First Things First
The two things you need to do before investing are:
- Get rid of high-interest debt.
No investment strategy pays off as well as, or with less risk than, eliminating high interest debt. Most credit cards charge high interest rates — as much as 18% or more – if you don’t pay off your balance in full each month. If you owe money on your credit cards, the wisest thing you can do is pay off the balance in full as quickly as possible. Virtually no investment will give you returns to match an 18% interest rate on your credit card. That’s why you’re better off eliminating all credit card debt before investing. Once you’ve paid off your credit cards, you can budget your money and begin to save and invest.
.To be clear we are talking high interest debt. Student loans and mortgages are low interest debt which can be addressed when more of your finances are stabilized.
2. Emergency Fund
To determine a sufficient amount of money to put away in an emergency fund, you should consider:
- What are your necessary monthly expenses?
- What are your insurance deductibles?
- What is current work situation?
- What are your financial responsibilities?
I am not going to suggest any brokerage account provider but feel free to post comments sharing your experiences with your provider.
Question for you: How did the COVID-19 event change your approach to preparing for the future?
