Before You Invest, Do This...

I don’t need to tell you that you are constantly being bombarded by advertisers. Each of them trying to get you to believe their product, service, or cause is worthy of your hard earned pennies.

As they try to influence you, many advertisers strategically attack your mind’s natural tendencies.  They tell you that you NEED to look a certain way, take particular action, or join a particular group in order to be happier and more successful.  Most of us know these images and false promises are garbage, but it doesn’t mean that we aren’t susceptible to the ideas advertisers are putting in our heads.

I could talk all day about the false ideas that are being pushed in the media and how they are making people less happy and more frustrated, but that’s a topic for a different day and a different post…

However, I believe that one of the most harmful ideas being perpetuated in the market place today is that you need to invest as much of your money as possible – and you need to do it as soon as possible – or you are missing out.  Of course, the advertiser’s motivation is for you to invest with them so they can get paid and have access to your money to make even more profits for themselves. So their message serves THEIR interests, but is it truly in YOUR best interest?

The short answer is NO.

Investing has its place, but it should NOT be the first thing you do when you begin earning money (This is especially important for young people who are newly out of school and developing their financial habits). 

What should you do FIRST?

You need to learn to systematically save money. Because if you can’t ever save any money, how will you ever be able to do any meaningful investing?

I know that isn’t a sexy thing to say, but it is absolutely essential.

Having money in a savings account will actually be worth more to you than any other investment you make.  How is that possible?  Its because having money saved works for you in many unseen ways and here are 3 of the most important:

1)     Having money saved gives you peace of mind and confidence.  Both of these allow you to sleep better at night, be a better spouse / parent / friend, and be powerful in your career or business. Your state of mind is your #1 asset because when you are confident and abundant you are far more effective than when you are operating out of a fearful or scarcity mindset. The importance of mindset cannot be over stated. It is often the difference between a successful business or marriage and a failed business or divorce caused by financial stress.  Financial peace and confidence is absolutely vital!

2)     Money in your account helps you save on interest. Savings helps you to avoid taking loans all together, but also allows you to get better interest rates on the loans you do take.  Whether its having money for a down payment on your car or showing the bank that you have money saved when you get a mortgage – having money set aside will help you save on unnecessarily high loan rates.

3)     Most importantly, your savings account will allow you to minimize losses incurred in difficult financial times and maximize your opportunities when they come along.  If you have money invested but no savings you may be forced to cash out of your investments as the wrong time leading to surrender fees or losses because you needed the money for an emergency.  Conversely, a strong savings account will allow you to jump on the right opportunities when they present themselves.

NOTE: Saving money into a 401k or IRA does NOT have these advantages.  Accessing “qualified money” can be difficult and almost always comes with penalties or fees. So stop to consider how much you’ll potentially miss out on by having your money tied up until you are 59 ½ years old. I’ve seen many people unable to start their own business or capitalize on a great opportunity because they couldn’t access their money.

Through the years I’ve worked with enough people to know that most of us get a few “curve balls” in life and a few key “home run” opportunities.  Being in the financial position to deal with the curve balls without losing everything and the ability to take advantage of those home run opportunities can often be the difference between living prosperously and barely getting by.

So before your rush into investing your money, take the necessary time to build a financial foundation first. To begin, you should strive to have at least 3-6 months worth of expenses set aside in a savings account.  After that, I believe Cash Value Life Insurance is the best place to continue growing your emergency / opportunity fund because of its higher rates of return, tax advantages, and security.

Learning to systematically save will set you up to maximize your future investments, and even more importantly, it will increase your quality of life through better sleep, increased confidence, and helping your be a better human for those you love!

To learn more about how to effectively save, schedule a complimentary consultation with one of our experienced Wealth Strategists here…

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