Financial: Planning for investors

It’s easy to talk about investing in really abstract terms without realizing that large sums of money are on the line. At least I acknowledge I’m guilty of it.

So, before we start talking about support and resistance, fundamentals and inflation, it’s best that we do some planning on how to build investment capital.

First things first: if you don’t have the fiscal discipline to keep your money in order, than you probably don’t want to be investing. If you don’t have the risk capital, investing quickly becomes gambling and gamblers almost always lose (unless they are really good, in which case they are investing in games).

I would say investing when you are in heavy debt is a poor plan. If you have credit cards charging 20% interest, you need to make an investment with 20% returns to break even vs. paying of debt. Ouch.

So if you are out of debt, you should next look to having an ample amount of safety money (in case you quickly end up in debt or out of a job). If you have a comfort zone, and are saving regularly (taking 15 to 20 percent right of your paycheck is a good way to go) then you can start investing.

Albert Einstein famously said that compound interest was the greatest power in the universe. You really don’t want it to work against you, do you?

Get out of debt. Get to saving. Get to investing. That sounds like a plan to me. Of course, I don’t want to browbeat anyone, that’s just a suggestion…