When to Start Investing

Many people have different views on the right time to start investing. Some people might wait until they have a good-paying job. Others maybe had parents who invested early for them. There are a few things to consider when you invest in your or your child’s future.

Do you have an emergency fund?

An emergency fund is a solid nestegg in the event that you need it. It is recommended that you fill it with at least three months worth of expenses. The amount will offer stability while investing. If you have an emergency fund, you will ideally not need to touch other long-term investments or funds.

Do you have extra money at the end of the month?

Before you say, “Yes”, consider a few things. How does your emergency fund look? Are all your bills paid? Do you have any high-interest debts? What is left over for groceries and other types of expenses? You do not need a lot left over to start investing. Starting small is the key to solid long-term investing. Consistency is more important than quantity.

Do you have access to a retirement plan?

Are you able to contribute to a 401(k) or a 403(b)? Contributing to an employer-sponsored retirement plan is a type of investment. It is also an important investment for the future. You sometimes may decide to have money taken out of your paycheck that goes directly toward your retirement plan. It is not a problem if you do not have access to an employer-sponsored plan. You can also consider getting an individual retirement account (IRA).

What are your current financial needs?

When it comes to investments, you will not necessarily only make them for yourself. Many parents start thinking early about the future security of their children. Do not hesitate when starting to include your child in money decisions. One investment possibility for your child is creating a savings account. You can open one as a custodial account. For these accounts, parents are the account custodians. A child is considered the beneficiary until age 18 or 21.