What do you really know about investing, besides it being “must-do” in this day and age? If you have not invested your time/money (pun intended) in some investment course or at least watched some YouTube videos, chances are – not much at all! Before you put your hard-earned money into anything at all, please keep in mind that investment is a risky venture and should be done with caution and with a good amount of research done on your part. Also, this is a long term affair, so don’t expect to become rich overnight.
It is safe to say that there is plenty to do before you even start investing your first dollars. Just like you do some warm-up before your main exercise or study to take a test, there is some prep work involved in the investing process. Don’t skip any of these 6 steps and you can thank me later. Again, some of these steps will require time and effort. Don’t rush. When it comes to money, it is important to have yourself and your assets protected. To be honest, these steps are great for anyone, even if you are not interested in investment right now, still it will be beneficial for you to look into these steps and evaluate your current situation.
Truth is, we spend all these years in school just to graduate and go make money, but we learn absolutely nothing about money! How to make them, how to manage them, how to make money make more money? Education yourself in financial literacy regardless of your age and income is important and can help increase your wealth and as a result your overall level of happiness and quality of life.
Let’s dive right into the topic.
- Save $1K (before your debt is paid).
This is that amount that should be untouchable unless you are in real trouble. For everything else, you should have point #3.
- Pay off debt with an interest of about 4% or more.
Focus on paying off debt that eats up the most of your money with time. This is just a smart way to do it. In order to find some great tips on how to pay off debt efficiently, look up Robert Kiyosaki’s tips on this subject. He explains the difference between bad and good debt very well and helps you identify what to target first. We are talking mainly about credit cards or car loans. If your mortgage is more than 4%, you may want to look into refinancing. Please consult a professional before making any decision.
- Establish your emergency fund (enough money to cover your expenses for 3-6 months).
Remember that financial safety net, everyone is talking about? This is it. With everything going on in the world, you never know what can happen tomorrow and the most stable job in the world is not a 100% guarantee you will get paid next week. We live in a time of uncertainty. You want to make sure you have this solid amount set aside before making any investments.
- Save up for larger goals that you want to accomplish in the next 3-5 years (house down payment, wedding, trips, etc).
Life doesn’t have to stop for you being busy paying off debt and saving up for what may come. Don’t forget that the only real life that you have happens right this moment. It is vital to have funds for things you want to accomplish in the near future. Maybe your family is growing and you want to get a bigger house, or you are planning this dream trip overseas. Life doesn’t wait for you to be done with steps 1-3. Allow yourself to dream and also have money for that.
- Educate yourself on investing basics.
This is a very important step that can be very well done together with the other 4. While you are saving up, you can start doing your research. There are plenty of free materials available in both video and articles/book form. You can choose an advisor and follow them on Instagram to be getting bits and pieces of information on a daily basis without overwhelming yourself.
- Create an investment plan. How much are you going to invest, how often, what you’ll invest in, and what account type to use?
This is the key! The plan will ensure you are on track, you have yourself covered and you know what you are doing.
If by the end of this article you feel demotivated with the amount of work you need to do before even thinking of investing, let me cheer you up! First up, you have made it all the way to the end of the article that means you are really interested. Second, now you understand that this is not something you can approach lightly and that will prevent you from mistakes that could literally cost you. And last but not the least, you have just done step #5! You have learned something about investment. Your steps don’t have to be huge, but they have to be consistent. As a famous Japanese proverb says “Fast is slow, but continuously, without interruptions...” Give yourself a pad on the back, you have done your 1 step for today. Now go ahead and plan one for tomorrow. Little by little you will notice your knowledge increasing and your debt reducing. Good luck!
Written exclusively for our company by Anna Aguilar
Source: CoolMambo.com
