It is essential for everyone to prepare themselves for the emergencies. Emergencies have various types, and it didn’t come with the sign, it just happened suddenly that’s why we call it an emergency. But isn’t it great when you prepare yourself already for it? Emergencies can occur anytime in the future, and it is vital if we make a plan to survive that time. When you start investing at your early age, you’ll cover these emergencies in a short period of time. Now everyone needs to know about their current circumstances. Be honest with yourself, do not hesitate by telling you that you may need 100,000 dollars in next year. Once you know what your requirement for the future is, you maybe not stop a hard time but you can handle it with your planning. Make a plan, cover it with some funds and start investing.
#Understand Cash Flow
Your cash flow statement will show you the scenario of your personal life. It is essential that every person should know where he stands in term of money or sayings. Once you understand what does your cash flow look like, you’ll know the method of life. If your cash flow is positive, it displays that you’re living a wonderful life. A life where you spent your money wisely, you generate income from your assets, you know how to deal with debt, and you do know how to increase your wealth and maintain your positive cash flow over the years. But if your cash flow is negative, you need to know that your life can be in danger, you may not be ready to survive the future, or you can suffer the worst of it. You don’t need to panic. There’s always a solution for everything. It is straightforward, first just figured out, how much you spent on your things, and how much you save, and starts counting on it. When you know all your expenses, then It will be very easy for you to invest.
When we took a loan from a bank, it is a liability for us, but for the bank, it is their asset. The bank earned when we overspent. Have you ever wonder that why a bank is being kind to you, You didn’t help it to recover a loan from an insolvent person, you didn’t do anything but the bank is behaving with you very gently. Why? Because when you go to the bank, they see you as their asset. They didn’t care about you or your family, and they only want their income. That’s all. Do not let them steal your money. A credit card is nothing but a way to transfer your own money into the bank’s pockets. As Dave Ramsey said once, “You don’t build wealth with credit cards rewards and airline miles. You can’t beat the credit cards companies at their own game.” Stay away from Credit card and make your life much simple but wealthy.
When you play cricket or football, you do count your score. Well everyone does. Everybody wants to know that how much they earn or in how many ways they can make money so that their wealth can grow faster. Do not invest your all the money in a single stock, Diversify it. It will decrease the risk. Once you start investing, keep a perfect track of it, count on your gains and profits. Net worth is the only thing that you need to score. Do not worry about the number which makes you think that you’re doing wrong, and these figures are bills and overdue. Make numbers which make your debt looks like a zero.
Always, always aware of your aim or goal. When we were a child, he had a dream of becoming a doctor or engineer because that’s what our parents want us to do. But only a few of us achieved that level, why? The answer is straightforward because they had a vision, a set goal for their future. This principle works in every situation of our life. Once we decide the motive of work, it becomes much easier to complete. It is essential that we define our aim or purpose of investment. Once we figured out why we want to invest, it will convince we to go on that road until we reach our destination. You can do short-term investment or long-term investment, and it totally depends on you that what are your goals of investing.
When you first drive a car, you can’t just directly drive it on the road. Your driving teacher or maybe father taught you how to drive. He first gave you instruction about the gear box, the acceleration, the breaks and every single detail of the car and you were like, “Dad, I know all of these things, could you please let me drive.” When you started the car, the two things might happen on your very first day of driving, you could’ve knocked off the car, or you may drove it to the road because you heard his every word very clearfully.
That’s exactly what happened to the investors When they know about the stock market when they know that how the stock exchange works, or before investing money in the market, which works an investor needs to do. They aware of technical and fundamental analysis, they know how to read financial statements, financial ratios or what moving averages represents. When they know everything or a little bit about the market, they make profits on their investment. But when a person who is not aware of the circumstances of the stock exchange, who is only investing because his friend told him to do, or he only wants to get rich, that person always lose everything in his first investment. Make sure you know the basics of accounting ratios, fundamentals and technicals of stock before start investing. It will help you to identify at which point you can buy and sell the stock.