The Investor’s Mindset – Laying the Right Foundation

One of the biggest mistakes beginners make is jumping into investments without setting a proper foundation. Investing is powerful, but without the right setup, it can become a trap rather than a tool for building wealth.

Before you even think about where to put your money, make sure you’ve checked off these three essentials:

1. Build a Financial Safety Net

Imagine this: You invest $500 in stocks, and two months later, your car breaks down. With no emergency fund, you’re forced to sell your stocks—probably at a loss. Sound familiar?

Your emergency fund should cover at least 3-6 months of essential expenses. Keep this in a high-yield savings account or a money market fund. This way, when life throws surprises, you’re not forced to cash out your investments at the wrong time.

Action Step: If you don’t have an emergency fund, start setting aside at least 10-20% of your income until you reach this goal.

2. Clear High-Interest Debt First

Investing is great, but if you have high-interest debt (e.g., credit cards with 20%+ interest), you’re likely losing money faster than you can make it. Think of it this way: If your investments earn 10% annually but your debt is costing you 25%, you’re in the red.

Action Step: List all your debts and prioritize paying off high-interest ones before diving deep into investing.

3. Define Your Investment Goals

Ask yourself: Why am I investing? Your goal will determine what and where you invest. Here are common goals and matching investments:

• Wealth growth – Stocks, ETFs, real estate

• Passive income – Dividend stocks, rental properties, bonds

• Retirement – Index funds, pension funds, IRAs

Action Step: Write down your investment goal in one sentence. Example: “I want to invest $5,000 in the next year to build passive income.”

Next week, we’ll talk about how to start investing with small money ($50 or less). Stay tuned!

To your success,

Perissos