Learn how to grow your money through investing. Investing is one of the best ways to achieve financial freedom but there are required skills and knowledge to succeed. Aside from your knowledge and skills, you also have to “take risk”, do not be afraid to risk because you can manage risk, minimize it by equipping yourself a skills and knowledge. As the old saying goes, in investing you should know what you are doing to avoid loss of capital investment.
Before Investing Money
Before you invest money, make sure you have prepared the following important things. Make sure you have paid all your debts or liabilities. Make sure before you invest you have your cash reserve or the emergency funds needed to help you in case there is an emergency so that you will never pull out your investment.
The ideal amount of emergency funds should at least 3 to 6 months of your income. So, if your income is $2,500 per month. You should have $15,000 emergency funds good for 6 months.
You should also have to buy a life insurance. A life insurance is for protection. You need life insurance just in case something bad happened to you. Life insurance can help your family to recover from financial losses in case you died.
The ideal life insurance coverage should at least 3 years of your total annual income. If your annual income is $60,000, you should buy a life insurance that has a face amount of $18,000 good for 3 years to help your family to recover from financial losses. Ryan Kavanaugh
After you have paid your debts, have emergency funds and bought insurance, it’s time to know your risk appetite.
Know Your Risk Appetite
It always depends on your age, of course if you’re still young, you can take high risk and for mid 40s to 50’s you have to take medium risk and for 50s and above, they should only take low risk investments.