Do you have enough money to invest?

To be a financial success you must respect and understand the value of money. Additionally, you must understand that you must first be rich in your head before you can ever be rich in your pocket. Everything starts in the mind. Success is simply a materialization of creative thoughts.


You can tell if you have enough money to invest by using this simple rule of thumb; subtract the money needed to pay current bills (such as utilities, rent/mortgage, food, savings etc.) from your current income. The balance is your “disposable income”. As the name suggests this is income you would normally use at your disposal for things like entertainment. From this balance subtract amounts for emergency funds, and the remainder is what you can really afford to invest.


But before you can even consider investing you must have developed a consistent habit of saving. It is the discipline that is important now, not so much how much you are saving. If you have not done so as yet, you are just fooling yourself in believing that you are actually investing. You cannot fool money. If it is not welcome, it will not stay.



Some Factors to Consider


Your Future Income – How secure is your job? Is there any pending restructuring, downsizing or closure that might affect you? It is very important that you are aware of these changes, if any, before you make any major commitments. Failure to do so can result in a loss of your investment.
The Rate of Return on Your Investments - What is the real rate of return on your investments? After taxes and charges have been deducted would you have been better off saving on your own until you have identified the right investment? What are the major economic trends and how will they affect your investments? Please remember you invest because you want to obtain more return on your money not to lose money. So you have a responsibility to be aware of current market trends.
Present Cash flow – Do you anticipate any major expenditure? Especially at this time of the year, major expenditures generally include school fees and the commencement of loan payments. Consider these before you go investing at this time.
Non-Recurring Expenses – How is your car? How good is your roof? We may experience a very active hurricane season for this year. Unlike previous years you now have to consider this in your plans as this can result in unexpected damages to life and property. So it is very important to have adequate property and life insurance before it is too late.
Emergency Fund – What do I mean? Simple. Have a fund for both emergencies and short term money needs. The emergency fund will vary with your age, family situation, job, health, earnings, net worth, condition of car, housing etc. I recommend that your emergency fund should be at least four (4) to six (6) months salary, just in the event you lose your job, incur medical bills or have an accident.


So are you ready to invest? After you have considered all these factors, trust your gut feelings and make sure you feel good about your investment. Then go ahead and invest, but remember ­never invest one cent in anything unless you know and understand what is it you will be getting in return.



Denver Brown is a Financial Services Specialist/Executive Business Coach and the author of "The Turning Point...how the 8 best practices changed my life...". http://www.strategicpublishinggroup.com/title/TheTurningPoint.html