Are you ready to invest
Are you ready to invest? Here are some questions for new investors
Investing is your way to financial security despite its risks, so you must take some precautions before you start investing, which are mentioned in the article.
The low interest rate on savings since the financial crisis means that many savers have moved into the markets hoping for a better return. Investing means risking your money. This isn't necessarily a bad thing - more risk can mean more returns - but if you're going to invest you have to be prepared for the fact that you can sometimes lose some or all of your savings.
Before you invest, it is important to determine your funds and make sure that your necessary guarantees are present.
Pay off your debts
Make sure you pay off your debts. The cost of your debt, in interest payments, is likely to outweigh the returns you receive on investments. Focus on reducing your debt to a level where it's manageable, or better yet, paying it all off before you start investing.
Get protection
Make sure you are protected from the possibility of your work being interrupted for a period of time. Examine your plans for sick leave to see how long you will be insured and consider getting income insurance if you are self-employed. Other guarantees, such as critical illness insurance, may also be an option if you have a mortgage or credit, although this can be costly.
Life insurance is an essential item that you need to take into consideration before investing, especially if you have a family. Your job may offer you a "death in service" benefit, but consider an additional policy if you change or quit your job.
Think about retirement
It is possible that the pension provided by the state will not be sufficient to cover your life needs after retirement. Therefore, it is essential that you start saving from your salary as soon as possible. Make sure to contribute to the employee retirement system or private pensions. Before investing any money, pension savers benefit from employer contributions and generous tax breaks.
Make sure you have your savings
Do you have surplus money to lean on? Before risking your money, you need to have basic savings; They are contingency funds for unexpected events. The generally accepted rule is to have at least three months' salary in savings before you start investing.
Now that you have finished preparing for the investment, you should ask yourself - as a new investor - some questions, such as:
What are your financial goals?
Set clear goals. Do you just want to increase your money? Or do you want a regular salary? Is there a specific amount of increase that you want or a minimum income that you want to achieve? Having specific goals will help you decide what risks you should take to achieve your goals. You may not have a particular reason to invest, but try to be sure of what you want your money to achieve.
What is your time frame?
When you know what your goals are, figure out how much time you need to achieve them. This will give you a clear idea of the rates of return you need from your investments, and whether your goals are realistic or not.
It's important to consider various factors, such as your age and health. If you have short-term goals (less than five years), you should commit to saving; Because if your investment drops in value, you may not have time to recover your losses before you need the money.
Medium-term goals (five to ten years) and long-term goals (ten years or more) are suitable as an investment, but some investments become inappropriate as you age. You have less time to get the money back when the value drops, and if you retire, your ability to earn diminishes.
Do you understand your position on risk?
Understanding the risks you face when investing and identifying the risks you intend to take is essential. You may have a long span of time and a lot of money to lean on, but if you don't think you can sleep with peace of mind when the markets are volatile, it may not be a big risk for you.
How much can you invest?
Be realistic about your ability to invest. Evaluate all of your liabilities, such as debt, insurance premiums, retirement contributions, savings, and cost of living, to see the extra money you can invest in.
The best time to invest is when you're taking a long-term view, so save money if you think you might need it in the next five years.
Have you sought financial advice?
Many investors make their own decisions, without resorting to advice. But doing things yourself takes time, knowledge, and confidence. If you take financial advice, you will be able to talk about all the points mentioned above and ensure that your investments perfectly fit your needs.