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6 Things To Do Before You Start Investing

Do you want to build an investment? There are things you need to do before you start investing. But you need to know the difference between investing and business. Because it’s possible to misapply the two thinking they are the same.

In this post the focus is on investing. So, we are going to focus on those things to do before you start investing. It’s not directly related to things to do before you start a business, even though you can apply some of them and it will work.

I’m drawing this boundary for a reason. There may arise conflict when you are trying to decide which one is a business from what is investing. It’s better you know the difference, so that your mind will properly articulate these 6 things.

Business Versus Investing

To achieve financial success you need wealth creation tools. We have only two options of wealth creation vehicles. It’s either investment product or business, or you are using both.

That’s means investing and business are not the same thing, but the same tools. While a business aims to generate revenue from product and services, an investment aims to produce a return from financial instruments or markets.

But there’s a part of business that’s equally investing. Like, the money you put into starting or running a business is also an investment. In that sense you can consider your money in your business as investing.

However, when investing in business it’s not just about putting your money, it requires more than that. Rather, it brings you into ownership of the investment. That includes your time, energy, experience and efforts are all required plus your money.

Whereas in investing, all that maybe required is your money. While you work for a business, in investing your money works for you.

The 4 Types of Investments

Having clarified that, let me further hint on the 4 types of investing your money. I will just list them here, but will expand them in another post. These four main investment types, or asset classes, has risks and benefits.

However, these 4 assets classes are grouped into 2 distinct categories.

  1. Growth investments
  2. Defensive investments

The first two investment types belong to the growth investments. These are investments that are more suitable for long term investors. They also offer reliable investments, as they are able to withstand market ups and downs.

The two Growth investment types are:

  • Shares
  • Property

But the last two are categorized as defensive investments. These types of investments are more focused on generating consistent income. They are not Growth focused. And are considered as lower risk investments than growth investments.

The two defensive investment types are:

  • Cash investments
  • Fixed interest

Planning To Start Investing

Now that you have an insight into different investment types, it will be more clearer now to understand these 6 things to do before you start investing. However, you should consider these steps as your planning stage.

Unlike starting a business, which you can equally do even without capital, but you cannot start investing without capital. You need money to invest. And if you don’t already have it, then you need to plan for it.

Planning to start investing is as important as the investment. Because if you are going to risk your money, you should think properly before doing so. And that’s why these 6 things to do before you start investing is key to your investment success.

{1} Build An Emergency Fund

If you are going to build an emergency fund it means you are raising your investment capital from your Cashflow. There are several ways you can start building your emergency fund. But the best part is your commitment to the cause.

Building an emergency fund equally means denying yourself and family some needed cash to purchase those needed groceries or items that can improve the quality of your life. So, it’s a sacrifice that would need your commitment till the end.

You can choose what you need to save from. However, if you look properly into your cashflow you might find areas that won’t affect your normal life. That would make it a lot easier to save.

Tips to build an emergency fund

NerdWallet gave a great idea on how you can start building your emergency fund. The site listed some tips to help you do just that. You can read the full blog on NerdWallet here.

  1. Set a monthly savings goal.
  2. Keep the change.
  3. Tidy up your checking account
  4. If there’s no money left, cut expenses
  5. Get supplemental income
  6. Save your tax refund.
  7. Assess and adjust contributions.

{2} Pay Down Debt

Having a debt profile could affect your ability to start investing. So, it’s better to get rid of your debt to give you room to plan your investment. That also includes not getting into further debts of any kind.

You may need to cut your credit cards and any other facility that’s adding to your debt profile. Once you stop accumulating debt, the next thing is to start paying off already existing debts.

Tips to Pay Down Debt:

  1. Pay as much as you can afford each month
  2. Make cuts to your spending
  3. Double up on payments
  4. Use windfalls to pay down balances
  5. Tackle debts with the highest interest rates first

{3} Know Your Cash Flow

Cashflow is key to how you can ever start investing. To be able to start investing, you will need to know how much money you receive and how much is spent on a given period. Analyzing your Cashflow will give you an idea of your investment potential.

How you can start investing now depends on your Cashflow. If the money you have left after a given period is enough to make an investment, then you have a healthy Cashflow. Otherwise, you may need to learn how best to manage your Cashflow to minimize expenses and increase your closing balance.

Tips to Maintain a Healthy Cash Flow:

  1. Reevaluate and fine-tune the pricing of your products
  2. Replace old equipment and inventory
  3. Re-negotiate long-term contracts
  4. Improve your marketing
  5. Monitor your cash flow regularly
  6. Cut costs.
  7. Lease equipment instead of buying it.
  8. Closely track and collect overdue accounts
  9. Don’t extend credit without taking the proper precautions
  10. Keep your inventory lean

{4} Track Your Net-worth

Know your net worth before you start investing. You need to properly evaluate your personal assets. Your assets is what you own. That will include your house, household items, car, wristwatches, phones, laptops, iPads, anything of exchangeable value. If that thing can be exchanged for money, it qualifies as an asset.

Also, you need to consider things that re your liabilities as well. They are things you owe like your debt profile. You should also value them to come up with its financial value. If that thing takes money from you on a regulars basis, it’s called a liability.

Tips on personal net worth statement:

  1. List your assets, estimate the value of each, and add up the total.
  2. List your liabilities and add up the outstanding balances.
  3. To get your net worth you need to subtract your liabilities from your assets to determine your personal net worth.

{5} Define Goals And Priorities

You have to define what your investment goals should be and those you consider priorities as well. You should not start investing without a proper goal definition. What you want to achieve must be clear to you, that’s equally what helps you determine what type of investment or investments would help you achieve your goals faster or better.

And if you have more than one investment goal, it’s proper to try and prioritize them.

Tips for Setting Goals and Priorities:

  1. Choose the right goals carefully
  2. Write down the goals
  3. Put down a plan.
  4. Stick to your plan
  5. Regularly reassess your goals and priorities them.

{6} Understand The Basics

Don’t start investing unless you have understood the basics. As a beginner, this should guide how you invest. Until something is clear to you don’t invest your money. No matter how good an Investment looks like, understand the basics first.

If you must invest when it’s not very clear to you, do it with funds you can afford to lose. Never gamble with your main investment capital.

Tips to learning how to invest:

  1. Decide how and what you want to invest in.
  2. Open an investment account
  3. Set a budget for your investment
  4. And Start investing.

Conclusion

Every entrepreneur must think of investments beyond their business. Plan your investment from day one of starting your business. It’s okay to work for your money, but it’s better when your money is working for you.

The idea of multiple streams of income should not be to start many businesses but to have many investment portfolios. That’s the best way to duplicate yourself and still be yourself and enjoy your life.

If you must start a business it’s okay, but I recommend that you start investing. You can start multiple investment in one year but starting multiple businesses may take you a lifetime to achieve.

Having multiple businesses maybe a dream come true but having multiple investment is the fastest way to grow wealth.

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3 Tips To Plan Better New Year Resolutions

Do you believe in starting a new year strong? Do you know that how you begin a new year can impact on the overall outcome for you? Well, have you considered having new year resolutions?

Many people don’t know that the year doesn’t have any plan for them.They are hoping for what the year can bring, but they don’t know it comes as like a blank Cheque, as new as the year.

So, what are you going to do to make this new year the kind of year you want to see? Yes, you have the power to decide how the year will be for you. But you can’t do that without planning.

I know many people make new year resolutions. That’s fine but not good enough. Have you seen any successful business built on a wishful decision?

I don’t think so. You need to have a solid business plan to determine the outcome of the business. You too can start your new year like a business with a better idea. And don’t think that it doesn’t matter.

Believe me, it does. Any success that is not built on a solid plan would eventually fail, including your life.

Understandin New Year Resolutions

Wikipedia define New Year is the time or day at which a new calendar year begins and the calendar’s year count increments by one.

Now, I’m welcoming you to this new year. If you follow my counsel in this article, you will be much prepared for the year. You need to understand what a new year represents.

It’s like a newborn. And if you treat it like that, you stand a better chance of having a prosperous year than someone who didn’t.

If you have observed the relationship between a grandmother and her grandchildren, you will understand what starting afresh can invoke in a person. In a new year, you can see all your past mistakes.

And you have a renewed hope to get it right this time. It’s like when all your sins have been forgiven. And you have learnt your lesson. You just want to do the right things going forward.

However, you might know your mistakes and still repeat those mistake again in a new year. But not identifying those mistakes increases your chances of repeating them again.

That means, by knowing those mistakes you have identified the things that won’t help you succeed in the new year.

How it Works

Inasmuch as the past year has mistakes, life has a way of giving you a clean sheet to write a new chapter of your life. Even though that won’t just erase the past but it helps you to create a present that makes up for the past.

And since you cannot change the past, create a future that won’t remember the past.

And one thing you must know about mistakes of the past is that it directly or indirectly have something to do with other people. Yes, because we live in a world that is largely dependent on others. Everything you do in this life will impact on someone else, whether good or bad.

If you know that’s how things work, it shows you the major areas where you can change your year to be your dream Year. Even if you think it’s just about you, it will also help you become a better version of yourself to others around you.

It doesn’t really matter so much how we see it, any change you make in your life will benefit others you don’t even know.

Understand How You Work

That brings me to the most important point in this new year epistle. You need to understand how you work. I don’t mean the work you do in the office but the actions of yourself. The things you do are what defines you more than what you think of yourself.

I know everyone has their personal opinion of who they think they are like. That’s okay but that doesn’t describe you if it’s just an opinion. If you want to know who you really are, the Bible gave us an idea. The things that occupies your mind the most are what defines who you really are.

But some people still don’t understand themselves from that perceptive. They think it’s just their thought.

The best way to be sure about your person is to identify those things that you spend the most money on. Yes, those are the things that define who you are or what’s most important in your life.

Where is Your Treasure?

The theory of where your treasure is there is where your heart is also have been proven to be true for all time. Everyone spend their treasure on the things they value the most.

If you have been in love with a girl before, you will understand this theory better. You just want to please her in everything.

The same principle applies in starting successfully. The things you spent the most part of your income defines what you did in the past year. And if you want to change what you will do in the new year, just change what you will be spending more money on.

It should show how you are going to spend your money in the new year and what you will spend those money on. Most importantly, how much you are willing to spend to get the exact kind of result you seek.

Action Points for The New Year

When you understand this secret of planning, you will always have a better year every new year.

The years wouldn’t be like mystery any more. You can know how each year will start and how it will end for you successfully.

The most relevant point I want to make here is that you are in control. The year has nothing to offer but what you demand of it. You are the one to create the kind of year that you want.

And it shouldn’t stop at new year resolutions. Put some definite action plan to it.

Tip #1: Start with a Plan for The Year

If you normally keep your new Year resolutions on your mind, you won’t probably remember it after sometime. That also accounts for the reason many people jettison their new year resolutions few months after the new year celebration.

But your plan is there to help you stay on course with achievable timelines.

Making new year resolutions and keeping it till the end should be a task and not just a memory. The right thing to do it to make it into a year plan.

What are the things you have resolved to do this year, put them together into a workable plan. I would rather advise that you adopt the business plan approach.

Until it’s a plan you may not actualise the new year resolution. You must also remember that as the year progresses, a lot of things will be coming your way. Most of it you didn’t anticipate at all.

And in the process, you may begin to change your vision for the year. It might even be problems that comes up and you know what could happen in such a situation.

Tip #2: Have Definite Lines of Action

And when I suggested it to be a plan, I don’t mean just a written document. Anyone can write down what they want to do but not remember after some days.

Make your idea into a dream project. And it doesn’t have to be a bogus document that you won’t be able to read in any jiffy.

It’s your plan. You don’t require it for a bank loan. So make it what you will easily scan through.

In fact, make it as simple to read as possible. If it’s not a plan you can read in less than 30 minutes, delete and write a new one.

I like to write my plan with the following contents, what I want to do in the new year, how I want to do them and the kind of results I want to get from it. Also, in how I want to do them I factor in the cost.

I always want to cost my plan of action. That way I can help my vision to comprehend the actualisation. If the cost is way too much for the result, it can also mean the strategy might be faulty.

So, I look for a new plan.

Tip #3: Define Results Before You Act on Plans

I don’t subscribe to any plan that you can’t see the result even before you acted it. Think of it this way, the only thing that drives you to action is the expectation.

If there is no expectation, nobody will do anything in this world. We all would have loved to remain in the garden of Eden and eating fruits all day.

And don’t be afraid to attach financial terms to your results. Be good with and comfortable with big figures. Nobody is going to arrest you for having a big dream or even for not achieving it.

So don’t stop yourself either. Go for the gold like they say in the olympics, even if you didn’t get it at the end. But don’t limit your chances just because you think it’s too good for you. Nothing is too good for you.

You should only take action on a plan you can see the result. Of what use is labour without wages? Nobody will go to work for one more day if salaries were to be removed.

You shouldn’t waste your time as well if there will be nothing to show for it.

Conclusion

The new year will keep coming as along as we have dates and time. So, the earlier you know to plan for them the better for you. Maybe you don’t know, your life would have been a lot better, easier, happier and more successful if you have been planning your year for the last ten years.

Why do you think companies are more successful that most people’s lives? It’s because companies are built on planning. But most people’s life don’t have any plan. And what better time to plan and replan your life than in a new year.

If you want to see your best life, start with new year resolutions plan. Life is not a mystery. Anything that’s not planned for will not succeed.

Do you know it took God over 4,000 years to provide salvation? Imagine God working on a plan of salvation for mankind for over 4,000 years. If God needs to work with a plan, your probably need it the most.

P.S: Comment below with your thoughts about new Year Resolutions. I will be happy to reply to your suggestion, views or question. 

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