We all want financial freedom! With the stable cash inflow from our remote work, we can slowly build our path to success. And financial freedom doesn’t just stay with our online jobs. We should have other sources of income like investing to secure our future.
But when is it too early to invest? Should you invest now, or should you wait for a later time? Here are 7 signs that you’re not ready to invest yet.
If You’re Living from Paycheck to Paycheck
Investing is a commitment. You are setting aside money to grow regardless if you work or not. But the problem is, what if you have an unstable income? And what if you can barely support your family’s needs?
Should you set aside money for the stock market or other investment opportunities? I don’t think so. Your necessities come first.
Imagine this. What if you invested and then you needed money after for your needs? Where do you get the cash? You guessed it right — from your investments!
If you start investing now, you might not reap the benefits. It’s time to build your skills and increase your earning potential. Attend seminars or learn remote working skills online. Or maybe find better opportunities first, like a stable remote working job, before investing.
When you focus on your earning skills, you can land higher-paying jobs. And you can budget investing without sacrificing too much of your necessities.
You Don’t Have a Budget
Financial freedom starts with your budgeting. Do you have a budgeting system you follow? If you don’t know where your money goes, it might not be the time to invest yet.
Fix your budgeting systems first. You can try out the 6 jars method for a less restrictive way to spend your money and build wealth while enjoying your income.
No Emergency Fund
In our life, there will be emergencies we can’t control. It can be as simple as your refrigerator suddenly dying on you. Or you might incur an unforeseen loss of jobs. You must have an emergency fund for this!
The standard is 3 to 6 months’ worth of expenses should be allocated to your emergency fund.
If you invest before setting your emergency fund, again, where will you get the money for these situations? You don’t want to spend your investments on these unforeseen circumstances.
So build your emergency first before focusing on investments.
You Don’t Have Health Insurance and HMO
There are emergencies that our emergency fund can’t cover. What if you were diagnosed with a critical illness? All your savings and investments will be for naught. And a lot of families are one accident or illness away from bankruptcy.
Before investing, you must protect your income. Invest in health insurance and HMO first before playing in the investment league.
You Have High-Interest Debt
We can surely invest even if we have debt in our portfolio like mortgages. But then, if you have high-interest-bearing debt like those from credit cards, it wouldn’t make sense to invest yet.
Even if you’re earning, let’s say 10% per annum for your investment. If your credit card debt charges you 3% per month or 36% a year, it wouldn’t matter. It’s better if you focus most of your money on paying your debt.
You Don’t Understand How to Invest
Now that you have the money and the budgeting discipline, do you start investing? Well, you can. But don’t do it if you don’t understand what you’re getting yourself into.
If you don’t have a proper trading or investing plan, you will inevitably lose money.
Think about the purpose of your investment. Is it for long-term, medium-term, or short-term? What’s your exit strategy? How much loss can you take?
Understand the financial instrument and make sure that it’s in line with your goals.
Susceptible to Get Rich Quick Schemes
Slow is fast when investing. Yes, there are investment vehicles that can bring in big amounts. But some unscrupulous individuals offer investment deals that will rip you off.
If you’re susceptible to easy money and get rich quick schemes, it might not be a good time to invest. The rule is, if it’s too good to be true, it most probably is.
So again, understand the investment vehicle before your commit to it.
With the tips above, should you stop investing and focus on earning money first? Well, it depends. If you really want to invest as early as now, you can try out low-risk investments like deposits to online banks.
It might not be as lucrative, but it can surely grow your money at a steady pace. But for now, if you have multiple cases similar to the ones above, it’s best to fix them first to prepare for better investment opportunities in the future.
Cheers to building your financial wealth!