Thinking about Investing? Investment-Savvy Checklist

Nighttime scene with a computer screen in the foreground showing the stock market performance

A lot of members tell us they’re interested in investing. Maybe you’re starting to save regularly, and you’re wondering how your money can work for you instead of sitting passively in a bank account.

What Are Your Goals?

Before jumping into investment strategies, start with this basic question: what is the point of investing to you?

If your answer is something like, “I want to make oodles of money,” I suggest getting more specific and more realistic. If you expect to make a lot of money from an investment, this may cause you to take unnecessary (or unwise) risks to chase huge returns.

Instead, use your short, intermediate, and long-term targets and financial goals to inform your investment decisions.

How Much Can You Safely Invest?

Before thinking about your future self, make sure you’re taking care of your immediate needs. Your emergency fund and debt management should still be priorities. Make sure you have a sustainable plan for your daily money management. Investing has risk involved, so don’t count on that money being available in an emergency.

Beyond making sure you have enough saved for emergencies, think about how much you feel comfortable investing. Assess your risk tolerance – whether you’re comfortable with high-risk (potentially high-reward or high-loss) investments.

How Much Effort Do You Want to Put Into Investing?

There are so many options out there. Ask yourself how hard you want to work at maintaining your investment portfolio. Do you want to do lots of research and actively manage all your money, or do you want to let a service or professional manage your investments for you?

If you’re interested in a DIY approach, do your research first. One option is to start small, perhaps with an app that allows you to manage relatively small investments (for example, Acorns or Robinhood).

If you’d prefer to leave your money to an expert, I caution you to know your expert.

Start, Monitor, and Adjust

As with all your financial decisions, check in regularly to see if you’re happy with the results. If you’re not, review what you have done, take a good look at the outcome, and make adjustments if necessary.

One way to know if your investment plan is working for you is to do what we call “the pillow test.” It’s pretty easy. If your investments are causing you to lose sleep, you need a better plan – and don’t be afraid to get help. Your investment plan should be working for you, not causing you stress.

Note: We have no affiliation with any financial product or service mentioned in this article. All information is provided for educational purposes only and is not to be considered financial advice.

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