Investing - Before you Start
 

One of the most frequent questions asked in this forum is "How do I get started?".

The real question is "Am I ready to start?".

Before you decide how or where you want to invest or save money, whether it's for a large purchase, a home or your retirement there are 3 things you need to take care of first and foremost. If you don't do these things first then you fail before you've even started.

#1 - Pay off all debts

If you carry debt, even $1 worth, you cannot invest or save money, period. It is mathematically impossible to earn enough of a return on savings or investments to offset the interest you pay on debt. I don't care how much you work the numbers, it simply can't be done so don't even argue the point. It doesn't matter if it's an IRA contribution, a 401K plan or just stuffing $100 from each pay-check in a savings account, it's all for nothing so long as you are paying interest on credit card balances, car loans or lines of credit.

The only exception to this rule is your mortgage.

#2 - Get Health Insurance

You must have health insurance. If you don't you could be wiped out financially in the blink of an eye. Health insurance is not optional, it is essential.

#3 - Get Disability Insurance

Again, just like health insurance, if you suffer some illness, disease or misfortune and cannot earn an income for an extended period (forever) you will be quickly wiped out and anything you've saved or invested will be gone in a blink.

You must do ALL of these before you can start saving or investing and you must continue to do these 3 things, forever. Please make sure you've got this covered before you ask how or where or we can't help you.

:thumbup: I agree with Erik.

Is #3, Disability insurance really necessary? I would say no. Certainly not a "required" thing to do before you start investing. This is certainly not a black and white kind of thing, but much more of a "gray area." To each his own in this regard.

I will throw my bit of info into this as I looked into DI for the wife not too long ago. DI is not all the same. There is a VERY large discrepancy between a crap plan and a true "own occ." Do the research. For a true "own occ" plan, via guardian (which is a subsidiary of berkshire) or any other "reputable" insurance company, it's most certainly not cheap per month, and ends at the age of 65. Whether this "risk" is worth it is upto the individual imo.

What if you interest rate to your auto loan is lower than your rate for your investments.

^lmao