5 Things to do Before You Start Investing in Stock Market
So are you also thinking of starting investing in the stock market but you don’t know that you are prepared for that or not? So, don’t worry guys today we are going to talk about the most important things to do before start investing in the stock market. stock market
Build an Emergency Fund for Stock market
Emergency funds are the funds that one saves to use in the time of emergency this is the money that you use during your hard times like unexpected expenses such as medical emergency, personal emergency, or even when your phone or vehicle broke down. stock market
So if you are thinking to invest in the Stock market then for that, first you should build an emergency fund for that also, which needs to at least three times of your monthly expenses and always keep this money in a separate account. stock market
Have a budget & know your cash-flows
If you are willing to invest in the Stock market and want to be financially free then you must need to know your monthly income and your cash -flow well because this will help you plan how much you can invest per month per week or day.
You can use a simple Profit and loss formula to understand your cash position, which is the
Revenue – Expenses = Profit Are you also struggling with your budgeting, then the 50/20/30 Strategy is the easiest strategies to know how much should you spend or save?
- Use 50% of your monthly income on your needs
- Save 20% of your monthly income
- And use the remaining 30%on your lifestyle
Pay down your high-interest debt
High–interest debts are the biggest hurdle of your investment career because it doesn’t make any sense if your investment profits are lesser than your debts for example if your returns are 13% and you are paying 15% interest then overall you are at loss.
However, let me clear that all debts are not bad so before start investing try to pay down your high-interest debts or minimize them because these interests can kill your investment profit.
Define goals and make plans
The most important thing to start something is you need to define your goals and make plans to achieve that goal and the same works with investment in the Stock market here you must know why you are investing so that will keep you motivated to achieve your goal.
Understand the investing basics
Do not try to run if you don’t know how to walk, the same goes with the Stock market investment before investing you must know the basics of Stock market investment understanding the elementary concept is a must.
But this doesn’t mean that to start investing you need to become a financial geek you just need to know the basics of the Stock market like- mutual funds, IPO, Bonds, diversification, liquidity, the volatility of the stock market and this, knowledge is enough for anyone to start trading or investing in the Stock market. stock market