Things you could do right now to start investing
You want to start investing but you cannot find time for analysis and education about investing. If you want to start with investing you should certainly find some time, but in the mean time, here is what you could do right now.
1. Eliminate your debt
If you have several credit cards, than you should pay out the one with the greatest rate. For example, let's say that you have three credit cards: the Credit card A with $1000 of debt and 15% rate, the Credit card B with $3000 of debt and 16% rate and the Credit card C with $200 of debt and 18% rate. You should payout the debt on the Credit card C first, and then start paying out debt on the Credit card B.
There is another hint that is general in life: Simplify. That means that you should tend to eliminate number of credit cards in the game. The reason is that you cannot maintain a long list of credit cards. If you have ten credit cards, than there is 10 different debts, 10 different rates and each factor that could be specific is multiplied by 10. Therefore to track what is going on with your credit cards you should check at least 30 and more parameters. It takes time to find all necessary data. Also, if something is too complicated that would lead you not to do it. And not tracking your credit cards is very dangerous.
Does it mean that you should not have any credit card? Yes, almost any credit card generates some expenses even if you don't have any debt on it. It is much better to have cash instead of debt. On the other hand, life is full of unexpected events, so some kind of cushion in the case of emergency is certainly necessary. So what should you do? Eliminate all your credit cards and take one with the smallest rate and smallest yearly fee. And don't use it.
2. Quit with smoking and junk food
What does smoking have in common with investing? First of all smoking costs you. You can calculate how much money do you smoke each year relatively easy. Determine how many packs do you smoke each month, multiply that with 12 and with the price of a single pack. And that is not all. If you smoke there is a greater probability that you contract some kind of disease in life, and any disease, even not so dangerous will pull money out of your pockets in the form of medications and in the form of smaller income. And there is more. If you want to buy some insurance, smokers usually pay more for it.
What does junk food have in common with investing? More than you think. Junk food is almost as dangerous as smoking. Eating a lot of junk food leads to poor health and the same problem with money as smoking.
Use your favorite spreadsheet program and start tracking your expenses. Keep it simple in order to be able to do it regularly. Amount, date, and category is enough for the start. The category is your classification of expenses. For example, gas, tires, broken windshield you could put in the car category. One category could be junk food, or eating out or something like that. For some time don't do anything, just track expenses. After several month you will notice if you need some more categories or to tune your system up. Anyway after several month you could begin with analysis of tracked expenses, i.e. to sum them using your categories. Then you could act on it. For example you could change your car as it might be cheaper than to use existing one.
4. Find a blue chips that allows drip investing
What is he talking about? First of all, blue chips are very large and stable companies. Drip investing is a kind of investing where one could invest a small amount of money regularly. For example you could invest in Coca Cola as low as $10 per month. Ten bucks per month is certainly feasible for anyone. You don't like Coca Cola? Try Pepsi! Or try Google with "drip stock list".
1. Eliminate your debt
Eliminating debt is not a classic example of investing. But I think that should look on paying credit card debts as a kind of investment. The reason for that is the fact that average credit rates is 14% annually. You will have to try really hard to beat 14%, and not to mention that it can be much higher, up to 20 or more percent. Keep in mind that average return rate on US stock market is about 10.5%. Therefore, if you have $100 in your pocket, and you don't need that money too much, go right now and payout your debt even if it is a small part.
If you have several credit cards, than you should pay out the one with the greatest rate. For example, let's say that you have three credit cards: the Credit card A with $1000 of debt and 15% rate, the Credit card B with $3000 of debt and 16% rate and the Credit card C with $200 of debt and 18% rate. You should payout the debt on the Credit card C first, and then start paying out debt on the Credit card B.
There is another hint that is general in life: Simplify. That means that you should tend to eliminate number of credit cards in the game. The reason is that you cannot maintain a long list of credit cards. If you have ten credit cards, than there is 10 different debts, 10 different rates and each factor that could be specific is multiplied by 10. Therefore to track what is going on with your credit cards you should check at least 30 and more parameters. It takes time to find all necessary data. Also, if something is too complicated that would lead you not to do it. And not tracking your credit cards is very dangerous.
Does it mean that you should not have any credit card? Yes, almost any credit card generates some expenses even if you don't have any debt on it. It is much better to have cash instead of debt. On the other hand, life is full of unexpected events, so some kind of cushion in the case of emergency is certainly necessary. So what should you do? Eliminate all your credit cards and take one with the smallest rate and smallest yearly fee. And don't use it.
2. Quit with smoking and junk food
What does smoking have in common with investing? First of all smoking costs you. You can calculate how much money do you smoke each year relatively easy. Determine how many packs do you smoke each month, multiply that with 12 and with the price of a single pack. And that is not all. If you smoke there is a greater probability that you contract some kind of disease in life, and any disease, even not so dangerous will pull money out of your pockets in the form of medications and in the form of smaller income. And there is more. If you want to buy some insurance, smokers usually pay more for it.
What does junk food have in common with investing? More than you think. Junk food is almost as dangerous as smoking. Eating a lot of junk food leads to poor health and the same problem with money as smoking.
Use your favorite spreadsheet program and start tracking your expenses. Keep it simple in order to be able to do it regularly. Amount, date, and category is enough for the start. The category is your classification of expenses. For example, gas, tires, broken windshield you could put in the car category. One category could be junk food, or eating out or something like that. For some time don't do anything, just track expenses. After several month you will notice if you need some more categories or to tune your system up. Anyway after several month you could begin with analysis of tracked expenses, i.e. to sum them using your categories. Then you could act on it. For example you could change your car as it might be cheaper than to use existing one.
4. Find a blue chips that allows drip investing
What is he talking about? First of all, blue chips are very large and stable companies. Drip investing is a kind of investing where one could invest a small amount of money regularly. For example you could invest in Coca Cola as low as $10 per month. Ten bucks per month is certainly feasible for anyone. You don't like Coca Cola? Try Pepsi! Or try Google with "drip stock list".
Labels: investment plan
posted by Zoran Maksimovic at
6:55 AM
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