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What is the first thing that comes to mind when we talk about "Investing"?
I believe to most it simply means money making money! Doesn't that sounds exciting and attractive.
However, it is time for the reality check, not all investments make money. In fact, many investments lose money.
So, it is quite amazing that since investments lose most of the time, shouldn't the first thing that comes to mind when mentioning "investing" be losing money.
That is why, the first step before even considering investing is to determine how willing you are to accept loses and still sleep well at night. No point to start investing only to find yourself affecting your physical and mental health when the investment takes a turn for the worse. You will be better off placing your investment in a fixed deposit and look for other more suitable ways to generate wealth.
The next step is the amount you can afford to lose. Set aside an emergency fund for a rainy day, the rule of thumb is about 6 months of your income, this amount must be kept in a liquid asset like cash, do not invest it in illiquid assets like property. Read more...