Many people ask how to get started in investing, and what the first step should be. The answer is different for everyone, and so many people are intimidated by all the options, that their plan never even gets started. Well, friends, if we don’t get started today, then before we know it, we are going to realize that time has defeated us. Read this check list of ways to get started, and take action on one this month. You can do this, and your future self will thank you.
First thing’s first: Do you own your home?
If you say no, don’t be ashamed. Currently the statistics show that 40% of the population in the U.S. are renting, which leaves 60% of people that own. Here’s the reality… if you own your home, you have automatically set up a savings account for your future, whether you know it or not. Each mortgage payment that you make is slowly reducing the amount you owe on your house total. More than likely, your house is slowly going up in value. Therefore, your house is working for you in two ways.
When you are paying rent, unfortunately you are paying someone else’s house off for them, and their house is slowly going up in value. So, you are actually helping your landlord’s future self, instead of your own.
Second: Do you have an IRA set up?
An IRA is an Individualized Retirement Account or a savings account that builds interest for the day that you are not working anymore. You might be thinking that you have a long time before you retire, but be careful because the years may easily slip right through your hands. Luckily, I had someone that made me open up an IRA, and at my middle ages now, I am so thankful. When you put money in an IRA, it will gain compound interest over the years, and make your money work for you. I recommend taking it out of your paycheck each month before you even see it. Someone once told me that the days are slow, but the years go by fast… before you know it, you will be at an age where you start to panic if you haven’t started preparing now.
Third: Do you have equity in your home?
If you answered #1 with a no, then skip to #4 (and read my next blog about buying your first house). If you own your own home, and you’ve lived in it for a couple years, then chances are that you have equity in your home.
Equity Example: You buy your house for $200,000 and 2 years later it is worth $215,000. Also, you have paid down a few payments and probably owe $150,000 now (minus your 20% down you paid upfront to purchase). Equity is the difference between $215,000 and $150,000. So you would have $75,000 in equity.
When you have equity in your home, it is possible to take out a Home Equity Line of Credit (HELOC). Banks will give you a second mortgage on your home if you have enough equity. If you want to get started in real estate investing, and don’t have the upfront capital, this is a way to get started.
Disclaimer: I really don’t advise you take out a HELOC to upgrade your personal house. Many people do it, but it doesn’t make you any money until *potentially* when you sell your house. I asterisk the word potentially, because there are instances where people get upside down in their mortgage, and it’s just not worth that chance.
Fourth: Are you interested in the stock market or real estate?
Let’s be honest, people don’t get rich because they make a huge salary; people get rich because of what they do with their salary. I, personally, am more interested in real estate. I would rather put all my savings in to a real estate deal. My husband, Jay, however is more interested in the stock market. He watches it daily, and enjoys buying and selling stocks and watching the interest compound.
Pick something to invest in, and do it diligently. It is instant gratification to buy new cars, boats or snowmobiles, but invest first… and then once you make enough money for your new item you’ve been researching, buy it then. We live in a time of having so many things… invest your money first, and buy your adult toys second.
Fifth: Do you have friends that invest?
Hanging out with people who already invest their money helps us to be influenced to do the same. If you have friends or acquaintances that manage their money well, invite them to hang out with you. Ask what they invest in, and start networking with like-minded people. Once the conversations come up, you will be surprised with the knowledge you will gain. Also, you may just find yourself someone to invest with in a bigger project.
How are you preparing for your future?
Creating opportunities for financial freedom 