Are you thinking about investing?
Has it been yet, another thing on your “To Do List?” Well, you’ll be happy to know, answering three questions can lay the groundwork for the investment of your hard-earned money. If you’ve already dove in the investing pool, these steps can help improve your investing plan or get you back on the right track.
Investing can be anything from your employer’s 401k plan, stocks, bonds, index and mutual funds. There is a lot, and it can feel overwhelming when you’re starting out. It best to take it in stages and that’s just what I’m going to do in my investing series. I’ll start at the beginning.
What are my goals?
The first place to start is to know what your goal is going into investing. The purpose of stating the results you want from investing is two parts:
- Knowing your goal will give you guidance in how much risk your willing to take. Is it for your kid’s college tuition? Is it for retirement? Or do you want the rush of playing in the market?
- A goal gives you the object to make a plan for, it’s the guide to create the steps of how you’ll get there
Life gets crazy and being able to look back at your objectives will make investing less stressful for the times you’re on the crazy express.
How much money am I going to put in?
Know this, you don’t need tons of cash stashed to start investing, but you do need some money. If you don’t know what your budget for investing is, create one. For those without an emergency fund, save up, at least, $1,000 first. Also, it can depend on how much you’re earning, but it may be best to pay off your debt before investing. Putting your money into stocks, bonds or a 401k while you’re paying down money you owe, could cause you to lose money. If debt is holding you up from saving for your future, then think about this.
How much time and energy am I willing to spend?
This question can be answered more completely next week when we go over methods to invest your money, but I want you to start thinking it over now. It’s important to not BS yourself here, you know yourself better than anyone.
Do you want to devote time to research and planning investments?
Do you have a passion for learning about how to invest?
Do you prefer to do quick set-up and move onto perusing Pinterest?
There’s no judgment on how you prefer to spend your time but I ask all this to save you time and heartache later. Your time commitment is a factor on where and how you invest your money. It could be anything from reading up on your employer’s 401k, to meeting with a financial advisor to discuss investments, to researching stocks you want to buy on your own. No matter your investing path, you’ll have to make time to learn the basics because they’re important to protect yourself.
Start answering these questions to prepare for investing. Once you have those answered the next step is to begin to invest money. There’ll always be more to learn and ways to improve but if you’re waiting around to be an expert on investing you’ll never start. Sure there will be some learning bumps and bruises, but you’ll get better and better each day.