5 Things to Do Before You Start Investing

Beyond buying and trading shares, there is a wide variety of different options for people who are looking to increase their wealth. But it’s not as simple as just following the latest trend or jumping in head first in the hope of making either quick money or long-term investments. Before you start investing, you need to do a little background work. From building a cash fund to paying off bad debt, we will look at 5 things you need to do before you start investing.

1. Pay off bad ‘high-interest’ debt.

Anything with an interest rate of above 8% is considered to be high-interest debt. There’s no point in thinking about investing when you have this type of debt, for example, significant credit card debt. Quite simply, any payments you make on your credit cards would make you more money through saved interest payments than any generalised investment strategy you could embark on.

2. Build an emergency cash fund.

Life has a way of being unpredictable. You may have a tight knit investment plan, but what happens if you get sick or if your car breaks down. Quite typically in times like these people will turn to credit cards to solve the problem. Unfortunately, this is often not the best solution, as it incurs interest and adds to debt. Look at setting up an emergency fund, as part of your budget, and build this amount up to be able to cover about 2-3 months’ worth of your living expenses.

3. Understand your purpose and goals.

One of the most important principles in your investment strategy is going to be the purpose behind your investment. What are your investment goals? Are you looking to invest for short-term returns or is your strategy more focused on the long-term? Are you investing to provide for your retirement? Your goals will change the type of investments that will suit your needs so figure this out first.

4. Research the potential investments.

If you are new to investing, start off by doing some basic research online. There is a large amount of resources online that can help you. These include websites such as Motley Fool, Investopedia and Silver & Young Private Wealth’s very own knowledge centre (wink).

Once you have a general idea of what you’re comfortable with, we advise you to consult with a professional financial advisor to talk through the available options, according to your objectives. Start small and minimise your risk until you are confident in your strategy.

5. Focus on your net worth

Net worth must become your focus now. Maintaining and working towards positive net worth is key to your investing success. Net Worth is your asset value, plus cash value, minus your debts.

Although it seems obvious that this should be the focus, quite often people worry most about the balance in their checking account or online saver. Getting out of this mindset and balancing your debt, cash and assets is key to ensuring that you’re ready to start investing.

As with anything, having a foundation in place is key when you start to invest. Diving in with rose coloured glasses (even with good intentions) is not the best way to approach things. Ensuring that you have the above 5 things in order before you start investing will ensure that you are better able to achieve your short and long-term goals.

For personalised advice on how you can get ready to invest, please contact us by phone on (02) 9600 7759 or by emailing us at


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