Financial Freedom
5 Steps That You Need to Take Before Investing

5 Steps That You Need to Take Before Investing

Investing is a hot topic right now, but how do you get started? In this blog let’s get the chisme on taking these 5 steps before investing your dinero!

5 steps before investing requires understanding where you are now
Figure out where you are now, and where you want to be.

Where are you now?

First things first! You need to figure out where you are in your financial journey. It is a pain, but in order to get where you want to be, you have to figure out where you are now. A great way to get an idea of how your money is spent, is by creating a budget. You can read more about how to create a budget in my Budget Blog.

Similarly, you should ask yourself how much you can afford to spend. If you find that you are not able to invest much or at all, then ask yourself if it is a spending issue or a wage issue? Thus, before you begin to invest, these should be addressed.

5 Steps before investing include setting goals.
What investment types are ideal for you?

Before Investing, what is your goal?

Next, decide what your goal is. Do you want to invest for a nice nest egg when you retire? Would you like to invest enough to retire early? Is passive income or financial freedom your end game? These questions are important to answer to determine how you would like to invest your money.

Another thing to consider is how much effort you would like to put into your investments. Stock day trading sounds like you can make money fast and easy, but the reality is that it takes a ton of time and effort! Therefore, you may want to invest in a more hands off approach. Below are some popular types of investments:

401(k)/work retirement accountsRetirement investment provided by your company. Some companies match contributions.
Taken from your paycheck pre-tax.
Target-date Mutual FundsManaged by a professional that invests your money based on your target retirement age
Index FundsGroup of stocks in a certain market (i.e. S&P 500)
Exchange-traded Funds (ETFs)Group of stocks in a certain market but are traded daily
Real estate investingPurchase property to flip or to rent out
For a more detailed summary check out his blog.

Do your research before investing, AMIGA!

Okay, I know this is not the most fun step, but it is important! However, the point is not to be an expert, but to learn enough to make informed decisions on your investments.

The good news is that it doesn’t have to be boring! If you enjoy reading, then there are plenty of books out there. In contrast, if you prefer listening, you can use audiobooks or podcasts. There are also many youtube videos and even tiktoks (self promo @moneychisme).

I know it can seem like a huge task, but you will start to learn more and more. I was the same way and now I am writing blogs!

5 Steps before investing you have to create a plan
Create your plan using S.M.A.R.T goals.

Create an Investment Plan

Now that you have figured out where you stand in your financial journey and where you want to get to, you have to create a plan! The plan should include how to adjust your current finances to allow you to invest.

In addition, your plan should include S.M.A.R.T goals. This means that your financial plan should be specific, measurable, achievable, relevant, and time-bound. Create your plan to ensure you reach your investment goals.

Start Investing!

Finally, it is now time to invest! You figured out where you are now, what your goals are, learned a few things, and now you have a plan! Nothing else to do but to start!

However, remember that it is a marathon, not a sprint! Be patient and don’t get antsy, because that’s when you can make poor investment decisions. This is a scary step, but the benefit that investing brings, is so worth it! So, Echale ganas!

Violeta Sandoval

Violeta Sandoval is a first generation Mexican immigrant. She stumble throughout life and her finances. Rising out of poverty, she managed to create different sources of income through her career as a Naval Officer, rental investments, and other side hustles. She hopes to help other modern Latinas with their financial journey, by sharing her story and experiences.

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