There is a limit to invest your money in stock markets. Yes, ideally you should save 20-25% of your income and out of that 40% can be invested in stock markets.
Still, I do not advocate investing too much money in stock markets?
Let me give you an example.
Vijay’s take-home salary is 1 lakh a month.
– 25% saving is 25,000
– 40% of 25000 is 10,000
– In a year Vijay can invest 10,000*12 = 1,20,000 in stock markets which in other word is 10% of his take-home salary.
Assuming his salary is same for the next 30 years, or he invested Rs.1,20,000 for the next 30 years in stock markets and makes a return of 25% a year.