Because of this, it’s best to be in a strong position to invest from the get go. You can identify your own financial wellness with a few markers, some of which can be seen down below. However, be sure to consult an actual investment advisor if you’d like to be really sure about your future investment decisions!
How Much Money Do You Have to Spare?
Investing should never be done when you’re close to your last dollar. If you need the money in the very near future, don’t tie it up in assets that might take years to mature! You need to think about how much disposable income you’ve got to play with, and how much you can diversify to ensure you’re never missing out on too much money while your wealth builds back up.
So, how much money do you really have spare right now? Make sure you’re comfortable living within your budget before you do anything else. You may also wish to put some money away in an emergency fund, so you can be sure that cash will be there if something unexpected and expensive happens.
How Well Do You Handle Tax Season?
Do you find filing your taxes incredibly stressful? Maybe you’ve made a few mistakes in the past and it took quite a bit of effort to rectify your returns? You pay your taxes, of course, but the admin surrounding the process has always gotten you a bit confused.
If those problems sound familiar, don’t muddy the waters too much for yourself yet. Finding firm ground on this issue is the thing to do before you think about investing. After all, you might get hit with an LT11 notice and end up with a lot to lose, especially if you’ve decided property is the best investment for your portfolio.
Anxiety around your taxes should never stop you doing anything, but make sure this doesn’t turn into a long term issue that ruins your investing experience.
How Soon Do You Need a Return?
Most investments take over 5 years to make a good return. If you pull out before this time, you’re much more likely to lose money. You need to be able to put money onto the stock market or crypto exchange for at least 12 months, but preferably you should be as close to this 5 year mark as possible.
You may even want to think about leaving your investment be for closer to a decade; trends show that the longer the money has to build and the market has to fluctuate, the higher your healthy return chances.
Being in a position to invest takes time. Don’t rush this decision!