How do I know I am ready to invest’’? That is a question I asked myself over and over again. It is also a question I got asked in a conversation earlier today?
This question often gets asked in different ways; am I ready to invest
- ….. when I hit a certain age?
- ………when I move out of my parents?
- …………when I have money left at the end of each month/year?
- ————–when I get given some monetary git?
- ……………………when I start getting paid a certain salary?
- …………………….…….when I have ‘grown up’ responsibilities?
- ——————————–when I feel like it?
Money is infinite but time is not.
The simple and short answer is if you are asking if you are ready to invest, then you are probably thinking of investing, and the chances are more likely than not that it’s time to start investing even if it means starting with $50/£50.
Personally, there were 7 signals that made me certain that investing was the right next step. If you are unsure, consider these 5 signs as they may help you decide if it’s truly time to start investing.
1. You Have Your Emergency Cash Saved
Before you start investing you should have enough on hand to cover your living expenses for several months. This will give you peace of mind should anything unexpected happen. It will also mean you get rid of the most common excuse not to invest, which is ‘ I don’t know when I might need the money for something else’.
It is recommended that you have three months to six months of your living expenses in your emergency fund.
I tend to keep an average of 9 months in my emergency fund but invest half of this – 4.5 months in opportunities that provide short term profit.
2.You Have Access To Your Employer Pensions Plan
Can you get free money? Yes, you can and I mean this literally! Imagine walking into your office building and your Chief Executive Officer or Chief Financial Officer is standing at the entrance and offering you free money.
Your employer pensions plan is your primary source of free money, but you will only access this free money if you invest.
Many employer pensions plan in the UK will match what you invest up to 3-6%, some even more. This means for every 6% of your salary you contribute to your pension, you get an additional 6% on top for free, at no cost to you.
Many people lose free matched money without knowing they are by not investing in their pensions.
It’s like being paid to invest – no its exactly being paid to invest!
3.You Do Not Have A High Interest Debt
If you have a high interest debt or credit card where you are for example paying 25% in interest to service the loan or debt, except you find an investment that pays you more that 25% return on your investment you are better off focusing on paying off that debt before investing.
However, once you have paid your high interest debt, there is no other reason not to focus on making money on your money by investing.
P.S: Do share with me that investment that’s paying you more than 25%!
4. You Spend Without Budgeting
If you find that you spend without proper budgeting or planning and are still left with some money at the end of the month then it’s time to start investing as chances are you are probably spending more than you should and with proper budgeting, you will have something left to invest.
5. You Want To Grow Your Wealth
The fundamental principle of building your wealth is putting your money to work. If you are starting to wonder how to grow your wealth, you first need to start with planting your wealth.
You plant your wealth by investing it, you water it by adding more to it, and it grows by working for you.
6. You Are Uncomfortable With The Interest Rate Your Bank Is Offering
Saving is a good first step. In fact, if you have money saved then congratulations, you are doing better than most.
However, once you have saved your emergency fund, it’s very easy to quickly get frustrated by the 0.1% that the bank offers on your savings. The interest rates the bank offers on fixed-term savings account where you lock your money in for a period of 1,2,3+ years isn’t equally appalling.
If you are starting to wonder if your money can make more than pennies, then I am here to tell you that you are 100% right.
Curious where to start – start with an index fund, open a vanguard account, and put it in S&P 500. It’s not at all complicated and you can read about my vanguard investment here.
7. You Are Asking If It’s Time To Invest
If you are asking this question, then I employ you to start small. Try investing $10/£10, then increase gradually to $50/£50 then $100/£100. The good thing with investing is that every little count and it is always better to start than postpone it.
I invite you to start investing now.
The good thing with investing is that every little counts. Don’t wait. Start now. Start small.
Which is your reason to start investing now?
*This is not financial advice. Do not consider this blog to be a substitute for obtaining advice from a qualified investment advisor. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional *
