The stock market offers a chance to grow your individual wealth and make your dreams of financial independence and success come true. However, it is by no means an easy process, one must first work hard studying the ins and outs of this amazing opportunity because although there is much to be gained, there is also the potential of much to be lost.
The people who excel at investments and who trade shares with confidence didn’t make their success overnight, they built towards it first. These people began by carefully determining exactly how much they could afford to invest in stocks based on a clear-minded assessment of their current finances. Nobody starts at the top, so don’t be disappointed if you don’t meet your hoped-for amount initially, you are here to accrue wealth over time, and every journey begins with a single step. This is a long, and sometimes arduous hike, not a brief and easy stroll through the park!
Here is some advice from the experts on how to give yourself an honest appraisal of just how much money you can start your investments with:
Sources of Income – Where are you getting the money you intend to use to make investments in the stock market? How much can you safely risk? One step some people overlook is enquiring if their employer offers avenues for employees to invest and gain tax credits, or who will participate by matching funds to help amplify the employee’s contributions- it doesn’t hurt to ask, and it may prove highly beneficial to your cause.
Eradicate High-Interest Debts – Before you begin putting a lot of your capital into investments it’s very important that you first make a point of paying your debts down, in particular credit cards and other accounts that are saddling you with high interest rates. The exorbitant costs of high-interest rate debts that accrue from your credit card bills are very likely to overwhelm anything you hope to initially gain trading stocks. Compare the interest you are paying to your forecasted stock investment returns to decide if you are best served by paying off your loans first, or going ahead and investing.
Emergency Fund – It’s best practice to establish a solid foundation for your finances prior to making any major investments. This doesn’t mean that your situation has to be perfect, but the better financial footing you begin with, the more money you will be able to safely put toward your trades and investments. It’s a good idea to consider setting aside an emergency fund that covers major expenses like hospital stays, rent and mortgage payments, and regular bills, then never risk it in the market so it’s always there if you need it.
Settle On A Budget – Now that you have thoroughly assessed your finances, you can make an informed and sensible decision as to how much money you can safely budget to invest in the stock market!
The stock market always holds risks, but the potential for gain is worth it as long as you only invest money you can truly afford to lose. Never enter into a vulnerable financial situation for the sake of investing, in the long run, caution always wins.