​Four things everyone should do before investing Now people t | Retire at 40

​Four things everyone should do before investing

Now people talk about investments absolutely everywhere. Advertising brokers from each box. People all around have + 100% profitability. Everything is cool while the market is growing. But people don't even know what they are buying. But every second person is puzzled by the question: "How does a stock differ from a bond?"

I think before starting investing, four fundamental questions need to be resolved: closing debts, improving financial literacy, starting to maintain a budget and accumulating a financial safety cushion.

First of all - to close debts

It's hard to give up the "credit lifestyle", but it's a road to nowhere. It is necessary to throw all the forces and resources to repay them.

"If you combine ignorance and credit, you will get very interesting results." - Warren Buffett (c)

I have never taken loans and do not intend to. I just know how to count and know perfectly well that I will lose money. At the same time buying some nonsense.

A mortgage is the only type of loan that can be considered, but at certain stages of the economy and interest rates. This is an unlikely scenario though.

Improving financial literacy

You need to know the basics. Understand basic concepts and definitions. Read literature and watch educational films and videos. I recommend the Khan academy channel and their series of videos on stocks and bonds.

Start budgeting

The most important point. I already wrote about this in a previous post. These will be real numbers, not an abstract "I spend so little". All people lie. Even to ourselves. Numbers - never.

Accumulate a financial cushion

Roughly speaking, an airbag should allow you to lead a minimum level of comfortable life from several months to a year.

Without savings, it makes no sense to start investing, since anything can happen in life. Force majeure can force the sale of securities and withdraw the currency at an unfavorable rate, and any collapse of the market will plunge into panic.

The size of the airbag and how it is stored may vary. I use short bonds or just dollars.

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