The need to invest in any appreciating asset may seem alluring especially when we think of the possible high rate of returns.
It’s good to however note there are stages to financial growth and if you skip a stage you might be setting yourself up for failure.
It’s extremely important to first cover the following mentioned steps before you decide to involve your finances in anything else.
Build an Emergency Fund
We simply cannot emphasize enough on the need to have an emergency fund. The easiest ways to build an emergency fund is simply by including it in your monthly payments as a bill.
It’s good to note that if you don’t prioritize building an emergency fund then soon you will be liquidating your investments at a loss to cover your expenses.
Have a Retirement Plan in place
It’s unfortunate that most of us don’t even think of retirement until very late stages of our lives. Some few lucky people work in jobs that provide a retirement plan but those of us who don’t you can always plan for one.
The trick here is to ensure your standard of living will not decline after you have retired. You want to be able to afford the same things you do now and live as well as you do now in your old age.
Pay your debts
Make sure you make monthly deposits towards your debt payments to constantly reduce them. Investing while your debt accrues in interest is a recipe for disaster and may not make much financial sense. As much as you may not pay your debt in full ensure consistency to reduce the amount of interest you pay on them.
Educate yourself on Investment
Now that you have put your retirement plan and emergency fund in place and your debt payments are in good progress, it’s time to learn about investments.
Simply understand your financial goals and capabilities and look for investment opportunities that match them. This can be achieved through necessary research and reading investment based materials like the investment articles on our blog as well as consulting any certified finance expert.
Recognize your possible left Disposable income
For you to invest you need to have some “excess” money left after paying all your bills and possible expenses. I would however advise you allocate this money in your budget see 3 Easy steps to making a simple budget to ensure you only spend what is left on your expenses.
This will ensure you make it intentional to invest and grow a certain potion of your money. If you have no money left to invest then you are probably living above your means evaluate that situation and learn how to cut cost to accommodate investing.
Having intent to invest is a great thing, but it might lose its meaning if the goal does not improve your current financial position. So before you start investing, try to find out why you want invest, for how long you will be investing and what your risk tolerance is etc. We hope these steps will help you achieve your alleged investment goals more effortlessly.