If you’re anything like me, you’re eager to grow your wealth by investing in stocks, mutual funds, ETFs, etc. You should be cautious about jumping head first. I recommend that you take a hard look at your finances and ask yourself these tough questions: are you even ready? do you have the basics in control? do you have the discipline? are you willing to introduce higher risk and exposure to your financial life? Think about it, seriously.
Below are the 4 pieces of the financial foundation you need to have before you start investing.
The bottom line is to simply have your financial core as unbreakable as possible. There is no certainty in life, so the last thing you should do is create more unpredictability by investing in the stock market without a solid foundation. Once you have a well oiled machine with a budget, tracking your spending, having a fully funded emergency fund, making contributions to your retirement accounts and aggressively paying down your debts, you will be in great shape to invest your extra cash in the markets.
The ultimate goal is to grow your wealth and there is no better than to introduce investing, but you’ve got to learn how to crawl before you run.
Suggested articles to read:
- Create your budget
- 7 Steps to build your emergency fund
- Snowball method versus high rate method
- Not all debts are created equal
- This is the app I’m using to invest my Stash