When investing, you should spread your money across different levels of risk based on when you think you will need to withdraw and use them in the future. Your emergency fund should be in a cash account so you can take it any time you need it and it’s not affected by the state of the prevailing economic and investment condition. Any extra money beyond your emergency fund can be invested but make sure that they are spread across different levels of risk based on the time you will need to withdraw them.
Any money you will need within 2 years should be in cash or guaranteed income and not in any investment that has the potential decrease in value.
For money that you will need between 2 to 5 years, I would suggest putting some on guaranteed income and some in low risk index funds.
For money your will need within 5 to 10 years, I would suggest putting them on low to medium risk index funds.
For money you will need within 10 to 15 years, I would suggest putting them on medium risk index funds.
For money your will need within 15 to 20 years, I would suggest putting them on medium to high risk index funds.
For money you will need after 20 years, I would suggest putting them on high risk index funds. And if you want, you can put a small portion of it in individual stocks.
It’s up to you on how you want to approach this. You can divide your investment money every month and allocate them to each of the list I mentioned above or you can have a target amount for each one and move to the next after you reached that target.
The most important thing is to build and complete your emergency fund first before doing any kind of investment. And if you use your emergency fund, you need to prioritize replenishing it before resuming adding to your investment funds. Always diversify and spread your money on different investments with varying level of risks. If you don’t diversify your investments, then you are practically gambling. In gambling, you can win big but you have a higher chance of losing. If you look at the charts of index funds such as the S&P 500, you will see that when it goes down, it always recover after some time. It could take months or even years but it recovers. A lot of individual stocks though, do not recover and some of them eventually become worthless and removed from the stock market. So always diversify and manage your risk if you want to have a higher chance of becoming a millionaire.