How much should I invest each month, and where should it go?

Work through three questions.

1. Do you have an emergency cushion? The Consumer Financial Protection Bureau (CFPB) says the amount you need "depends on your situation." Putting money aside, even a small amount, helps you recover faster from unplanned expenses. Automatic recurring transfers are often one of the easiest ways to save.
2. Are you getting your full employer match, if you have one? Fidelity's advice: "At the very least, take advantage of your company match if you have one."
3. What is left after that? Fidelity's guideline is 15% of pre-tax income, including the employer match. Its estimate is that most people will need about 45% of their pre-tax retirement income to come from savings, and that saving 15% a year from age 25 to 67 should get you there. If you start at 30 with no savings, the target rises to 18%, and at 35 to 23%. Your own number depends on when you retire, your lifestyle and what you have already saved.

For context, Vanguard reports that participants in the plans it keeps records for saved an average of 7.6% of pay in 2025, or 12.1% once employer contributions are included. That is Vanguard's own plan data (and the 2025 figures are estimates), not the whole country.

Illustrative example (not a recommendation). Say your salary is $80,000 and your employer match is worth 4% of pay. Plans vary, so the 4% is made up.

• Target: 15% × $80,000 = $12,000 per year.
• Employer match: 4% × $80,000 = $3,200 per year.
• Your share: $12,000 − $3,200 = $8,800 per year, or $8,800 ÷ 12 ≈ $733 per month.

The limits are annual, not monthly. For 2026 the IRS set these:

An IRA contribution also can't exceed your taxable compensation for the year if that is lower. People 50 and older can add a 401(k) catch-up of $8,000 in 2026. Most investors never reach these ceilings, so they matter mainly if you are planning a large amount.

If you earn the money monthly, you can't invest it before you have it, so this question is mostly about windfalls. A Vanguard study found that investing a lump sum right away beat spreading it over three months about 68% of the time over 1976-2022. But Vanguard is clear that paycheck investing is a different situation: "In contrast to that, we are examining here what to do with a lump sum that is available immediately."

The practical takeaway Vanguard offers regular savers is "simply... not delaying when funds are available for investment." FINRA adds that if you contribute to a 401(k), you are probably already investing equal amounts at regular intervals. Sitting in cash while you wait for a better moment often means lower returns than investing sooner. Vanguard allows one exception: very loss-averse investors who would otherwise keep a lump sum in cash.

There are two common ways.

• Fixed split. Send the same percentages every month, matching your targets. It is simple and easy to automate. Fidelity, for example, lets you set up recurring investments from $1 for stocks and ETFs. But it doesn't correct drift, so a fund that has run ahead keeps getting its full share.
• Contribution-based rebalancing. Each month, compare where every holding stands against its target and send new money to whatever is behind. Fidelity describes using new contributions to buy more of the positions that have shrunk in percentage terms, which might restore your targets without selling. Bernstein calls this "soft rebalancing."

Worked example

Illustrative example, not a recommendation. Take a three-fund portfolio built from broad ETFs, used here only to show the math: a total U.S. stock fund (VTI), a total international stock fund (VXUS) and a total U.S. bond fund (BND). Target: 60% / 30% / 10%. Current value: $50,000. This month's contribution: $1,000.

1. New total = $50,000 + $1,000 = $51,000.
2. Target value of each fund at the new total: VTI 60% × $51,000 = $30,600; VXUS 30% × $51,000 = $15,300; BND 10% × $51,000 = $5,100.
3. Need = target value minus current value, never below zero: VTI max(0, $30,600 − $33,000) = $0; VXUS $15,300 − $13,500 = $1,800; BND $5,100 − $3,500 = $1,600.
4. Total need is $3,400, more than the $1,000 contribution, so split the $1,000 in proportion to need: VXUS $1,800 ÷ $3,400 × $1,000 = $529.41; BND $1,600 ÷ $3,400 × $1,000 = $470.59; VTI $0.

One contribution closes only part of the gap: VTI is still 4.7 points above its target. Vanguard's website gives the example of rebalancing when an allocation is "off-target by 5 percentage points or more," and Fidelity gives the same 5-point example for a threshold approach. Before this contribution, VTI was 6 points over target (66% vs. 60%). Whether to also sell the overweight fund is a separate decision. In a brokerage account, selling part of a position can trigger taxes.

The dollar amounts rarely convert to whole shares. $529.41 isn't a multiple of any share price. That is the subject of Fractional shares and rebalancing: what changes in the math.

Not every month. Vanguard says that for many investors an annual rebalance is optimal, and that the important thing is to pick a schedule that is easy to follow. Revisit the monthly amount when your pay, expenses or goals change. The math above is what a contribution calculator does, whether you build it in a spreadsheet or use an app such as Allocta.