3. We may have been taught when we were growing up to tithe, giving 10 percent of our incomes to a church, synagogue, or charitable cause. The same goes, as a minimum, for our saving and investing. It is best, as a rule, to reduce one's spending enough that he or she can put at least 10 percent aside for a rainy day or other short-term contingency, for medium-term goals such as buying a house or paying for kids' educations, or for longer-term targets, like building up a good retirement nest egg.
One can put up to $5000 of one's earnings a year into a retirement account. If doing well and making $50,000 or better annually, much or all of the "investment tithe" can be added to an IRA annually. (If one also has a 401K plan through work, additional tax-deferred funds can be set aside. And if 50 or older, one may contribute an extra $1000 annually to the IRA.)
On a dollar-cost-average basis (buying with the same amount at regular internals, such as the first of each month or the beginning of January each year), gains tend to be greater than just a buy-and-hold investment, since we thus add more shares when the market is periodically down. This can mean up to a 20% increase in one's average return. However, assuming distributions are not taken out early, a $5000 tax-deferred annual investment at "only" a 10% compounded yearly gain will assure one has a nest egg of about $905,000 after 30 years. Married folks with a couple incomes can often do even better and may well become millionaire households in the same period.