“If you need your money in the next year, it should be in cash.”
The stock market can fluctuate greatly. It’s no fun to need cash for, say, a down payment on your first home and find that your stocks are down 50%. If you’re house shopping, wedding planning or car buying within the next year, keep those necessary funds in a savings or money market account.
Investing is an effective way to put your money to work and potentially build wealth, may also allow your money to outpace inflation and increase in value. This means, you ought to save up to 10%-20% of your after-tax income for investing in stocks, bonds and other assets.