Friday, June 20, 2014

4 Things You Need to Have Before You Start Investing in the Stock Market

Life is always unpredictable. People never really know what will happen to them the next day. They do not know when exactly they will go, or until when they can work on their job. Those were the reasons why you need to save and invest – for future preparation.

People are planning to invest in the stock market, mutual funds and other investment vehicles.

Photo (c) philstar.com

But before entering the world of investing, it is good to educate yourself first, and learn the important must-have’s so you can build your solid financial foundation.

Solid financial investment requires certain steps so you can achieve your financial freedom.

· Financial goals and financial blueprint

Financial goals are often your dreams that you want to achieve. Financial blueprint is your plan on how to achieve your financial goals. I believe that there is a right path to achieve your financial goal, your destination. And to reach that destination, you need to be guided by your financial blueprint, which serves as your road map.

Sometimes, Financial Goals are also your financial dreams.
You can create your financial blueprint in a piece of paper (as draft) and later on, create it in a more artistic way like journal and scrapbooks, which you can read often.

Common financial goals answer the following questions:

When are you planning to retire? Age 40? Age 50? Age 60?
How much money do you want to have before you quit your job?
After quitting your job, what are your plans? Have a vacation? Where? How much do you think you need?

Before starting to invest, realize first your financial goals, and set up your financial blueprint.

·  Healthcare

Having sickness is always part of our lives. No matter how much we take care of ourselves to prevent any diseases, we still have occasionally. Even Manny Pacquiao sometimes got sick. No one is excused for any sickness! And that is the reason why healthcare insurance.

Nobody knows when you are going to be sick. So your health card will be of great help for you whenever you got sick and needs to be admitted in the hospital. Medical expense is hard to be shouldered alone if you do not have your health card.

"Your health must be your first investment, because that will be your greatest wealth."
Photo (c) stylecraze.com

·  Life protection and insurance

This is very important especially if you are the breadwinner of the family. No one ever knows your date of appointment with the Lord. And if that time comes, how can your family survive without you?



This unexpected, sad yet realistic event could happen to all of us. And it depends on us how we prepare for that. By having Life Protection and Insurance, your family can somehow survive when you go. With the amount of money your family can get from your Life Insurance, their burden of losing you will somehow get lessen, because at least they still have something left to move on with their lives.

This is better, than leaving your loved ones with nothing.

Photo (c) sva.edu

·  Emergency fund

Yes, life is unpredictable, and will always be. You never know what will happen tomorrow.

Maybe you are on the great job position today, but what if tomorrow you get fired?
Or what if your roof needed to be replaced? What if your child needs extra payment for his extra curricular activity in school?Photo (c) economic.indiatimes.com


Those are some of emergencies that may ruin your budget for your regular expenses. Those are all unexpected.

Can you survive a month or two without your pay slip?

That is why you need an emergency fund. So that when emergency situation occur, you are prepared.

Healthcare, Life Insurance and Emergency Fund are all pre-requisite for every individual who are planning to invest in the stock market or mutual fund.


Why?

Simply because the market is unstable. Some time your money invested could gain, some time you could also loose when the market is down.

If any of those pre-requisite happen to you while the market is down, you loss big amount of your money.

Say, you invested Php50,000. Then the market goes down.

Along with this, you lost your job. You do not have any other investments, so you withdraw your money from the stock market, which lose some amount.

Worst of these three is when you pass away. Whether the market goes up or down, what can your Php50,000 do to support your family?

Most insurance coverage is about a million peso. So in case this will happen, a million peso from the insurance company is a lot better than the Php50,000 you invested in the stock market.

Friend, do you get the point before investing in the stock market?


PS. We are providing Free Financial Coaching Seminars conducted by the Bo Sanchez Truly Rich Makers Team - IMG in Makati. Click this to register: Truly Rich Makers Financial Coaching

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