Before you start investing
Last updated on December 7th, 2022
What are the most important things to know and remember before you start investing? Here is a great checklist that can really help you.
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Do you know why managing my money is important to you? Before you start investing, Writing down your 'why' will help you keep going, even when things feel challenging - because sorting out your finances is not an overnight journey.
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Do you have a list of simple financial goals. It's important to know your timeframe as an investor, which can be difficult to work out until you write down your goals. Do you want this money in 5 years to buy a house, or are you aiming to retire in 20 years' time?
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Do you have all your pesky debts paid off (think BNPL, credit cards or personal loans). All the nasty high interest ones. It’s a good idea to tackle these debts before investing. Think about it: if your credit card debt is charging interest at 20% every year and the stock market is going up 10% -- it makes more sense to pay off the card first.
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Do you have an emergency fund (3-6 months of basic living expenses) stashed away in a high interest savings account. This is your 'break glass in case of emergency' money, that you don’t want to be investing. Save it for a rainy day.
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Do you have scheduled 30 minutes in you calendar to work on you finances each week. It can be overwhelming to try and tackle everything at once, so take it one step at a time.
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Before you start investing, Do you understand the following:
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The stock market won't go up every year ("volatility")
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That everyone is unique in how they think about risk ("risk profile")
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The stock market is for 5-10+ year money only ("investing timeframe")
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Stocks are risky, but over 10 years can grow well ("compound interest")
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I have listened podcasts and read papers and books about investing, and understand that investing takes time, know-how and patience.
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I have a sound knowledge of the basics of investing in ETFs.
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I have downloaded and tested at least two brokerage accounts. Some of the popular brokers are CommSec, Pearler*, Stake, SelfWealth*, Superhero, Sharesies.
