Are you saving for your future? Investing is a great way to make your savings money work harder for you, but how do you know if now is the right time to begin investing?
You Have Your Debt under Control
Do you have a mountain of debt? If so, it is best to wait to invest until you have your finances under control, and here’s why: The more debt you have, the more interest you’re paying and the interest rate is probably much higher than what you’ll get in returns on your investments. Thus, the longer it takes you to pay off that high-interest debt, the more money you’re losing.
You Have Extra Money
You should wait to invest until you have a little extra money to do so. Surplus cash is money left over after you pay bills and contribute to your emergency fund. In case of emergencies, you should have enough money to cover all of your expense for at least three months, preferably six. A basic investment portfolio can begin with five hundred dollars. If you don’t have this, but you want to begin investing right away, some investments allow you to have small withdrawals taken from your account each month.
You Have Researched Your Options
Deciding what investments work best for you depends upon your personality, your investment goals and the current state of the economy. If you are a safety oriented person, you may prefer secure investments such as money market accounts and savings bonds. If, however, you don’t mind taking risks, stocks might be a better option for you.
Do you need to make money quickly or are you looking farther into the future? Investment goals are usually long term or short term and this will affect the type of investment vehicles you choose. You also want to make sure you keep your portfolio diversified so that your money isn’t tied up in one venue.
For more information on building a strong investment portfolio, consult with a qualified financial planner. If you’re looking for financial planners to interview, we’re happy to provide names of advisors we trust.