The A-Z Investing Roadmap for Beginners Seeking Financial Freedom
Welcome to Part 1 of the 5-Part Mini-Masterclass on Investing!
I know you’re excited to grow your wealth and this mini-masterclass is structured to help you learn about investing, remove doubt, and increase your confidence so you can get started making your money grow.
Money can’t buy you happiness but it CAN buy you freedom… freedom of time, location, and choice. It can put you in total control of your life so you can spend your days EXACTLY the way you want to - not the way your boss decides.
If you're ready to escape the golden handcuffs that keep you working day in and day out and trade them in for the golden ticket that leads to financial freedom, then listen up.
What is the golden ticket to financial freedom? Strategically putting your money in places where it will grow as fast as possible - also known as investing.
You’re not going to become wealthy by keeping your money in a bank account. You MUST put your money in places that will grow much faster than that, and faster than the rate of inflation, as well. You must put your money into ASSETS. It’s THESE investments that can make you rich and it’s THESE investments that give you financial freedom.
Let’s talk about the 9 steps you need to take to get started investing and begin your own journey toward the priceless destination of financial freedom.
1) GET INTIMATELY FAMILIAR WITH YOUR NUMBERS
You should know - down to the last dollar - how much money you bring in every month and how much money you spend every month.
Knowing this exactly will help you move forward to Steps 2 and 3... don't skip over this one; it's important to dig into the numbers because you don't want to invest until you know what you can afford, and this is the first step to understanding that.
Here’s what I mean by this: make a list of every single expense you must pay each month (your NEEDS) and then track all your other spending for 1-3 months to see what you’re spending on your WANTS. Get specific here, accuracy is important.
If you need help, you can grab my fill-in-the-blank Budget Calculator Guide to help you get organized. It provides a single place for you to list all your expenses, all your income, and the next steps if you need to reduce your spending.
2) MAKE SURE YOU’RE CASH FLOW POSITIVE
In other words, ensure you're making more than you're spending - once you're done with Step 1, you should be able to see this pretty quickly.
This is important because, in order to invest, you have to have money left over after all your other monthly expenses with which to buy your investments.
If you find that you're spending more than you're making, I suggest first reducing your expenses as much as possible. Here are 30 money-saving ideas that can help.
If you've cut as many expenses as you can and you're still cash flow negative, you'll need to increase your income. Here's my guide on how to land the biggest raise possible.
3) SAVE 3 MONTHS’ WORTH OF LIVING EXPENSES
Before investing, make sure you have saved AT LEAST 3 months' worth of your living expenses from Step 1 (6 months' worth is better).
This is your Emergency Fund and it is NOT for investing. It's for emergencies only.
Having an emergency fund of 3-6 months' worth of your living expenses empowers you to invest with confidence because, if the value of your investments drops, you always know you have your emergency fund to fall back on if and when you need it.
4) DECIDE WHAT YOU’LL INVEST IN (WHAT WILL YOU BUY?)
Before you actually invest, you must decide what you're going to buy... specifically, what TYPE of investment (or asset).
There are 5 different asset classes we normally talk about: the stock market, real estate, commodities, cryptocurrency, and starting your own business. And, although you'll have to decide for yourself what type of asset(s) you're going to buy, if I were going to start investing all over again, I would invest in the stock market.
For new investors getting started, the stock market generally has the path of least resistance because it doesn't require a minimum amount to get started like buying real estate would, it doesn't require you to physically hold anything like some commodities or starting a product-based business might, and it's typically not as volatile or as big of a learning curve as cryptocurrency.
5) PAY OFF DEBT WITH INTEREST OF >10%
Assuming you're going to start investing in the stock market, it's wise to pay off any debt with an interest rate greater than 10% because the stock market historically performs at around 10%*.
In other words, say you have $100 and you must decide between using it to pay down debt with a 12% interest rate or investing it in the stock market. Because that specific debt has an interest rate that’s higher than the average return of the stock market, you'd presumably lose more money by NOT paying off that debt than you'd be making in the stock market.
So, again, it might be wise to pay off any debt with an interest rate of greater than 10% before investing in the stock market. (I'm speaking generally - this varies for every situation.)
6) DECIDE HOW INVOLVED YOU WANT TO BE
It's time for a little self-reflection. When it comes to investing in the stock market, are you the type of person who wants all the details and to be in charge of every decision? Or, would you rather allow a professional to help you make decisions in exchange for a fee?
The former will likely require more time and effort in the long run, and you'll be solely responsible for the success (or failure) of your investments. The latter may require less time and effort, however, you'll be agreeing to pay someone for the duration of their support, and you place the fate of your investments in their hands.
Remember, you can always change your approach later… the idea here is to decide on an approach, and move forward. When I was starting, I opted to have a professional help me because my goal was to get invested ASAP (in fact, this is still the approach I use because I don’t have time or interest in picking my own stocks).
7) DO YOUR RESEARCH AND MOVE FORWARD
If you plan to go it alone, you'll need to research how to start investing in whichever asset class you selected (for example, if you decided to go with the stock market, look into self-directed brokerage accounts to see which best fits your needs) and begin researching stocks or other types of paper assets to buy based on your goals.
If you plan to partner with a professional, research professional providers for the asset class you chose (for example, if you decided to go with the stock market, search "managed services, robo-advisor, fiduciary." This loosely translates to a brokerage firm with professionals or AI algorithms that will invest in the stock market on your behalf, and who is legally obligated to act in your best interest).
In either scenario, it may serve you well to compare at least 3 brokerage firms. But don't get stuck here... be sure to pick one and move forward!
8) BUY THE ASSET
Many people get to this point, freak out, and abandon ship - do not be one of them!
Remember: the value of your investments WILL fluctuate... they'll go up, and they'll go down. It's simply the nature of the game. But, like I said, historically speaking, the stock market has returned an average of 10%* since its inception. And history repeats itself, right?
And don't forget: you've got your emergency fund to fall back on if your investments drop down for a while (which is one reason why always having your emergency fund savings is so critical). You've done the work of creating your safety net so you can give the market time to course-correct without needing to withdraw money from your investments at a loss.
9) BE CONSISTENT - INVEST REGULARLY!
It's important to remember: the magic of investing happens not when you invest once, but when you invest often. So, regardless of what type of asset classes you're investing in, be sure to set up a process for yourself that ensures you don't invest once and stop.
Whenever possible, I set up an auto-draft so I make sure money is going to my investments every single month. For example, when I started investing in the stock market, I calculated what I could afford to invest each month, and created an auto draft from my bank to my brokerage account.
(Important note: your brokerage account acts as a middleman between your bank account and the stock market... so make sure your money actually gets invested into the stock market and doesn't just sit in the brokerage account doing nothing.)
THE BIG PICTURE: INVESTING AND FINANCIAL FREEDOM
One of the reasons investing is great is because, yes, it can make you money, but more importantly, it can 'pay you back' with moments of your life. You can literally buy your freedom.
Imagine no longer having to trade time for money. No longer having to put in hours upon hours of work to receive a paycheck. Ditching the golden handcuffs that keep you tied to a job working day in and day out.
That's the REAL power of investing. Investing leads to having OPTIONS which leads to having CHOICE which leads to having FREEDOM.
It’s your time; take the plunge! You'll never know what’s possible until you try. investing has drastically changed my life for the better and, even when my investments are down, I've never once regretted regularly investing.
NEXT STEPS
If you’ve made it this far and you’re thinking I’M READY but I still feel some hesitation on where exactly to begin, I get it. Even when you’ve checked all the boxes and you can say I’M READY TO INVEST, it can be scary. Sometimes you just need a little more help, and I totally get that which is why I boiled everything down into a one-page checklist.
From making sure you’ve got the basics nailed down, to setting up and funding your brokerage account, if you’re a beginner who wants to get started investing the RELAXED way, this 14-point checklist is for you. It will walk you through the basics and getting set up with investing in the stock market, and it aligns with everything we've discussed.
So now you have it... You have everything you need to take your first step forward and begin. The only thing standing between you and financial freedom… is YOU! Make the choice RIGHT NOW to do ONE THING TODAY to prioritize your financial well-being and take a meaningful step toward your goal.
I'm rooting for you and I cannot wait to see what you accomplish.
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