So You Think You’re Ready to Invest this Year?

With COVID-19 throwing the stock market in an uproar and at its most unstable in recent years, many of the people who were once interested in investing are now having second thoughts about it.

Should you invest in 2021?

Why should people consider investing?

Investing is a great and effective way to build wealth over time. One of the best things about it is that regardless of age, gender, skin colour, educational attainment, or career, it is easily available and accessible to any adult American.

However, that doesn’t mean that it is going to be an easy journey. You have to understand that people come from different backgrounds. And investing successfully depends on an individual’s habits, values, state of mind, and financial foundation. It is not as easy as sitting around in office chairs just watching your stocks go up and then selling them at the right time. Even that takes a bit of science and know-how to pull off successfully.

However, this doesn’t mean that you should never invest if you’re not “qualified” under the said conditions. There are certain measures that anyone can take to prepare themselves to become successful investors.

What Aspiring Investors Should Do to Prepare for Investing

Contrary to what most folks think, getting to a position where you’re ready to invest isn’t really that complicated. It’s not exactly easy, but the concept isn’t difficult to understand.

Here are a few things that every aspiring investor should start doing now to prepare themselves for investing:

1. Know where your money is going.
Investing is all about finances. And your financial capacity will greatly depend on how you keep track of and manage your expenses and income. As someone who is considering getting into investments, the first thing that you should do is to keep tabs on how you’re spending your money and where it goes monthly.

Be disciplined enough to list down all of your expenses, both essential and non-essential, down to the last penny. This will give you a general idea of how you spend not just your money but also your time and energy.

2. Determine which ones are essential expenses and which ones are not your priorities.
Once you have already come up with your list of expenditures, identify which ones you can’t live without and which ones are expendable. If you really want to secure your future financially, you need to start making the necessary sacrifices today.

3. Think of ways to keep your yellow costs to a minimum.
Yellow costs are your expenses that are not vital to your lifestyle, but you can’t easily let go of them. Perhaps it’s that gym membership or monthly data subscription. You can gradually ease your way into losing them by making the transition easy for you. You can probably start by buying some exercise equipment for your home so you can eventually start working out in your garage or basement instead of going to the gym. Or maybe you can downgrade your mobile data plan and pay for a lesser amount monthly.

Take a look at your lifestyle and see how you can make certain incremental adjustments until you get to the point that you have taken it out of your monthly budget.

4. List down your debts and eliminate them one by one.
The next step that you should take is to start getting rid of your debts one by one. It will be hard for you to make a significant investment if you still have outstanding debts you need to take care of. Lessen your stress by lining your debts up and taking them on one at a time. Once you’ve eliminated all of them, you now have more cash to divert into an investment of your choice.

5. Put away some money for your emergency funds.
Set aside some money for emergencies. Much of life is unforeseeable, just like this pandemic, and a lot of us learned that the hard way. Plenty of folks weren’t financially prepared for such a time as this because they failed to save up for a rainy day. If you don’t have an emergency fund set up yet, we strongly suggest building one before making any significant investments.

6. Study the market and strategise how you will deploy your cash.
So let’s say that you’ve already settled all your debts and have enough savings to cover 6 months of your monthly expenses. The next step is to do your due diligence.

Never enter anything that you’re not familiar with. Before taking a step, make sure that you do your research on investments, the stock market, how it works, how to properly strategise and diversify your portfolio, and many more. This doesn’t mean that you need to be an expert on the subject matter before investing. You need to know the basics first. The rest will follow. The important thing is you understand how it works so that you can map out a sound investment plan that will get you good returns on your investments.

 

If you can get yourself to a position where you are mentally and financially ready to invest, then don’t wait too long to turn it into reality. Act now and start making a difference in your life.

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