Step 1.

Determine Your
Goals
Before you get into investing of any kind, you
first have to make sure that your overall
financial situation is in a position to
accommodate the new activity. Your financial
baggage includes everything from income to
debt, to your household budget. You can
organize your finances for free with our
favorite budgeting app, Personal Capital.
Specific considerations include:

 Employment – make sure that both your

job and your income are secure enough to
allow you to begin investing.
 Debt – if you have a significant amount of
outstanding credit, you may want to pay
some debt down before you begin investing;
you should never invest money you can't
afford to lose, and that's the position you'll
be in if you have too much debt.
 Family situation – if you just welcomed a
baby into the world, you may need all of
 your available income to help with the new
arrival; family situations should be stable
before you begin investing.
 Your household budget – you should
have some room in your budget to direct
cash into your investment ventures.
It's also helpful to consider your goals and ask
yourself why you want to start investing:'
 Are these investment accounts for your
retirement?
 Is this money for a shorter-term goal, more
like 5–6 years away?
 Will anyone else have access to this
money?
Using these three questions as the starting
point of your investing will help shape the
decisions you need to make next. And they
require no knowledge of the stock market!
These are highly personal questions that each
investor needs to answer for themselves.
There's no right answer, just the correct
answer for your life and goals.
Investing makes the most sense for the longer
term. You generally don't want to invest money
that you need in fewer than five years, as there
is a risk of losing that money in a downturn.