Scroll Top

Should You Be Investing?


Investing can be overwhelming when you’re first starting out. Many people have told me they want to start investing because they heard from friends or family it’s the best thing they can do for their money. However, investing is really situational. For some people it’s a great option and for others it’s not the best choice at the time. Before you decide to start investing, ask yourself a few questions:

How much of an emergency fund do you have?

  • Typically, the minimum emergency fund you should have is 3-6 month’s worth of expenses
  • This includes your rent or mortgage, insurance, groceries, car payments, etc.
    • Any payment you have that must be paid (for example vacation expenses don’t need to be included)

How much debt do you have?

  • Depending on the type of debt, the interest rates can be high
  • If you have consumer debt or student loans with a high interest rate, you may be better off putting extra money towards paying down this debt instead
  • Debt like a mortgage can be beneficial in the sense that it can help you itemize deductions on your tax return

Are you putting money into a 401(k), IRA, 403(b) etc.?

  • If you aren’t taking advantage of an employer sponsored retirement plan, start thinking about it
  • Some employers provide matches that will help boost your savings in the account (don’t ignore that extra money!)
  • If you truly are just wanting to start out with investing, a retirement account is a good way to choose from a small pool of funds
  • Before putting money into a company plan, do you research by requesting information from your company
  • You still need to look at your emergency fund levels before this though as most times there is a penalty to remove money from a retirement plan before a certain age or before certain qualifiers happen

5-year rule

  • When you want to start investing you also have to look at the timeline you have for your money. Is the money you want to invest needed in the next five years? If so, the stock market might not be the safest place to keep it.
  • This year was a good example of why this is a common rule. Say you had put money for a house down deposit in stocks and you wanted it by May 2020. Due to the pandemic, we have seen some major volatility in the stock market and if you had your money invested during that time and needed it before the market came back up, you could be down a significant portion.

Risk tolerance and Goals

  • What kind of Investor are you?
    If you have looked at all the above categories and made the decision that investing is what you want to do, then the next step is to take a look at your risk tolerance. Online discount brokerage firms like Schwab and Fidelity will help guide you by asking questions.


Investing Apps – Buyer Beware

  • There are many investing apps right now that are appealing to the young investor – mainly due to the tech appeal and ease of use. Stories about margin accounts raking up too much debt for young investors accidently should be a reminder to do your research
  • Be sure the app you’re looking into is registered with the SEC and/or FINRA (regulatory agencies meant to protect investors)
  • Fees – do they tell you how they make money?
  • Do they offer SIPC insurance? Read more here:


Contact us for more information to get started on investing at 410-995-8711 or