Investment Checklist: step one, have cash flow?

Investment Checklist

What is investing? We all hear about the great investors like Warren Buffett, Jack Bogle, and Benjamin Graham. Hollywood portrays these investors and the likes as shrewd investors who outsmarted the market. Investing can oftentimes seem like a difficult or foreign task when you hear these stories, but it doesn’t have to be. Here is the investment checklist that we look at before deciding if someone is ready to start investing.

Investment Checklist 1: Cashflow

How much money do you make each month and how much are you spending? When we talk about investing, we are talking about putting money away for the long run. For this reason, it is crucial that we make sure that you have all of your current obligations met and that you don’t need to dip in and out of the money. The goal is to make sure that you have a positive cash flow each month.

Investment Checklist 2: Evaluate Your Personal Financial Situation

Evaluating a financial situation will differ from person to person but the metrics we look at stay the same. What do you own? What is it worth? Do you have any liabilities? Credit card debt? These are just some of the metrics we use to determine where your money can best be used. Investing is important, but it is crucial to make sure that all other financial duties are met before investing.

Investment Checklist 3: Solid Foundation

Before jumping into the investment world, it is crucial that your financial foundation is sound. Emergency funds are an important part of this. Your rule of thumb typically is to have 3 to 6 months worth of expenses covered. Insurance is also important. Do you have the proper life insurance and health insurance in place? We want to make sure that a catastrophic event does not derail your financial plan.

If you can check all three of these boxes, you are ready to become an investor. At this point, it is important to have a game plan with goals, benchmarks, and a disciplined approach.

  1. Cash Flow
  2. Personal Financial Situation
  3. Solid Foundation
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