So you want to invest your money to make more money? But you don’t even know where to start. The first thing to consider is why you want to invest. In other words what are your short term and long term financial goals? Do you want to retire early, buy a house, car, or build a small business?

Take some time and write out your goals for the future and separate the long term goals from the short term goals then put them in order of importance with the most important at the top of the list. It is paramount that you actually put effort into this step before you move ahead. Many people invest money in stocks with the hope that they will make money and that is about as far as they go. They don’t consider what they will use the money for and what might happen if the lose there money in the stock market.

Next, you need to ask yourself if investing is right for you at this point in your life. Ask yourself if you’re ready to potentially lose money in the process of investing and are you able to survive a couple of months in the case that you loose your job or are confronted with other unplanned expenses. You need to have about six months worth of living expenses as an emergency reserve in a high-yielding mutual fund in case something happens. It might sound like a lot but it only takes one event in your life to change all of your future plans. Take into consideration this story about this man named Warren.

Warren owned a home and an investment property. He seemed to be financially secure until he had lost his job due to Corporate Americas downsizing. Long story short he was in big trouble. Warren was not able to borrow money from a wealthy family member and didn’t have enough equity in his house to borrow. He was stuck selling his investment property and lost about 300% appreciation on the property over the last two decades. This put his financial goals back several years.

The next step in preparing yourself to invest is to evaluate any existing debit that you have. The average amount of credit card debit for families with more than one card is $8,000! Any credit card debit needs to be paid off as soon as possible. Consider this scenario:

If you owe $100 in credit card debit and you have to pay 15% interest on the card then paying the outstanding balance off is like putting your money in an investment that has a tax free annual return of 15%! That’s because if you pay it off before you are charged next months interest it’s like saving $15. If you had a debit of $8000 then paying it off would be like making (or not having to pay an added) $1200!

So paying off any credit card debit and controlling it should be on your priority. People should not buy large ticket items like new cars on credit. If you’re in debit you shouldn’t buy much of anything on credit unless you needed it to survive.

Next Issue of money matters I will discuss Mitigating your mortgage and establishing your financial goals. Stay tuned and you too will have your money working for you!