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Two Steps To Take Before Investing In a Stock Market

November 5, 2018 by Maya

It’s wise for every family to have an investment or savings stash they can access in the future to provide support for their needs. However, some plans and processes must be put in place whilst various factors which might come into play must be considered.

One place where one could look to invest in is the stock market. However, before you proceed, here are two things that must be considered to avoid any problems in the future. Meanwhile, if you’re a casino enthusiast, you may try your hands at NetBet

1. Ensure that you have no short-term debt

It’s advisable to pay off any debts ranging from credit card debts, personal loans, and other short-term debts before you start investing. This is because most of these debts come with interests.

Let’s say you are allowed to borrow money from a bank at 7% for 3 years with the aim of investing it and getting a return of 12%. It would be better to go for a loan and invest the money. However, this is not a possibility.

This is because the interest you attract from a short-term debt will always supersede any return you’ll be hoping to make without you opting for any crazy risk.

Therefore investing your money or depositing it in a bank while you still have a short-term debt is ultimately a waste of time. You are practically pouring water in a basket. You must eliminate all financial leaks before you proceed to start saving.

2. It is advisable to plan ahead and keep at least three months living costs at hand.

Emergencies are a part of life. Damages or accidents could occur in your home or anywhere you find yourself and there must be readily available finance to help solve these issues.

This is where the concept of emergency funds enters the fray. This is usually an amount of money that has been put aside to address life’s occasional ups and downs.

The amount of the emergency fund will definitely be dependent on factors like family size, preferences, etc. It is advisable to have at least 3 months emergency funds saved up. Three months could just go by easily. Therefore, six months could be the ideal duration.

Filed Under: Lifestyle

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Welcome to our family blog! We are the Newmans and our site HeroRat is all about family, home and pets. Myself (Maya) writes most of the articles, but sometimes the kids and hubby help too. We have 3 adorable dogs and 3 adorable kids! We do a lot together as a family, so it's pretty busy in our house on a regular basis.

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About US

Welcome to our family blog! We are the Newmans and our site HeroRat is all about family, home and pets. Myself (Maya) writes most of the articles, but sometimes the kids and hubby help too. We have 3 adorable dogs and 3 adorable kids! We do a lot together as a family, so it's pretty busy in our house on a regular basis. Read More…

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  • The Best Contact Lenses for Australia

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