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8 Great Investment Practices That Will Make, Brake, or Break You

The basis needed for investing is something anyone can attain by investing some time and effort. Here are eight things that you definitely should do before considering investing in anything beyond your savings or a retirement plan. Investing advice from Investment Club 360, where we learn our stuff.

1. Your Net Worth Should Become the Primary Personal Finance Number You Care About

First of all, what exactly is “net worth”? Net worth, simply put, means the total value of everything you own: your home, your car, all valuables that can easily be resold, the balances of your checking account, accounts, and any investments you may have. From that total subtract the total of any and all debts you have: mortgage, credit cards, student loans, and so forth. The result is your net worth.

More than anything, your financial focus should be on this number and how to make it bigger. There are several ways to make this bigger: paying off your debts, not spending money on stupid or wasteful things, increasing your income, and investing.
The best way to sum up this modification is that focusing on your checking account is a short-term perspective, while focusing on your net worth is a long-term view. If you don’t have a long-term perspective on things, you probably shouldn’t be investing, and if checking account balance turns out to be more important and compelling than your net worth, then you don’t have a good long-term perspective yet.

2. Eliminate Most of Your Poorest Personal Spending Practices

When we look at our finances each month, we tend to look at it as a pile of revenue from which we have expenses that we deduct from that income. What’s left is a smaller pile which I call“the gap”–the difference between one’s income and one’s spending. That “gap” is the money that you can use to invest. Naturally, you want that “gap” to become bigger so that you have more to invest, which means you’ll be able to reach your goals sooner than before!

When it comes down to it, there are actually two ways to successfully increase your “gap.” You can spend less or make more. One could write endlessly about methods of earning more money–getting a better job, getting a raise, starting a business. But, I’m going to concentrate on the spending segment of the equation, because that is where you can take action on right now and see almost immediate results.

The thing is, most people get a bad taste in their mouth when they consider cutting their spending. Yet, they shouldn’t. The reason that people get this negative reaction is they firstly think of the spending they care the most about and don’t want to cut it.
What you should be curbing are the forgettable things, the purchases you won’t remember tomorrow, those things that are just bought and quickly forgotten. Watch for those things. When you see yourself about to spend money thoughtlessly on something that doesn’t matter much, stop yourself. Don’t spend that money. Focus on stopping whatever routine that brought you to the point of making that unnecessary purchase.

3. Pay Off Your Credit Cards and High-Interest Debts

If you have high-interest debts, there is nothing better you can be doing with your money than to pay down that debt. There are no investments offering anything that approaches a long-term stable return that tops what you’ll save by paying off your credit cards and installment debt.

Paying off your credit card will also, have an immediate positive effect on your net worth, and it will make your net worth start climbing, because it isn’t being held back by all those interest payments and finance charges.

If you still have high-interest debts, you should be paying those down as your highest priority. Not only will this offer you a better return than any investment, but it will rapidly improve your net worth, and will improve your monthly cash flow.

4. Develop a Healthy Relationship with Your Wants and Desires

Desire control is one of the most powerful tools an investor can have in their toolbox. One of the very distinct ways that you can see whether you have it or not is when you’re considering a purchase you desire. Do you have the willpower needed to avoid giving in to every want and desire? If so, you’ll not only find it easier to have the resources needed to invest, but you’ll find it simpler to have the self-control required to tolerate the ups and downs of the market.

5. Establish a Cash Emergency Fund

I always encourage anyone who is investing to have a healthy cash emergency fund stashed away in a savings account somewhere, solely to guarantee that life’s predicaments don’t upset your bigger financial plans.

Set up a savings account with a bank, and then set up weekly automatic transfers from your primary checking into your savings account for some amount that won’t kill your budget but will build up reasonably fast.

Let your cash build over time. Then, when you need money for an emergency, transfer the money back into your checking account. I suggest you never turn off the transfer; if you find the balance is getting too high for your tastes, take some of the money out of the account and invest it.

6. Determine Your Larger Life Goals

A fundamental principle of investing is never to invest without a purpose. There are many reasons for that, but the big one is that without a specific purpose in mind, you can’t accurately evaluate your timeframe for investing and how much risk you’re willing to take on. Both are vital questions when it comes to investing.

This thinking should start with your own personal goals. Why you’re investing? What are you planning to do with the money? Maybe you’re investing to buy or build a house soon. In which case, investing in stocks probably isn’t the best idea, since you’ll need the money reasonably soon.

7. Develop a Healthy Understanding of Your Investment Options

Another vital step before you invest is knowing the different investment options that are available to you and how to decipher them. Know the basics of what stocks and bonds and mutual funds and ETFs and index funds and precious metals and real estate are. You should, also, know how to compare two similar investments to each other. Know these skills before you begin to invest.

Even if you plan to have an investment advisor handle your investing, you should still take the time to understand the things that your money is going to be invested in. I strongly recommend getting a book on investing and giving it a full read-through before making any investment moves at all. It’s usually a bad move to simply trust someone else to handle it.

8. Find a Bank That Easily Handles Online Banking and Automatic Transfers

Before you begin investing, your bank should be equipped to do online banking easily, and to system for automatic transfers, both, to and from the bank easily. If your bank doesn’t offer these services, look for another bank.

Today most banks offer these things. Online banking is practically a standard today, as are automatic transfers to and from checking accounts.

These features are important. Because, you’re going to need to make automatic transfers if you plan to set up a regular investing plan. You want to be able to check the account regularly to make sure money is being transferred out of your accounts.

Get the step by step help by joining an Investment club that specializes in your area of interest. For us, Dallas, Texas has the best returns on your investment dollar, and we know the place. Join us today.