  • Benefits
  • Monthly allowances

There may also be income your receive on an annual basis (holiday pay/tax refund) or a quarterly basis (child benefits). To get the full picture of your income, you could convert the total sum into a monthly amount.

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What are your monthly outgoings?

How much do you spend every month? Most of your spend will probably go towards ‘fixed expenses’ such as the rent or mortgage, energy and water bills, insurance, child care, and your mobile, TV, and broadband plan. Remember to also include what you spend on a car and your daily commute. Next, work out how much you spend in total every month on things such as groceries, clothes, going out and subscriptions to see what other costs you have every month.

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Get the full picture

Did you know that the ABN AMRO app includes a feature that lets you track your expenses? It can, for example, generate a list of all your subscriptions and fixed expenses. And it even lets you cancel any unused subscriptions immediately. On top of that, the app helps you anticipate expenses coming up in months to come.

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Sufficient leftover income?

Have money left over at the end of every month? Great! The final step now is to check whether your savings buffer is enough to cover unexpected expenses, such as when your washing machine breaks down or your car needs costly repairs. The buffer calculator offered by Nibud, the Dutch National Institute for Family Finance Information, lets you work out just how much you need to have in your ‘buffer pot’. Still have money left over after filling your buffer pot? Fantastic! You’re all set to start investing. You can start investing from as little as €50 and then you can make deposits into your investment account (minimum €20) or set up a standing order for anything from €20. But you should first set your strategy.

You are now ready to set your strategy

In step 4, you read all about setting a strategy. Since you now know how much money you have available to invest, we can complete your strategy. The following questions will help you formulate a strategy.

  • What is your investment goal?
  • How long do you intend to invest for?
  • How much are you going to invest (starting amount / monthly amount)?
  • What investment option will you choose?
  • What level of risk are you willing to take?
  • If you want to make your own investment decisions, how do you intend to spread your risk?

Learn more about starting with investing ...

Target

4. How do I set my strategy?

When you invest for the long term, it’s a good idea to set yourself some rules. Read more about setting yourself a goal, your budget, and your risk. And don’t forget about the fees!

Back to step 4
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Investing for beginners

Back to the overview
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6. How can I invest?

If you are raring to get started with investing, the next step is to choose the investment option that suits you best. We’ve prepared a run-down of the features of the most popular investment options for you.

Continue to step 6

Investing involves risks

Investing involves risks. You could lose (some of) the money you invested. If you are going to invest, it is important that you are aware of this. Invest with money you can spare. Read more about the risks associated with investments.