Investing is like fertilizer that makes your savings grow faster.
These three questions will help you decide if you’re ready for investing:
1: Will you have enough cash on hand? Investing isn’t helpful when there’s an emergency and your money’s tied up in the market. Make sure you have three to six months of expenses saved in an emergency fund before investing. Available cash is also impacted by debt. Eliminate consumer debt and you’ll make money already by not paying all that interest!
2: When do you need the money you want to invest? If your goal is five years away or less, save up for it instead of investing. Investment values fluctuate, and you might need the money when the market’s down. However, it’s unlikely to be down longer than five years. The more certainty required, the less likely you should invest.
3: Will the risk involved in investing keep you awake all night? A portfolio should reflect a person’s comfort level with risk. If the idea that your investments might go down a little — or a lot — could keep you awake worrying, investing isn’t for you right now. Try putting money in a safe savings vehicle instead. Sleep well!