When investing, you need to come prepared.
To get a tip-top investment portfolio, you first need to sort out your investment objectives. Start by asking some questions that don't have anything to do with investing such as:
"Apart from my mortgage, what debt have I got?"
If you do have some debt, remember:
- chances are, you won't earn more from investing than you'll have to pay in interest charges from things like credit cards or a personal loan
- annual interest rates for credit cards and loans are frequently around 15%
- if you have any debt on store cards then you can reckon on rates of around 20%.
It is a good idea to pay off these sorts of debts first
"Do I have any rainy-day savings to fall back on?"
If your answer's no then remember:
- it's important to have rainy-day savings you can get at easily, before you begin to tie any money up in a long-term investment
- if you've got folk depending on you or you're worried about keeping your job, then you'll need to build up some rainy-day savings first.
As a general rule of thumb you should reckon on having enough cash to live on for approximately three months. You could try putting it in a high interest savings account or a mini cash ISA. Think about how much you would feel comfortably putting in an emergency fund.
So now you've asked yourself some tough questions. If you're still keen to invest you need to sort out what type of investor you are going to be.
You can uncover your true investor identity by reading throught the rest of the articles in this section.
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