Investing: Getting Started (Part 1)

Today’s the 15th! For some of us, it’s payday again.

We can all breathe a little easier knowing that there’s something to support our daily expenditures/travels/hobbies/plans for world domination. And hey, maybe you’ve even heard about investments from a friend or relative.

atm-machine-1355804210ahg.jpg

As you go over to the ATM and come face to face with the numbers on the screen, you could be wondering, if I want to start investing, just how much should I start with?

Like many things in life, it depends. But first of all, are you even ready to invest? Here’s a quick checklist.

  • Do you have enough savings?
    • Before you even begin investing, make sure you have enough emergency savings to cover your expenditures for at least three months or more.
      • This is to make sure that you can support yourself in case of sickness/job loss/family emergencies or other similar scenarios. Investments are not protected from loss. You absolutely do not want to risk the money you need to survive.
    • This might not apply if you are still a dependent (ex: student investors who use their allowances for investing), though you should still keep in mind the importance and purpose of a savings account.
      • Ask your parents/guardians, they probably already have one set up for you. If not, why not open one on your own!
  • Are you in debt?
    • Make sure you are able to pay off your personal debts before you invest. Gains from investing may be used to pay off debts, but don’t forget to account for the possibility of loss. Investing is not a shortcut to be rich or debt-free. Remember, you’re investing to strategically improve your finances, not to bleed cash.
  • How often will you invest?
    • It’s not just how much, but also how often. For example, people who want to invest only once a year should be investing a bigger amount compared to those who wish to invest on a monthly basis.
  • How much are you willing to lose?
    • People often get into investing because of the exciting stories about quick gains, but a sensible investor should always be grounded in reality. Just because your uncle made great gains from a hot stock tip doesn’t mean you should imitate his strategy. It’s even possible that he was just lucky!
  • When do you need the money?
    • A lot of people invest because their friends/parents/co-worker/boss told them to. This isn’t a bad thing. The most important part is actually getting started.
      • Do you plan to use that money for a dream trip? A business? Retirement? The duration that your money stays invested will affect how much you will earn, as well as what risks you can take.

Ready to start investing? Wondering how much you should invest? Stay tuned for Part 2.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s