Four signs that you (and your budget) are ready to invest

By WP BrandStudio

July 31, 2019

Investing can help you build the financial assets needed to accomplish long-term goals. But first, it’s important to figure out if you’re in the right position to get started.

(WP BrandStudio Content) If you’re like most people, you probably want to put some money away for future goals. However, it can be tough to figure out exactly what to do with that money. Should investing be part of your plan? If so, how will you know when you’re ready to start investing? Maybe you already are and didn’t even know it.

Here are four signs that can help you figure out a game plan.

1. You have a well-stocked emergency fund

Life throws curveballs. It’s smart to have an emergency fund with at least three months-worth of expenses to give yourself the stability that investing can require. Your emergency fund will give you a buffer if anything unexpected happens, so you won’t have to tap into investments slated for other purposes. That being said, having a well-stocked emergency fund isn’t a must before starting investing—it could just be a matter of prioritizing saving for a while.

2. You have extra money every month

Your emergency fund is looking good. You pay all the bills and any high-interest debt. You have enough to cover groceries and other expenses. Still have some funds left over? It doesn’t have to be a lot. Investing is all about starting small and growing over time. The key is to stick with it, so the money invested can work for you.

3. You have long-term goals

Investing is a journey that works better if you know where you’re headed. That’s where long-term goals come in. Goals give you direction and focus for your investing. Maybe your goal is a comfortable retirement. Maybe it’s paying for a great college for your kids. Be detailed and realistic about what you want to accomplish.

4. You have access to a retirement plan

Contributing to an employer-sponsored retirement plan, like a 401(k) or 403(b), is a big step toward investing. With most employer-sponsored retirement plans, you can elect to have money invested from each paycheck. That makes it easier to contribute to your retirement goals. Some employers even offer to match employee contributions up to a certain amount. That’s free money, and these extra contributions can help a lot over time. If you don’t have access to an employer-sponsored retirement plan, look into opening an Individual Retirement Account (IRA).

Ready to get started investing? Connect with a Principal^® financial professional.

This content is paid for by Principal Financial Group^® and published by WP BrandStudio. The Washington Post newsroom was not involved in the creation of this content. Learn more about WP BrandStudio.