Is Now the Time to Ask When, Where and How I should Invest My Money?

by Justin Weinger on September 13, 2012

There is no doubt about it.  This economy is the worst that we have witnessed in many generations, but it appears that the worst may be behind us.  For those of us that have been lucky enough to maintain jobs during the past five years, the issues become more about planning for the future and building true financial security over time.  Is now the time to invest my money in the market or to take the leap by starting my own business?

For those of you familiar with this website, you have found a multitude of ways to make money on the Internet and elsewhere or to save money by reducing your cost of living.  If you have been following our advice, at some point you will accumulate a little extra spending money and wonder what to do next.  The prudent advice from traditional money managers is to ask the following three questions:

1)    What is my personal situation?  Yes, it starts with you.  You need to understand where you are financially at the moment before embarking on some new strategy.  Do you have any outstanding credit card balances?  Interest rates may be as high as 30% or more, depending on your personal payment history, on those balances, and it is difficult to believe that you could earn at a higher rate than these.  Pay your balances down first.  Second, do you have an emergency fund?  We are talking about liquid cash here, not unused credit lines.  Three to six months of net monthly income is the recommended amount.  The idea here is to prevent you having to sell an investment at the wrong time due to an emergency.

2)    What is my risk tolerance level?  Most people fumble around searching for an answer to this specific question because the nature of it says something about us personally.  Do we want to be strong and aggressive?  Is it about our ego, or is conservatism called for?  It really depends on your internal wiring.  We are all different, and we are all not cut out to be day traders or long-term value investors either.  It is said that if you lose sleep over your investments, then their risk profile is too high.  You do not have to be a genius stock picker, but you do have to understand your probability for loss, no matter if you are short or long-term oriented.  If you do not feel up to the challenge of managing your own portfolio, then delegate that duty to worthy professionals and review their progress over time;

3)    Where should I invest?  Once again, professionals can help here, too.  What if you want to start your own business?  The best time to start a new venture is at the low point of the business cycle so that you can “catch the wave” as it rises.  Planning and preparation are keys in this area.  Any type of selling proposition will involve marketing, logistics, and payment processing.  Experts can assist in each area to ensure adequate distribution channels and low credit card processing fees, but investing in the market is a different proposition.  The keys to success in investing are knowledge, experience, and controlling one’s emotions.  There are ample courses and tutorials available to address education, and practice trading and investing will produce experience.  During these practice sessions, you will also be able to evaluate your ability to deal with risk and block your emotions from interfering with your decision-making process.

Investing is not “gambling”.  Get educated first, and enjoy the process.  Good Luck!

This has been an article by Tom Cleveland from

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