5 Things You Need To Do Before You Start Investing Your Money
Other than investing in your savings account and retirement fund, there are other ways to invest your money. From real-estate to stocks and shares, many of us consider investment opportunities that are going to massively boost our monthly income. With dollar signs in our eyes, we dream of becoming a property millionaire or making it big on the stock market. And there’s no problem with that – fortune awaits the brave, although you need to understand that ruin awaits the foolhardy too. There’s always a negative alternative, isn’t there?
If you’re thinking about investing your money, there are five things you need to do first.
#1: Take stock of your finances
To ensure you are in a financial position to invest, you need to take stock of your finances. It’s money management 101 – you need to ensure you have enough money to survive if your investments don’t work out. If you have debts hanging over you, it’s worth clearing them before you start to invest. If you are struggling on your income, you should look for ways to boost your money in non-risky ways. You see, if your investments don’t pay out, you will put yourself in a rocky financial situation. Will you be able to cope if things head south?
#2: Think about your goals
Unfortunately, a goal to get ‘rich quick’ is not a particularly useful one. You need a better sense of purpose, as this will help you with your thinking. You see, if you’re in it for the short-term, you will be frustrated. Both real-estate and the stock market are geared for the long haul, as in both cases, it may be a while before you get a return on what you paid out. So, think of long-term goals – buying a house, retirement, family nest eggs – rather than using investment as a means to make money fast or to get yourself out of a financial jam.
#3: Speak to your partner
And by partner, we mean your husband or wife. Are they happy with your plans to invest? Rather than going it alone, ensure they are in the loop. Come up with a goal together; that reason why you should invest in the first place. Whether it’s to add to each of your retirement funds or if it’s to better your lives in the long-term, talk to your partner and come to an agreeable plan. They may have some excellent suggestions too, or they may have valid concerns that will stop you from damaging your family finances. Work as a team, listen to each other, and maintain a happy marriage!
#4: Educate yourself
If this is your first investment, you will be stumbling around in the dark. You need to pick up a few skills first, so this means broadening your education. Your best bet is to hire an investment advisor, as they will outline the options ahead of you, and give you advice as to the best places to put your money. If you’re considering real-estate, speak to a property firm for advice. If you’re thinking about stocks and shares, use the demo tools at CMC Markets before laying down actual money. Read books on your investment choice – there are bound to be ‘beginner’s guides out there for those new to the game, so read up. The more knowledge you acquire, the more stable your investment plan will be.
#5: Curb your enthusiasm
When you are finally ready to invest, you need to have a strong grip over your spending. Know how much money you have to invest, and set limits. If you let excitement get the better of you, you may make a poor financial choice. It’s about impulse control – not spending money on a property that is beyond your initial means, and not getting carried away on the stock market, as your head must always rule your heart – the occasional risk is expected, but you don’t want to get carried away by reckless enthusiasm.
If you do decide to invest your money, we wish you every success. Just remember to follow our advice before you take the plunge!