Principle 8

Make Sure You're Ready

Just when you thought you were ready for take-off, there’s one more checklist to go over. Before putting any money in the market, your finances should be in order, with day-to-day cash flow running smoothly.

Before you start investing, we recommend that you:

  • SAVE
    Before starting to invest, it’s important to have some money set aside for the unexpected expenses all of us really should expect. Having three to six months’ worth of essential living expenses in an emergency fund provides peace of mind and helps ensure you won’t have to cash out an investment at an inopportune time.
     
  • GET OUT OF DEBT
    We’re big fans of being debt-free, with the possible exception of a reasonable mortgage (one that requires no more than 25% of your monthly gross income for the combination of your mortgage, property taxes, and homeowner’s insurance). If you're carrying a balance on a credit card that charges you 14% interest, every dollar you devote to paying off that debt gets a guaranteed 14% return. Once you stop compound interest from working against you, it's time to get it working for you.