People often ask me how to get started in investing. My first question always is, “Can you afford it?”
The reality is that you need to have at least 3 months of income saved in a very safe and accessible account before you invest any money. All of your investment money needs to be above and beyond that savings level. In tough times where your job may be at risk then you may actually want to increase this amount to 6 months.
Obviously, 3 months of your income is 25% of your annual take home pay. This means it will take 2.5 years to set aside this level of savings if you save 10% of every paycheck. Your interest during this time is negligible since your account will be very conservative and therefore not giving a great yield (it is unfortunate that savings accounts approach 0% in this economy).
So click over to KrantCents to learn how to set a savings goal and set that goal for 25% of your annual pay so that you can start investing in your future.