This article describes what individuals need to do before they can venture into the field of savings and investments. These are two deeply related concepts and the manner in which a person handles one always affects the other. The guides are flexible enough to fit people of all economies across the world, no matter their professions.
Savings and investments are two features that everyone must have in their life in modern times. Their main aim is to provide financial security in the present and future. The task of saving has become increasingly easier nowadays due to the availability of the Internet. Individuals no longer have to rely on physical bank savings accounts alone, because they can undertake the same activity on online savings accounts. However, before a person embarks on the task, they need to consider a number of factors. First, do they have debts and do they have a plan of becoming debt-free? Savings are only beneficial if a person is fully solvent or on the way to becoming so. Second, they need to ensure that they protect their finance in the event that they cannot work for an extended period, due to illness or injury. Sickness pay needs to last long enough to avoid eating into savings. Third, one needs to ensure that their savings plan takes into account retirement so that when their employment pay runs out, they will still have another source. Only after all these factors are in place, can a person embark on a savings plan that will serve as the base for investment. As mentioned earlier, there are many options for saving on the Internet, such as the e-Savings account among others. The general rule is to have at least three months' salary on savings before initiating an investment.
After that a person has amassed a reasonable amount of savings, the following rules can guide their foray into investments. First, they need to decide on what financial goals they want to achieve. Then, they need to determine the timeframe in which they want to achieve these financial goals. This is important because it will give them the rate of return that they should expect from their investments. Third, they need to gauge the level of risk that they can expose themselves to. This will determine how much loss they can tolerate. Fourth, one should be realistic and come up with the amount that they can channel from their savings into their investments. Final word Lastly, one should seek financial advice from a professional in the field of the chosen investment. This last step ensures that the process listed above fits one’s exact financial health.