So I'll be covering the three things that every investor needs to be doing before they start
investing and i don't really want to be lecturing you guys here but this is some basic information
and i think it's good for everybody but it is more catered to those that are going to be investing
more in the stock market more money if you're investing just a little bit some of this advice
isn't really that big of a deal but it still can apply to you so just hang tight and i'll explain
what's going on because if you're only investing like 100 bucks into the stock market and you lose
it all then it's really not that big of a deal it's probably not going to affect your entire life
just because it's a little bit of money but if you invest a lot of money and you're not
doing it correctly then some of this advice is probably going to be good for you because you
don't want to go into the stock market when you're doing things in a backward order okay
so the first thing that you need to do before you start investing in an individual account
is that you need to take full advantage of all the tax savings accounts that are out there
the tax sheltered accounts like roth iras 401ks at work or maybe a sep if you're self-employed you
need to take care of those first before you start investing because you might as well take care
of all the tax savings that's available to you through the government so definitely make sure you
do this first and i do realize that i'm talking about investing in two separate categories here
i'm talking about investing for your retirement with all the tax sheltered accounts that are
available to you and then i'm also talking about just an individual account that's a normal taxable
account because the difference here is long-term capital gains you can pay up to 20 in just an
individual account whereas if you're doing the tax savings sheltered accounts like a roth ira 401k
those are going to help you a lot better as far as tax savings go for your retirement in the future
and you want to max those out before you start working on your individual account so for instance
if a roth ira has a max of six thousand dollars a year then you want to max that out at six thousand
dollars and then move on to your individual account so that you're maximizing everything
that you can in terms of taxes and also if your company offers any sort of a 401k match i would
do whatever you can to take full advantage of it because it's always going to be worth your effort
because for example if your company offered a five percent match and then you also contributed five
percent then that is just instant free money that you're going to be getting that you can't even
get in the stock market because it's a hundred percent return and it's almost instant because
if you did put in let's say two hundred dollars and then they also match two hundred dollars then
that is just instant money that you're getting doubling your money and that's all because of
the 401k match because you're taking advantage of it so just make sure that you max out all of the
tax sheltered accounts that you can and then also max out your 401k match before you start investing
individually in the stock market and this is the right order that you should be going in now if
you guys do have any questions and need to talk to someone that's professional i'm just some guy on
the internet so take this advice for entertainment purposes only but seek a financial advisor if you
guys need to seek further help on this kind of stuff because it does get fairly complicated
and there is help out there for you now the next thing you need to do before you start investing
in the stock market is that you absolutely need to pay off your high interest debt first
before you start investing so if you've got credit card debt personal loans anything
with really high interest payments you need to pay those off first before you start investing
because that's the right order that you need to be doing because if you actually go back to 1926
when the s p 500 first started their returns have averaged about eight to ten percent through all
of the years through all of the ups and the downs and so if you've got a credit card that's actually
18 and you get a return of 10 in the stock market then you're still going to be losing eight percent
and so that's never going to get you ahead you have to take care of your high interest debt first
meaning your credit card at 18 so that you can actually start making money in the stock market
now if you do happen to have high interest debt at home but you've got a retirement account going on
like let's say you have a work account a 401k or even a match i do still want you to take advantage
of that kind of stuff even if you have the high interest debt it's not fully advised but i think
this is still a good idea to have that compound interest working for you for all of those years
do take care of your high interest debt as soon as you can but keep those retirement accounts going
i'm just referring if you want to do an individual account like you just want to hop on robinhood and
start investing definitely take care of that high interest at first now the last thing to do before
you start investing in the stock market is that you should only be using money that you can afford
to lose because let's say you invest five thousand dollars into the stock market and you lost it all
you don't want that to be your emergency money or some type of savings that you have
because that's money that you don't want to be losing because if you needed the money tomorrow
and you sold all of your shares you always have to wait a couple trading days just for
that money to settle and then on top of that the money still needs to settle through your
bank so a lot of the time it can take about four to six business days just to get the
money and that's assuming that the stock prices are where you actually want to be selling them
because if you bought all the shares for a hundred dollars and then the share price went down to 50
right when you needed to sell them all because there was an emergency
then you're going to have to sell them at a loss and that's something that you might not want to do
if you would have just had a regular emergency fund and you weren't investing with that money
now obviously life happens and sometimes even if you do have an emergency account you might have
to use all of that money and then sell some shares just because you don't have a choice
all i'm saying here is that you need to be prepared so if you take care of your emergency
fund and you also make sure that you have a proper savings account you want those to be as liquid
as possible and don't have those tied up in the stock market because if you need the money today
you need to be able to go to the bank and get that money and you don't want to have to wait
and sell those shares at possibly a loss which is something you really don't want to be doing
so just remember to always take advantage of all of the tax sheltered accounts that are available
to you make sure that you pay off all your high interest debt and then only put in money into the
stock market that you can afford to lose and then also make sure that your savings account
your emergency fund aren't tied up in the stock market so that you can get your money easily
now if you take care of those things first what you're doing is you're prioritizing other things
before you start investing in the stock market so that you can have better results down the road
because at the end of the day you want to make as much money as possible
and these are some tips that you can use to make sure that that happens