If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.
by Christy Bieber | Updated July 21, 2021 - First published on Feb. 25, 2019
Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.
Investing is part of adulting. If you want your money to grow -- or at least not lose value because of inflation -- you need to invest by buying assets that will provide a reasonable return. For most people, investing is done in the stock market, although you could also invest in other assets such as real estate.
Since most people know the importance of investing, you may be eager to get started. But, not everyone is actually ready to put their money in a brokerage account so it can work for them. In fact, these four signs could suggest you aren't yet ready to invest.
Do you have payday loans or a car title loan? If you do, both of these types of debt typically charge annual interest topping 300%. You cannot afford to invest until this debt has been repaid in full because the interest you pay far exceeds any gains you could earn on an investment.
If you have high interest credit card debt, it may also be worth paying that off before you begin investing. After all, you're not likely to earn a 15% or 20% return on money you invest, but these rates are common for credit card debt.
If you find you owe a lot of money at high interest rates, it can be frustrating that paying down debt forces you to put your investment plans on pause. Make a plan to pay back this debt as soon as possible so you can divert your spare cash to assets that will help you build a more secure future.
Find the best stock broker for you among these top picks. Whether you're looking for a special sign-up offer, outstanding customer support, $0 commissions, intuitive mobile apps, or more, you'll find a stock broker to fit your trading needs.
Do you find yourself running out of money before your next paycheck comes? Do you have no cash in the bank you can access in case of an emergency?
If so, you need to solve both of these problems before you can start investing. If you have no spare cash, you obviously can't invest because you'll have no money to buy assets. And, if you don't have an emergency fund, investing doesn't make sense because an emergency could force you to go into debt or take money out of the stock market at an inopportune time.
To stop living paycheck to paycheck and find spare cash to buy assets, try to live on a budget that reduces your spending and allocates cash to investing. Or, consider a side gig to increase your income.
As far as an emergency fund goes, ideally you'll build a fund over time that covers three to six months of living expenses. But, it could take too long to start investing if you try to do this first. Instead, opt to save a little bit, like $1,000 or $2,000 for emergencies, before you begin investing. Put this money into an account you can access easily.
Once that's done, divide your spare funds so some goes to building a bigger emergency fund and the rest is invested. If you have $100 in spare cash, put $50 of it into building your full emergency fund and $50 into your investment account. That way, you can both invest for the future and build your cushion for short-term emergencies.
There's a lot of bad investment advice out there -- and following it could lead to disaster. Before you start investing, you need to know there's no easy solution to double or triple your money. If you try to chase get-rich-quick schemes or have unreasonable expectations, losing your money is the most likely outcome.
Instead, you need to commit to making responsible choices aimed at earning reasonable returns. If you can do that -- and are confident you can say no to investment schemes that sound too good to be true -- you're ready to begin looking for assets that will grow your wealth.
Once you’ve chosen one of our top-rated brokers, you need to make sure you’re buying the right stocks. We think there’s no better place to start than with Stock Advisor, the flagship stock-picking service of our company, The Motley Fool. You’ll get two new stock picks every month, plus 10 starter stocks and best buys now. Over the past 17 years, Stock Advisor’s average stock pick has seen a 632% return — more than 4x that of the S&P 500! (as of 1/05/2022). Learn more and get started today with a special new member discount.
Investing can be complicated. You don't need to know everything about investing before starting to buy assets aimed at producing returns -- but you need to know enough to understand where to put your money.
You should understand how stocks work, how to buy them, and why you need to diversify your investments so if one investment performs poorly, another will likely do better. You should also understand the costs you'll pay for different assets so you can compare fees and expenses when you make your investments.
The good news is, there's lots of advice out there for beginning investors so you can learn some of the fundamentals before you get started.
If you're not ready to start investing yet, don't lose heart. You can take steps to pay off your debt, start living on a budget, and learn about investing responsibly. If you get started today, you should be ready to invest in no time.
Over the long term, there's been no better way to grow your wealth than investing in the stock market. But using the wrong broker could make a big dent in your investing returns. Our experts have ranked and reviewed the top online stock brokers - simply click here to see the results and learn how to take advantage of the free trades and cash bonuses that our top-rated brokers are offering.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2022 The Ascent. All rights reserved.