Tashkent, Uzbekistan (UzDaily.com) — With the growing interest in investments, more people are asking: how can one begin investing if their income is modest? Is it possible to grow wealth by regularly setting aside small amounts of money? Experts agree: in investing, success depends more on discipline and a smart approach than on the size of the initial capital. 

In this article, specialists from the company "Alpari" answer the most common questions about investments and explain how, even with a modest income, you can build a financially stable future. 

 How can I save if my income is low? 

The key rule is that consistency, not large sums of money, is what matters most when starting to invest. 

In Uzbekistan, you can begin investing with as little as US$50. 

The wise financial principle “Pay yourself first” suggests that before spending your income on anything else, you should set aside money for your future. 

First, analyze your budget. Look at your monthly income and divide it into several categories: essential expenses (utilities, groceries, loan payments, etc.). Then, allocate 10% of the remaining amount for investments. The rest can be used for entertainment, clothing, education, and gifts. 

If needed, try optimizing your expenses. For example, avoid dining out frequently, cut back on impulsive shopping, and refrain from living on credit. It may also be wise to pay more often with cash rather than a card, as studies show people tend to spend less when using cash. 

Many people find that after reviewing their finances, they discover extra money that was previously being wasted. 

If you find that you need more money for a comfortable life, consider ways to increase your income. Should you change jobs? Take on a side job? Rent out any property you own? 

 Why should I invest when I could just enjoy life now? 

This is perhaps the most common question we hear. 

Everyone has their own reasons for investing. 

The main one: to avoid wasting your money and make it work for you. Investing not only helps preserve your earnings but also increases your wealth at a rate that outpaces inflation. 

Here are a few additional reasons to invest: 

- Financial independence. Investments can serve as a source of additional income, a supplement to your salary or pension, and a cushion during periods of reduced earnings or temporary unemployment. 

- Achieving major long-term goals such as buying property, furthering your education, or creating a passive income stream that can supplement your salary and help you through financial hardships. 

- Psychological confidence. Knowing you have a financial safety net reduces anxiety about the future. 

- Improved quality of life. Investments allow you to avoid skimping on important things like proper nutrition, healthcare, and travel. 

 How much of my income should I save each month? 

Ideally, you should allocate at least 10% of your monthly income to savings. If you can afford to save more without hurting your lifestyle, by all means, do so. 

The Pareto principle (80/20 rule) can also be applied to investments. Spend 80% of your income and save 20%. Of this 20%, you can use 10% for investments and the rest for paying off debts and building a financial safety net. Your safety net should ideally be equal to 3-6 months of your income. This will help you weather tough times without needing to withdraw from your investment portfolio, which could reduce your returns. 

 At what age should I start investing? 

As the saying goes, “The key is not to run fast, but to start early.” The best time to start investing, like many important things, was yesterday. 

However, better late than never. 

There is no age limit when it comes to investing. For example, the world-renowned investor and billionaire Warren Buffett bought his first stocks at the age of 11. 

There is an interesting formula that helps determine what proportion of your savings should be invested based on your age. Subtract your current age from 100. For instance, if you’re 35 years old, the result is 65. This number represents the percentage of your savings that can be allocated to riskier investments, while the remaining 35% should go into more conservative instruments, such as deposits. The older you get, the smaller the first number should be and the larger the second. 

 Isn’t it too late to profit from investing? Haven’t all the best opportunities already been taken? 

Absolutely not. It’s never too late or too early to start investing. 

Moreover, you should periodically review your investment strategy. Your financial goals, income levels, the performance of different financial instruments, and new investment opportunities all change over time. 

Investment goals evolve, and your strategy can be adjusted to align with both current and future financial needs. 

 Why do experts recommend diversifying investments, even if one financial instrument seems reliable? 

Diversifying minimizes financial risks and maximizes potential returns. The idea is to avoid putting all your money into similar instruments that are influenced by the same market factors. This reduces the chances of unsatisfactory returns or even losses. A well-balanced portfolio ensures that less risky investments offset the potential volatility of riskier ones. 

You can divide your investments into short-term and long-term categories. This depends on your financial goals and how quickly you might need the money. For instance, if you plan to travel in six months (a short-term goal), your investment might be a deposit with partial withdrawal options. If you plan to buy a house in five years (a long-term goal), you could consider converting your savings into foreign currency or buying shares in various companies. 

 Key Takeaways 

Here are the main points to remember for those who want to start saving and investing: 

- Investing helps preserve and grow your wealth. 

- Aim to save at least 10% of your income each month. 

- Remember, consistency matters more than large amounts. 

- It’s never too late to start investing—whether you’re retired or still in school. 

- Don’t put all your eggs in one basket: diversify your savings across various financial instruments to reduce risks and increase potential returns.