I know I told you in a last post that I'm going to teach you on how to invest; but before you do that, let's talk about the prerequisites of investing first.
1) Healthcare and Life Insurance - basically, this is for security purposes in case something happens to you. Know that this is not for you but for your family. You invested and suddenly died, your investment becomes funds for your funeral, paying off estate taxes, any existing debts, and other expenses that your family will face. If you have insurance as back up, your investment can be passed on to your family without them worrying about the high estate tax to get your investment. You get sick or hospitalized, your healthcare will come running for you to help.
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| live.regnumchristi.org/2010/08/get-back-up/ |
"Thanks healthcare and life insurance"
"No problem, bud. Just pay on time or will give you a fee if you don't."
And we know how expensive hospital bills are, especially if you live in a country where there is no free healthcare (at least the taxes aren't really high in the Philippines unlike some country with 50 States).
2) Emergency Funds - I have mentioned Emergency Funds in my previous post here and here. You probably get the idea based only on its name. If you don't, I'll give you a hint: It's for EMERGENCIES.
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| reactiongifs.com/mind-blown/ |
Mind Blown!
Save up to 3-6 months worth of your monthly salary. In case emergencies do happen, you already have the money to pay and not use your investment as collateral. It just simply avoids put and take and your investment can enjoy the power of compounding interest.
3) A Goal - if you are one of many people that'll say "I'm going to invest because my money grows" then I'll ask you this question: "Your growing money for what?"
A goal might sound obvious but there is amazingly a lot of people who invest that don't have a goal in mind. They just invest so their money can grow and think about their goals later on. The goal post is there, try and hit it.
This also helps to avoid redeeming your money from anything that you just come up on a whim that you'd like to buy.
4) Zero Debt - if you have any existing debts my advice to you is simple: DON'T INVEST, YET! Better eliminate all of your debts first because if you have debts that gain interest over time, it will be a problem for you to pay it off and you'll have no choice but to take your investment out. "What if I have debts that have no interest?" Eliminate that also. You usually get that from friends or a 0% interest promo from some company or government agency like SSS's Calamity Loan. But of course, those with interest rate should be prioritized first. And I'm going to be biblical here: Romans 13:8 Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.
5) A Saver's Mindset - probably should have put this in the number one list, but I didn't really specify that this is in the order of importance, but, you know, this is really important than the others since it's going to involve your thoughts and emotions that lurks in the inner dwellings of your mind.
3) A Goal - if you are one of many people that'll say "I'm going to invest because my money grows" then I'll ask you this question: "Your growing money for what?"
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| http://www.ytv.com/blog/mr-krabs-eyeballs |
"To grow even more money, me boy!"
A goal might sound obvious but there is amazingly a lot of people who invest that don't have a goal in mind. They just invest so their money can grow and think about their goals later on. The goal post is there, try and hit it.
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| itsagoal.net/all-products/football-goal-posts/folding-goalposts/ |
"I'm just here for decoration."
4) Zero Debt - if you have any existing debts my advice to you is simple: DON'T INVEST, YET! Better eliminate all of your debts first because if you have debts that gain interest over time, it will be a problem for you to pay it off and you'll have no choice but to take your investment out. "What if I have debts that have no interest?" Eliminate that also. You usually get that from friends or a 0% interest promo from some company or government agency like SSS's Calamity Loan. But of course, those with interest rate should be prioritized first. And I'm going to be biblical here: Romans 13:8 Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.
5) A Saver's Mindset - probably should have put this in the number one list, but I didn't really specify that this is in the order of importance, but, you know, this is really important than the others since it's going to involve your thoughts and emotions that lurks in the inner dwellings of your mind.
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| https://3dmachinations.files.wordpress.com |
The inner machinations of your mind are an enigma.
Internally, your emotions will be the one that you have to look out for, because all logic and reason disappear when that starts infecting your brain. And do not correct my choice of words. Your emotions can trigger bad habits that'll leave you emptying your pockets like shopping when your depressed as an example. Practice frugality and thriftiness. Make a point that after getting your salary, commission, royalty, or blood money you go save 20% of it.
I hope this helps! :)
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