Everyone, or at least almost everyone, wants to make it big in terms of financial success in life. There are numerous ways to do but one of the most exciting (and perilous) is investing. While most will be met with failure some become among the richest human beings on the planet. But before we dive in what does one need to do first before they start to invest?
The first thing you are going to need before you do anything is determine what your goals are. How much money do you want to make, how quickly do you want it and just as important what is the reason you want it? As I’ve said before investment is risky business and conceptualizing and focusing on a set objective is going to push you past the frustration of roadblocks and failure.
Now that you’ve got drive you are going to have to temper that with the right mind set. Investing requires balancing what seem like opposing principles. The first is austere discipline coupled with fearless tenacity. In order to make it big you‘re probably going to have to live below you’re means, but still be willing to risk seemingly everything to be successful. Investing is not for the faint of heart.
The next is what I call a proper ratio of greed and restraint. Greed is good; capitalism and in fact all human endeavors thrive on it, but too much will leave you destitute. Don’t become over ambitious once you start getting good returns.
Perhaps the most obvious question any investor will want to know is how much money is needed? Do I have to slave away for decades to acquire enough capital to invest only to one day hope to have enough saved for retirement as well as invest? Actually no, depending on where you‘re investing.
According to the Association of American Individual Investors this can be as little as one hundred dollars or less. Other sources suggest at least a few thousand dollars to, for example, low-cost mutual funds (EFT‘s) or at least twenty-five thousand if you are investing in stocks.
By contrast being an angel investor, or one who donates a large sum of money directly to a business venture in exchange for equity, requires one to have about a million of more dollars saved and possess a six figure income. So it depends on where you want to put your money, when you expect to seek returns, and how much risk you are willing to take.
Let’s not forget you are also going to need money set aside in addition to this to be held in reserve. Holding this reserve in a bank has the added bonus of not only providing emergency capital but will increase with interest over time.
Once you’ve got a goal, your mind and house in order, and capital saved up you are going to need someone to help you manage it. Find someone trust worthy to appoint as your chief financial officer (CFO) to maintain detailed financial records, be able to track where every single penny you own is, and be able to strategize and predict what the best direction your investment firm should travel in.
Additionally you are going to need a chief executive office (CEO) which is a position I highly suggest you assign yourself unless of course you have an extra seven hundred and forty thousand dollars lying around. You may also want to play CFO yourself until you can get your feet off the ground for a while to cut down on cost.
Keep in mind this is an incredibly watered down introduction to invest. There’s still a great deal of background information on what type of investments are best and that depends on more than just start-up capital. You’re also going to have to know a great deal about other subjects besides economics most notably human psychology and law.
Financing, and thus investment, is one of the most regulated industries in the world. Since the world economy is sadly, ultimately slave to the US dollar and the Federal Reserve, knowing what kind of laws govern your part of the globe and the rest of the world is going to be a necessity. But with these basic tools you should have sufficient knowledge to at least structure the foundation for your investment venture.