While most people prepare their balance sheets and income and expense tables, if you don’t know how much money you have, you can’t even think about investing. Without a proper financial planning process, your money is bound to go down the drain. But what many people don’t understand is how to develop one that works. Everyone out there is in a different financial position. So, the process of planning your financial goals and needs should be done around this position: Most people today make one decision or another. Some go their own way and some go wrong.
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What should you do before you start investing?
Investing your money is a part of the financial planning process. However, the process does not begin with it. It is not that difficult to prepare a base to start your investments. With time and effort, everyone will get it. Here are some things you should know before making your first investment plan.
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Get Advice
If you are not sure how to get started, then get advice from an industry expert. A financial advisor is just the person you need if you want to guide your financial plans towards your goal. The financial advisor will guide you through the entire process of planning your investments, starting from identifying your financial goals, to the final goal of that investment plan. If you do not have good knowledge, do not enter into complicated financial markets like binary markets.
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Outlining a Family Budget
This is the first step because the family budget determines how much you have left, which in turn determines whether you can start investing. To prepare this budget, you will first need to write a plan on a piece of paper, which includes your sources of income, which could be a salary, rental income, interest, dividends, etc.
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How to Get Rid of Any Debt
The sooner you get rid of your outstanding debts, the faster you will make more money by starting your investments. Let's say you earn about 10 percent per year from your investment portfolio. However, you will get nothing if you spend that same 10 percent to get rid of your debts.
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Have an Emergency Cash Fund
Life doesn’t always go the way we want it to. This is true for all our financial plans and dreams. Even if you have a good financial plan ready, it can fall apart due to various reasons and unavoidable circumstances.
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Understanding Bigger Goals
The key to a good investment plan is to never invest without an end goal. Now there are tons of reasons why you should do this. But the biggest one of all is that you don't know how long your investment periods should be. Not to mention, you don't even know how much risk you should take.
Article published on March 5, 2021 - 12pm
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