For most people, investing is one of those things that sounds great, but they have no idea where to begin. There are stocks. There are bonds. There are different markets. The world of investing is almost as complex as it is unpredictable.
“Where do I even begin?” you think to yourself.
Well, before you even begin, there are a few steps you should take. This will ensure that, no matter how your investments go, your life won’t won’t be ruined by it. It’s possible you have some/all of these steps completed. If so, feel free to skip to the end.
Budgeting Your Money
Investing and establishing a diverse portfolio is a great, but you need to have at least some money on hand to get started. In order to know how much (if any) money you have, you need to sort out your budget.
It’s not as exciting as playing the stock market like you’ve seen people do in the movies, but if we’re being honest, real life investing isn’t as exciting either. So, get your money sorted. Map out your expenses. Remove unnecessary purchases, subscriptions, etc. Set budget caps based on categories.
All of this will help you determine and improve your cash flow. That, in turn, will give you more money to work with when you’re ready to invest. But it’s not quite time to invest.
Establish a Savings
The next thing you should do is make sure you have some savings built up. At the very least, you should have an emergency fund of $1000, if not more. Your investment portfolio isn’t a savings account and shouldn’t be treated as such.
With a savings established and your budget sorted, you’re ready to make some money moves. Now, some will advise to tackle debt before moving into the world of investments at all. This will free up more of your cashflow, and you won’t be losing money on interest.
Whether you do or not, you definitely need to get your debt in check. That means not being behind in payments and not struggling to get by every month because of what you owe.
If you want to get into investing from there, that’s your decision.
Where to Begin with Investing
There are a few approaches you can take to investing. There’s a lot to understand, and you can certainly start small. There are a number of apps and programs these days that allow you to invest extra change and side-money into various stocks.
This can help you learn a few things, and you could see your money grow a little. However, the returns you make will likely be small, especially if you’re putting in small amounts of money. You can’t expect to turn $5 into $1000.
If you’re really serious about investments, and you’ve got some money ready to go, your best bet is to meet with an investment manager. They know how the markets work. They can advise you on risk-factors while making sure your investments are diversified. With an experienced investment manager at your side, your odds of prosperity increase significantly.
Let us help you. At KB&P Partners, we provide financial advising and investment management in Springfield, Ohio for people of all different income levels. Whether you have a lot or a little to get started, we’ll help you determine the best ways to make it grow.
Played right, investing can be surprisingly safe, while providing a return that’s far superior to any interest rate you’ll find in a financial institution.