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2 min read

Should I Start Investing

Ever thought about investing but felt overwhelmed by where to start? Discover how interest rates can shape your decisions, and follow our step-by-step guide to lay the groundwork for a prosperous future. From erasing debts to choosing growth instruments, we demystify the art of smart investing
Should I Start Investing

Yes, you should start investing. However, it's crucial to realize that you already are. While most associate investing with the stock market or cryptocurrencies, in reality, almost everything you do is an investment. For example, being employed means investing your time in a company. Paying for a course at Trump University means investing in the promise of future success in real estate. At AssetAlign, we emphasize a holistic view of investment, looking beyond just the stock market. In this piece, we'll guide you in laying a robust financial foundation.

The Power of Interest Rates

The magic behind successful investments often lies in understanding interest rates. If you had $100 and had to choose between a personal loan with a 15% interest rate and an investment with a 12% guaranteed return, which would you pick? The smart choice would be to pay off the loan. At the end of the year, you'd essentially "earn" $15 from the avoided interest, while the investment would've only returned $12. Thus, by choosing wisely, you've made an extra $3 without any added risk.

Setting the Record Straight

Things aren't always as straightforward as they seem. When you factor in variables like risk and time, the equation becomes more complex. In upcoming posts, we'll introduce some low-risk strategies to amplify your wealth.

Laying the Foundation: Where to Invest First

Here are the essential steps:

  1. Eradicate Credit Card Debt: Clear off your credit card balances. Their high interest rates can significantly dent your finances. Keeping a running balance can lead to spiraling debt, especially if you try to offset it with high-risk stock market ventures.
  2. Build a One-Month Expense Buffer: Having a month's worth of expenses saved up ensures you avoid credit card balances and the associated high fees. It also brings peace of mind.
  3. Settle High-Interest Loans: Prioritize paying off any loans with interest rates above 5%, beginning with the highest rates. These can slowly drain your resources.
  4. Create a Safety Net: Accumulate 3 to 6 months' worth of savings. Depending on your risk tolerance and job security, adjust the amount. If you'd readily accept any job after a layoff, save up for 3 months. If you'd be more selective, aim for 6 months.
  5. Dive into Growth Instruments: Now, you're poised to invest in the stock market and similar avenues. We'll delve deeper into these opportunities in upcoming posts. For now, focus on the basics. As for low-interest loans like a 3% mortgage or 4% student loan? Stick to minimum payments. Your money can be better invested elsewhere.

Conclusion: Building a Strong Financial Future

Armed with insights on interest rates and a clear five-step plan, you're now better equipped to commence your wealth-building journey. Stay tuned for our next post, where we'll explore more advanced investment strategies building on this foundation.