As much as I love telling people that investment is not as complicated as some see it, I also love to establish some easy criteria that should be met before a person begins the journey of investment.
So, how do you know if you are ready to start your investment journey? Here are five ways to know;
🔸️You have an investment goal- In simple words, this means- why are you investing? If you do not have a reason for investing, you would pull out your money for any reason!
🔸️You know the time frame of your investment- When you clearly state your reason for investing (your goal), you should also know the time duration for your goal. This will help you know if your investments should be in short term, medium term, or long-term options.
🔸️You know your risk tolerance level- This simply means the point you stand at between “chesting” any loss to your investment and having a mini heart attack 😀. Your goals help you determine the level of risk you should be exposed to. Also, your risk tolerance level determines the degree of risk you are willing to take. Understand your risk tolerance level!
🔸️You have a solid emergency fund- This especially goes to people who intend on investing long term. Before tying down your money in long term investment, ensure you have a solid emergency fund to cover any unplanned expense that comes up.
🔸️You are not broke short term- I am sure you’ve heard this line before- someone is rich long term and broke short term 😀. What I mean by this point is that, as much as you are working towards building future wealth for yourself, ensure you have enough cash for short term. Do not carry all your savings and put them in investment!
Are you ready to invest?
How many boxes do you check? 😁
To your financial independence and freedom!