Investing is one of those ‘adult’ things you start doing and doing more of the older you get. Fresh out of college it’s probably not really on your mind but as you continue to develop as a young professional you’ll learn that investing is ultimately a great way to build long-term wealth. To get started you’ll need to have some disposable income, a safety net (emergency fund) and some in savings, as you’d never want to put yourself at risk of going under by investing and risking too much. The funds you use on your investments shouldn’t ever come from the funds that are there for paying vital bills. 

Having a solid budget is step number one, and then making sure you’ve got your vital expenses covered and then you can get a sense of how much you can start investing with. Once you are fully on top of your disposable income, you can start researching about investing. Once you’ve researched questions like Why don’t brokers accept US clients? or “What are the minimums and fees”, you can start getting more serious about investing! It is so important to overprepare when you are at this stage because if you underestimate one type of stock you like the look of, you could lose it all. Study every oil brent chart and get as many quotes on gold/silver sources as you can because it’s not something you can leap into. Make one misstep and you will lose money, but it might turn you off investing in anything ever again. Investing can be an amazing way to prop up your finances, but you must overprepare.Here are a couple of steps before pulling the trigger and buying your first stock or mutual fund:

Complete A Financial Audit On Your Money 

Completing a full audit of your personal finances certainly isn’t the most exciting way to spend your time, however, it’s definitely worth doing. It will not only enable you to see a clear picture of the real state of your finances, but it will also help you to identify any areas where you could possibly cut back. 

Begin by making a complete list of all your income. This will include your wages, any freelance fees, and income from elsewhere. Make a note of how often you get this income. 

You then need to go through all of your bank statements and make a complete list of all your outgoings. It’s a good idea to go over at least a few months just in case there are payments that don’t go out each month. It’s also a good idea to make sure you relook at any that come out at the same time every month, you may find that you are paying for things that you don’t use anymore. 

Once you have looked at both of these you are able to work out a realistic amount that you can save or use for investing. 

Don’t Borrow To Invest 

An essential part of your financial audit will be to look at the total amount of debt that you have left on your debts such as credit cards, personal loans, and car finance. Then you can figure out how to pay it off. If you would like investing to become a way for you to make money, you should aim to get rid of any debts first. Having debts can be a heavyweight on your shoulders that prevents you from successfully getting started as an investor. It is never a good idea to borrow in order to invest and it’s also not a good idea to invest to try and pay back debts. 

Make Sure You  Think About Emergency Funds 

The money that you are thinking about using for your investments should never be the same money that is there for an unexpected emergency. Ideally, you should have a separate pot for both of them, and you shouldn’t invest until you are sure that money isn’t needed elsewhere. At the end of the day investing can be risky so you need to only use money that you can afford to lose. Having and building on your emergency fund should be a top priority. 

These are just three important things that you should consider with your personal finances before you make investments. Are you thinking about investing, what have you considered? 

Understand different types of trading 

Before you get into trading or investment it is important to take a look at some of the different types available to you. There are lots of ways to invest your money whether it be by trading on the forex and stock market or renting out property. Here we are going to have a look at a few of the most popular types to be aware of. 

Currency trading 

Currency trading or forex trading is the a bit more of an advanced investment, but also a very popular form of investing. By trading currency or cryptocurrency (https://bittrade.one/) you can stand to make a large profit and even make a career out of it. It is important to note that this type of trading can often be complex and you need to read up on some of the theory before you commit to trading in this format. 

Stock market trading 

Stock market trading is the form we most commonly associate with TV and movies and is the process of buying and selling stocks of a business. This could be a stock with Apple, Google, or a small company on the rise and if you time your bids right you could stand to make a huge amount of money this way. I personally am more of a believer in index funds (a basket of stocks), but do keep about 5% of my investments in individuals stocks.

Real estate 

Buying and renting out houses is a popular form of investment and one that many people do alongside their full time work. Buying a property at auction and renovating it for rental can be lucrative and a clever way to make some extra money. Mrs. Money and I have had a rental house for about 2 years now, and although it’s not always been easy and has been work, it’s been a nice investment for us!

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