I am in my mid 20s, I got a (quite) good job and I am able to put asside, each month, about $800. I just started this savings process and currently I have just $800 but at the end of the year I'll have twice as much.
I want to put my money to work - invest in a mutual fund - but I'm not sure what should I do first because I also want to have some backup money for not so happy days (at least $2000 - in a bank account or maybe even in cash). So my question to you, people with much more financial/life experience, is: should I start investing as soon as I reach the minimum investment ammount for the mutual fund (2.5K) and save in the following months or save $2000 first and postpone the investment for a few months (3 if I add 33/month to the regular 800)?
Here is my reasoning for each of these two scenarios - please correct me if I'm wrong:
Invest now, save in the next 3 months:
- Pros: (hopefully) the invested money generate some more money
- Cons: I don't have any savings except that month's paycheck if some unexpected expense appear. Pay fees if need to take money from the fund.
Save now, invest in 3 months:
- Pros: I have some money available immediately in case of emergency.
- Cons: Investment delayed 3 months, with a possible smaller return for the current year.