DO THIS BEFORE INVESTING…

While investments of all types can be very lucrative, it’s important to remember that there is always a risk that you are taking on. Be sure to consult with a Certified Financial Planner™ Professional as he or she can provide you with the expertise to make educated financial decisions, ensure that you have a diversified portfolio, and help to determine your risk tolerance.

HAVE AN EMERGENCY SAVINGS!

This is a point I have been reiterating a lot lately. It’s important to have an emergency savings under normal circumstances, but even more so given the current economic state and unemployment rate. Aim for having at least 3-6 months of expenses saved up. While this may not be feasible for everyone, something is better than nothing! Work on this before you start investing.

CONTRIBUTE TO YOUR 401K.

If you have an employer who offers a 401K match, be sure to invest in it! If not, you’re essentially leaving free money on the table. Different employers will have different matches, vesting schedules, etc., so be sure to look into those specific details first.

GET OUT OF DEBT!

Paying a high interest rate for your monthly credit card bill will not get you rich. Most investments do not have an ROI (return on investment) that’s higher than the interest rate you pay for your credit cards. So, before you look to invest all of your money, work towards paying down and ultimately eliminating your credit card debt.

NOW ONTO INVESTING…

Investing can include a variety of things, such as stocks, bonds, mutual funds, annuities, and real estate. Typically people are most familiar with stocks. By purchasing a company’s stock, you own a percentage of that company and are therefore a part owner. You will then become a participant in both the gains and losses of that company. What is a bond? Essentially it is a loan taken out by a company. The company receives money from investors who buy their bonds, instead of obtaining money from a bank. In return, the company pays the investor an interest rate on that bond. Types of bonds include government, municipal, and corporate bonds. Real Estate is another popular investment. There are a couple of different ways of looking at your potential ROI with this investment. You can buy real estate with the expectation that the value will appreciate, and you can sell later on for a profit. You can also use it as a rental property where not only will the value appreciate over time, but you can also make profit through rental income.

WHAT IS LIQUIDITY?

Liquidity is the ability to turn your investment into cash. For example, your savings account is considered very liquid as you can withdraw the money from it at any time. Whereas with real estate, it is not as liquid. You would have to take the time to put the property on the market and wait for a buyer before actually having the cash in hand. This is one reason why it’s important to have both savings AND investments.

BE SURE TO INVEST IN YOURSELF!

Putting your time, money, and resources into you is the best investment you can make. Aside from the traditional investments mentioned above, you can invest in yourself by taking a course, purchasing a gym membership, a meditation app, etc. Health is wealth!

As always, thank you for checking out my podcast and blog post! If there are any topics you would like to learn more about, or if you would like to schedule a free financial consultation with me, please email me at Luis@onmywaytowealth.com! I look forward to speaking with you soon!