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The Role of Stability in Investment Success

Aug 17, 2007
Stability is extremely important for any successful investor. For most people this means living with your means or not spending more then you earn. Every time you over spend you are taking potential investments away from yourself.

Accumulating debts will make it hard to have the funds available to invest in the future. Make sure you stay away from credit cards. While it does allow for the ease of purchase it to often leads to impulse buying. Make sure when you shop you have cash in hand and only what you can afford to spend. Never spend money you do not have. Do not spend money you think you will have in the future. Debts are accumulated gradually and over time.

A budget can be very helpful in achieving stability. There are several budget software programs which can be downloaded online for free. This is an easy way to keep track of your expenses. Budgets help pin point places where money can be saved. Make sure once you form a budget you stick too it. Follow through is extremely important in saving, investing, and in life in general. Before investing even begins it is important to pay down debt. Reports suggests that most Americans are in debt between $7,000 and $20,000 dollars. Most of which is what is called consumer debt - credit cards, store accounts, and auto loans. These types of debts usually have a huge interest rate associated with them which makes them even harder to pay off. This means that $1,000 in debt at 18% is costing you 9 times what your $1,000 savings account at 2% is producing. Consumer debt is a dangerous spiral that is very hard to get out of.

Unfortunately the more debt you have the lower your standard of living will become. To be able to free up some money for investing you must first get rid of at least some of your credit card debt. Remember minimum payments offered by credit card companies have you paying 18% interest on your debt for forty years and when all is said and done you will end up paying 10 times the original debt when the item was purchased.

While you are paying down credit card debt and approaching a point in your life that is both secure and stable. This is a great time to educate yourself about finances, especially stock options and investments.

The more knowledge you have the better investor you will be. Look up information online about investing, borrow books from the library, attend free stock portfolio workshops offered by local investment companies or college campuses. Make sure you are not just improve your current skills but developing new ones.

Investing is not something you should jump head first into. If and when you invest it should be well planned and orchestrated. You need to have an understanding of what are available funds are, what your goals are, and what investment vehicles are available to you.
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