As we begin another week, I am excited to bring you a new series of financial gossip ( Maybe not gossip really). This is a series of questions that come in my inbox or received from people that I personally believe are not confined to the these particular individuals. The goal is to learn from each other’s mistake and questions; and hopefully also spark a new level of conversations regarding financial matters. In as much as money problems are everywhere, people rarely do talk about them openly.
The most frequently asked question is ~ I have this much XX and I want to know how to how to start investing and I do not know where to begin?
Although investing is one of the key things to start your financial freedom, I think its important to know that it is not the first step in financial freedom. Before you need to start knowing which investments options are available to you, you need to ensure that you understand the most basic concepts about money. You need to be able to know the difference between income and expenses , assets and liabilities as well as different returns options available on various savings options.
Why this is critical to understand is because having the knowledge of basic money management will assist you to avoid falling victim of getting rich quick investment schemes etc. Also , it is in the process of learning the basics that you start exploring what investing really is and what are the most basic investment skills.
Also going to investment brokers with that question, you are likely to end up with your money tied up in products you do not understand; that if you decide to quit at a later stage can cost you a lot in termination fees.
In a nutshell, although that is not the answer to the question, my plea to you is to really consider learning a few things about money first. Start budgeting and learn the art of sticking to the budget. Get to understand different savings goals and build up an good saving nest. Only after that, you will begin to understand the power of knowledge!