I'm 18. How to build good monthly income at my 20's?
Market rate of return averages about 8% annually (sometimes more, sometimes less or negative). To get 30k monthly -- even taking that as pretax -- you're talking about 360k yearly. Divide that by 0.08 and you need to have savings of 4.5 million--- and really you should double that for safety..  Tl;dr: forget it. Added thought: If you really have $20k/month coming in, you really have no business asking the Internet for advice. Hire a professional financial advisor (not a broker, someone who is paid a flat fee for their expertise and has no incentives to give you less-than-optimal advice). . The money they will save/make for you will more than pay for their hire. It looks like you need a lot more education on the subject. I suggest you pick up a book on investing and portfolio management to get a first idea. Dividend yields are currently way below 5% on blue chips. Unlike coupons from fixed income instruments (which, in the same risk category, pay a lot less), dividend yields are not guaranteed and neither is the invested principal amount.  In either case, your calculation is far away from reality.  Sure, there are investments (such as the mentioned direct investments in companies or housings in emerging economies) that can potentially earn you two digit percentage returns. Just remember: risk always goes both ways. A higher earning potential means higher loss potential. Also, a direct investment is a lot less liquid than an investment on a publicly quoted high turnover market place. If you suddenly need money, you really don't want to be pressed to sell real estate in an emerging market (keyword: bid ask spread). My advice: the money that you can set aside for the long term (10 years plus), invest it in stock ETFs, globally. Everything else should be invested in bond funds or even deposits, depending on when you will need the access. As others have pointed out, consider getting professional advice.
I wouldn't be too concerned, yet.  You're young.  Many young people are living longer in the family home.  See this Guardian article: Young adults delay leaving family home.  You're in good company.  Yet, there will come a time when you ought to get your own place, either for your own sanity or your parents' sanity.  You should be preparing for that and building up your savings. Since you've got an income, you should – if you're not already – put away some of that money regularly.  Every time you get paid, make a point of depositing a portion of your income into a savings or investment account.  Look up the popular strategy called Pay Yourself First. Since you still live at home, it's possible you're a little more loose with spending money than you should be – at least, I've found that to be the case with some friends who lived at home as young adults.  So, perhaps pretend you're on your own.  What would your rent be if you had to find a place of your own?  If, say, £600 instead of the £200 you're currently paying, then you should reduce your spending to the point where you can save at least £400 per month.  Follow a budget. With respect to your car, it's great you recognize your mistake.  We're human and we can learn from our mistakes.  Plan to make it your one and only car mistake.  I made one too. With respect to your credit card debt, it's not an insurmountable amount.  Focus on getting rid of that debt soon and then focus on staying out of debt.  The effective way to use credit cards is to never carry a balance – i.e. pay it off in full each month.  If you can't do that, you're likely overspending. Also, look at what pensions your employer might offer. If they offer matching contributions, contribute at least as much to maximize the tax free extra pay this equates to. If you have access to a defined benefit plan, join it as soon as you are eligible. Last, I think it's important to recognize that at age 23 you're just starting out.  Much of your career income earning potential is ahead of you.  Strive to be the best at what you do, get promotions, and increase your income.  Meanwhile, continue to save a good portion of what you earn.  With discipline, you'll get where you want to be. "Yeah, pretty much. That's really par for the course among underemployed twenty-somethings in New York. To be fair, I've also lived in cost-inflated areas my whole life, so I'm used to it, and know how to work around it. Even so, with that 18k I'm able to support a decent single malt scotch habit.   The only thing I may have fudged a little is that I do a some freelance photography on the side, and I use money from that to buy myself a new pair of  red wing boots and some nice raw denim jeans every year or so. Which I guess would make my income more like an even $20,000. Sure, I wish I made more so I could have some savings and a little security, and I'm certainly not saying I want to live like this when I'm 35. But I do alright.   Point is, people forget that this city is full of poor people, and it wouldn't exist if they couldn't survive doing menial jobs for minimum wage. My neighborhood is full of peurto rican single parents, flipping burgers for less than I make an hour, pulling down maybe thirty grand a year. To a lot of people I know, a $60,000 year would be a fortune. There's a huge difference between ""doing alright"" and this privileged idea of ""getting by"" most people raised in the upper middle class cling to." Assume you will need to retire with a few million in the bank to maintain an average lifestyle.  I had an analysis done for me (at 33) that shows my family, to keep it up lifestyle will need to have 3.4MM in the bank so in retirement I can draw down enough cash. This number reflects inflation. Now that you are 18, if you make consistent but small savings you will achieve that financial stability.  Try to make it automatic so you aren't tempted to spend. There is more you can do but since you have such an early start, you can do less than most people and still have plenty. Even thought it is great you are thinking about it, don't forget to be young, move around lots and have fun.  Just pay yourself first and have fun second. Also, thank whoever guided you to this point.  If you did it all on your own, be proud. "I posted a comment in another answer and it seems to be approved by others, so I have converted this into an answer. If you're talking about young adults who just graduated college and worked through it. I would recommend you tell them to keep the same budget as what they were living on before they got a full-time job. This way, as far as their spending habits go, nothing changes since they only have a $500 budget (random figure) and everything else goes into savings and investments. If as a student you made $500/month and you suddenly get $2000/month, that's a lot of money you get to blow on drinks. Now, if you put $500 in savings (until 6-12 month of living expenses), $500 in investments for the long run and $500 in vacation funds or ""big expenses"" funds (Ideally with a cap and dump the extra in investments). That's $18,000/yr you are saving. At this stage in your life, you have not gotten used to spending that extra $18,000/yr. Don't touch the side money except for the vacation fund when you want to treat yourself. Your friends will call you cheap, but that's not your problem. Take that head start and build that down payment on your dream house. The way I set it up, is (in this case) I have automatics every day after my paychecks come in for the set amounts. I never see it, but I need to make sure I have the money in there. Note: Numbers are there for the sake of simplicity. Adjust accordingly. PS: This is anecdotal evidence that has worked for me. Parents taught me this philosophy and it has worked wonders for me. This is the extent of my financial wisdom." "First of all, never is too late to develop good habits. So, you know what you want to do and you are going about the how now... First, you should pay off any consumer debt except from mortgage which should be planned for. Prioritize your consumer debt (credit cards, consumer loans, etc) according to the interest rates, starting with the one with the highest interest and going to the one with the lowest one. Because you should make quite the investments to pay off this interest debt and still make a profit. Second, you should start saving some money. The 10% rule of thumb is a good one and for starters having aside the money you need to get by for at least 3 months is quite okay. As they say, cash is king. Now, that you actually realize the amount you can spare each month to start investing (assuming you had to do something of the aforementioned) it's time to see the risk you are comfortable taking. Different risk-taking views lead to different investing routes. So, assuming once again that you are risk averse (having a newborn baby and all) and that you want something more than just a savings account, you can start looking for things that don't require much attention (even more so if you are going on you own about it) such as low risk mutual funds, ETF (Exchange Traded Funds) and index funds to track indexes like FTSE and S&P500 (you could get an average annual return of 10-12%, just google ""top safe etfs"" for example and you could take a quick look at credible sites like forbes etc). Also, you can take a look at fixed income options such as government bonds. Last but not least, you can always get your pick at some value companies stocks (usually big companies that have proven track record, check warren buffet on this). You should look for stocks that pay dividends since you are in for the long run and not just to make a quick buck.  I hope I helped a bit and as always be cautious about investing since they have some inherent risks. If you don't feel comfortable with making your own investment choices you should contact a specialist like a financial planner or advisor. No matter what the case may be on this, you should still educate yourself on this... just to get a grasp on this." "This may sound very ""tongue in cheek"", but the best thing you can invest in is to raise your income in order to increase your retirement savings.  How much are you able to contribute to retirement now?  I think you would be lucky to do $150/month and most months probably less than that.  However, if you were making like 60k/year, and allowed a little lifestyle bloat, you could probably easy put away 20k/year.  Once you are able to do that the savings you can manage now will be quickly eclipsed.   Often times when people consider ""having their money work for them"" they often neglect to factor risk.  Prior to investing one should have a proper emergency fund in place.  That is 6 months or so of living expenses in a nice safe savings account.  Those earn about 1.25% these days, which is pretty meager, but it does earn something.   Once the emergency fund is in place, one can invest with impunity.  Without it, you will have to liquidate investments if economic calamity strikes you.  This could be done at a loss furthering the harm done by the calamity.   Increase your income and create an emergency fund.  Do those things first." "It all depends on what your financial goals are when you are ready.  You sound like you could be ready today if you wanted to be.  The steps that I would take are. Create a monthly draft budget.  This doesn't have to be something hard and fast, just a gague of what your living expenses would be compared to your after-tax salary.  Make sure there  would be room for ""fun"" money. a. Consider adding a new car fund line item to this budget, and deducting that amount from your paycheck starting now so that you can save for the car. Based on the most realistic estimate that you can make, you'll get a good idea if you want to spend the money it takes to move out alone now or later.  You'll also see the price for various levels of rentals in your area (renting a single family home, townhouse, condo, apartment, living in a rented room or basement, sharing a place with friends, etc) and know some of the costs of setting up for yourself.  Since you're looking at the real estate market, you may want to do a cost comparison of renting versus buying.  I've found the New York Times interactive graphic on this is excellent.  If you are looking to buy, make sure to research the hidden costs of buying thoroughly before taking this step. To answer your last question, if you have the cash you should consider upping your 401K investment (or using Roth or regular IRA).  Make sure you are investing enough to get your full employer match, if your employer offers one, and then get as close as you can to government maximum contribution limits.  Compound interest is a big deal when you are 23." "I would like to add my accolades in saving $3000, it is an accomplishment that the majority of US households are unable to achieve. source While it is something, in some ways it is hardly anything.  Working part time at a entry level job will earn you almost three times this amount per year, and with the same job you can earn about as much in two weeks as this investment is likely to earn, in the market in one year.   All this leads to one thing:  At your age you should be looking to increase your income.  No matter if it is college or a high paying trade, whatever you can do to increase your life time earning potential would be the best investment for this money.   I would advocate a more patient approach.  Stick the money in the bank until you complete your education enough for an ""adult job"".  Use it, if needed, for training to get that adult job.  Get a car, a place of your own, and a sufficient enough wardrobe.  Save an emergency fund.  Then invest with impunity. Imagine two versions of yourself.  One with basic education, a average to below average salary, that uses this money to invest in the stock market.  Eventually that money will be needed and it will probably be pulled out of the market at an in opportune time.  It might worth less than the original 3K! Now imagine a second version of yourself that has an above average salary due to some good education or training.  Perhaps that 3K was used to help provide that education.  However, this second version will probably earn 25,000 to 75,000 per year then the first version.  Which one do you want to be?  Which one do you think will be wealthier?   Better educated people not only earn more, they are out of work less.  You may want to look at this chart." "There's plenty of advice out there about how to set up a budget or track your expenses or ""pay yourself first"". This is all great advice but sometimes the hardest part is just getting in the right frugal mindset. Here's a couple tricks on how I did it.  Put yourself through a ""budget fire drill"" If you've never set a budget for yourself, you don't necessarily need to do that here... just live as though you had lost your job and savings through some imaginary catastrophe and live on the bare minimum for at least a month. Treat every dollar as though you only had a few left. Clip coupons, stop dining out, eat rice and beans, bike or car pool to work... whatever means possible to cut costs. If you're really into it, you can cancel your cable/Netflix/wine of the month bills and see how much you really miss them. This exercise will get you used to resisting impulse buys and train you to live through an actual financial disaster. There's also a bit of a game element here in that you can shoot for a ""high score""... the difference between the monthly expenditures for your fire drill and the previous month.   Understand the power of compound interest. Sit down with Excel and run some numbers for how your net worth will change long term if you saved more and paid down debt sooner. It will give you some realistic sense of the power of compound interest in terms that relate to your specific situation. Start simple... pick your top 10 recent non-essential purchases and calculate how much that would be worth if you had invested that money in the stock market earning 8% over the next thirty years. Then visualize your present self sneaking up to your future self and stealing that much money right out of your own wallet.  When I did that, it really resonated with me and made me think about how every dollar I spent on something non-essential was a kick to the crotch of poor old future me." "If you're making big money at 18, you should be saving every penny you can in tax-advantaged retirement accounts. (If your employer offers it, see if you can do a Roth 401(k), as odds are good you'll be in a higher tax bracket at retirement than you are now and you will benefit from the Roth structure. Otherwise, use a regular 401(k). IRAs are also an option, but you can put more money into a 401(k) than you can into an IRA.) If you do this for a decade or two while you're young, you'll be very well set on the road to retirement. Moreover, since you think ""I've got the money, why not?"" this will actually keep the money from you so you can do a better job of avoiding that question. Your next concern will be post-tax money. You're going to be splitting this between three basic sorts of places: just plain spending it, saving/investing it in bank accounts and stock markets, or purchasing some other form of capital which will save you money or provide you with some useful capability that's worth money (e.g. owning a condo/house will help you save on rent - and you don't have to pay income taxes on that savings!) 18 is generally a little young to be setting down and buying a house, though, so you should probably look at saving money for a while instead. Open an account at Vanguard or a similar institution and buy some simple index funds. (The index funds have lower turnover, which is probably better for your unsheltered accounts, and you don't need to spend a bunch of money on mutual fund expense ratios, or spend a lot of time making a second career out of stock-picking). If you save a lot of your money for retirement now, you won't have to save as much later, and will have more income to spend on a house, so it'll all work out. Whatever you do, you shouldn't blow a bunch of money on a really fancy new car. You might consider a pretty-nice slightly-used car, but the first year of car ownership is distressingly close to just throwing your money away, and fancy cars only make it that much worse. You should also try to have some fun and interesting experiences while you're still young. It's okay to spend some money on them. Don't waste money flying first-class or spend tooo much money dining out, but fun/interesting/different experiences will serve you well throughout your life. (By contrast, routine luxury may not be worth it.)" "So my read on the question is ""How do I invest 300k such that it earns me a 'living wage' without the ongoing grind inherent in most formal employment?""  Reading the other answers to date it looks like most of them are thinking in terms of investment accounts and trying to live off of the earnings from such.  I wanted to throw out a couple of alternative choices that may be worth considering... The first is real-estate investing.  $300k should allow you to pick up 2 or 3 single family dwellings with little or no mortgage.  Turning them into rentals placed with a good property management company should easily pay their expenses and provide a consistent income with minimal effort/attention from you.  Similar story with buying into multifamily housing or commercial real-estate. Your key concern here is picking the right market in which to buy and finding a reputable manager to handle the day to day issues on your behalf. Note that you are not overly concerned with the potential resale value of the property(s), but the probable rental income they can generate, these are separate concerns that may not align with each other. Second is buying/founding a business that has a general manager other than yourself.  Franchise ownership may be a potential option for you under the circumstances.  The key concern here is picking the business, location, and manager that make you comfortable in terms of the risk involved.  You need the place to make enough money to pay for itself and the salary of everyone working there, with enough left over for you to live on.  Sounds easy enough, but not so much in practice.  Generally you can expect at least a few years of being hands on and watching things very closely to make sure it is going the way you want it to.  Finding a mentor who has done this type of transition before to walk you through it would be strongly advised.  So would preparing yourself for a failure or two before you work out the exact combination of factors that work for you." "So you are off to a really good start.  Congratulations on being debt free and having a nice income. Being an IT contractor can be financially rewarding, but also have some risks to it much like investing.  With your disposable income I would not shy away from investing in further training through sites like PluralSite or CodeSchool to improve weak skills.  They are not terribly expensive for a person in your situation.  If you were loaded down with debt and payments, the story would be different. Having an emergency fund will help you be a good IT contractor as it adds stability to your life.  I would keep  £10K or so in a boring savings account.  Think of it not as an investment, but as insurance against life's woes.  Having such a fund allows you to go after a high paying job you might fail at, or invest with impunity.   I would encourage you to take an intermediary step:  Moving out on your own.  I would encourage renting before buying even if it is just a room in someone else's home.  I would try to be out of the house in less than 3 months.  Being on your own helps you mature in ways that can only be accomplished by being on your own.  It will also reduce the culture shock of buying your own home or entering into an adult relationship. I would put a minimum of £300/month in growth stock mutual funds.  Keeping this around 15% of your income is a good metric.  If available you may want to put this in tax favored retirement accounts.  (Sorry but I am woefully ignorant of UK retirement savings).  This becomes your retire at 60 fund.  (Starting now, you can retire well before 68.)  For now stick to an index fund, and once it gets to 25K, you may want to look to diversify. For the rest of your disposable income I'd invest in something safe and secure.  The amount of your disposable income will change, presumably, as you will have additional expenses for rent and food.  This will become your buy a house fund.  This is something that should be safe and secure.  Something like a bond fund, money market, dividend producing stocks, or preferred stocks.   I am currently doing something like this and have 50% in a savings account, 25% in a ""Blue chip index fund"", and 25% in a preferred stock fund.  This way you have some decent stability of principle while also having some ability to grow.   Once you have that built up to about 12K and you feel comfortable you can start shopping for a house.  You may want to be at the high end of your area, so you should try and save at least 10%; or, you may want to be really weird and save the whole thing and buy your house for cash.  If you are still single you may want to rent a room or two so your home can generate income.   Here in the US there can be other ways to generate income from your property.  One example is a home that has a separate area (and room) to park a boat.  A boat owner will pay some decent money to have a place to park their boat and there is very little impact to the owner.  Be creative and perhaps find a way where a potential property could also produce income. Good luck, check back in with progress and further questions! Edit:  After some reading, ISA seem like a really good deal." "To buy a house, you need: At least 2 years tax returns (shows a steady income history; even if you're making 50k right now, you probably weren't when you were 16, and you might not be when you're 20; as they say, easy come, easy go). A 20% down payment.  These days, that easily means writing a $50k check.  You make $50k a year, great, but try this math: how long will it take you to save 100% of your annual salary?  If you're saving 15% of your income (which puts you above many Americans), it'll still take 7 years.  So no house for you for 7 years. While your attitude of ""I've got the money, so why not"" is certainly acceptable, the reality is that you don't have a lot of financial experience yet.  There could easily be lean times ahead when you aren't making much (many people since 2008 have gone 18 months or more without any income at all). Save as much money as possible.  Once you get $10k in a liquid savings account, speak to a CPA or an investment advisor at your local bank to set up tax deferred accounts such as an IRA.  And don't wait to start investing; starting now versus waiting until you're 25 could mean a 100% difference in your net worth at any given time (that's not just a random number, either; an additional 7 years compounding time could literally mean another doubling of your worth)." "My basic rule I tell everyone who will listen is to always live like you're a college student - if you could make it on $20k a year, when you get your first ""real"" job at $40k (eg), put all the rest into savings to start (401(k), IRA, etc). Gradually increase your lifestyle expenses after you hit major savings goals (3+ month emergency fund, house down payment, etc). Any time you get a raise, start by socking it all into your employer's 401(k) or similar. And repeat the above advice." "If the OP is saving 33% if his/her current income, he/she doesn't want or need yet more income from investments right now. The advice on ""diversifying"" in the other answers is the standard ""investment advisor"" response to beginner's questions, and has two advantages for the advisor: (1) they won't get sued for giving bad advice and (2) they can make a nice fat commission selling you some very-average-performance products (and note they are selling you ""investment industry products,"" not necessarily ""good investment opportunities"" - advisors get paid commission and bonuses for selling more stuff, not for selling good stuff).  My advice would be to drip-feed some of your excess income into the emerging market sector (maybe 1/3 or 1/4 of the excess), with the intention of leaving it there untouched for up to 20 or 30 years, if need be. At some unknown future time, it is almost certain there will be another EM ""boom,"" if only because people have short memories. When that happens, sell up, take your profits, and do something less risky with them.  You might consider putting another slice of your excess income into the commodities sector. I don't know when the oil price will be back at $150 or $200 a barrel, but I would be happy to bet it will happen sometime in the OP's lifetime... Since you apparently have plenty of income and are relatively young, that is the ideal time to adopt a risky investment strategy. Even if you lose your entire investment over the next 5 years, you still have another 20 years to recover from that disaster. If you were starting to invest at age 56 rather than 26, the risk/reward situation would be very different, of course."