Many people want to start investing, but they are worried about what it will mean. They know they should plow money into the markets to make long-run returns, but they are concerned that they’ll make mistakes.
Everyone, though, has to start from somewhere. Even billionaires invested their first dollars at one point.
But how do you know you’re ready? Check out the following.
You Have a Strong Emergency Fund
You never quite know when disaster is going to strike. In life, things go wrong, from time to time.
Once you have an emergency fund in place, though, you have more freedom to play around with your funds. You know that if something goes wrong (such as getting sick), you have the money to cover it. You can then funnel more money into the riskier bets that could help you become wealthier in the future.
You Understand the Charts
If you can eyeball USD CAD charts and understand what’s going on, then you’re also probably ready for investing. You don’t need to understand the ins and outs of the Black-Scholes-Merton equation, but if you can read a graph, and see where things are heading, you’re in a much better position to trade, particularly short-term. If you understand key concepts, such as ROI, P/E ratio, and book value, then you’re well on your way to a successful investing career.
You Have Spare Cash at the End of the Month
If you have spare cash sloshing around in your bank balance at the end of the month, you’re in a much better position than other people to start making investments.
Remember, you don’t have to have a lot of money left over at the end of the month to start investing. Just small amounts can snowball into fortunes if you leave them in the markets for long enough.
The trick is to keep putting money in over the long-term into a diversified portfolio of assets. Make sure that you own dozens of stocks so you can hedge against the risk of any particular equity falling in price.
You Have Financial Goals
Many people go month to month without really considering their financial goals. However, if you’ve started planning for your long-term future, it’s a sign that it’s time to invest. Remember, you aren’t going to get a good rate of return in a savings account. Banks are offering low rates. The only place to really build wealth right now is in the markets or real estate.
Therefore, if you have financial goals that you want to achieve, consider putting your money into stocks and shares. Over the long term, they’ll return a fortune to you, providing you buy the right instruments.
You Want to Retire Early
If you want to retire early, investing in the stock market is essential. It’s virtually impossible to save up enough money through regular income alone. You need assets that can generate money for you long-term. And while bonds and real estate can do that to some extent, the stock market is the winner long-term for most people.