4 signs you and your budget are ready to invest

A man who is ready to invest.

If you clicked on this story, you’re probably ready to put some money away for future dreams. Should investing be part of your reality? How will you know you’re ready to start investing? Maybe you already are and didn’t even know it. Here are signs to help you know for sure.

1. A well-stocked emergency fund

Life throws curveballs. It’s good to have an emergency fund with at least three months’ worth of expenses to give yourself the stability that investing can require. Your emergency fund will give you a buffer if anything unexpected happens, so you won’t have to tap into investments slated for other purposes. Don’t worry about having a well-stocked emergency fund before investing. It could just be a matter of prioritizing saving for a while.

2. Extra money every month

Your emergency fund is looking good. You pay all the bills and any high-interest debt. You have enough to cover groceries and other expenses. Still some left over? It doesn’t have to be a lot. Investing is all about starting small and growing over time. The key is to stick with it so the money invested can work for you.

3. Long-term goals

Investing is a journey that goes better if you know where you’re headed. That’s where long-term goals come in. Goals give you direction and focus for your investing. Maybe your goal is a comfortable retirement. Maybe it’s a great college for your kids. Be detailed and realistic about what you want to accomplish.

4. Access to a retirement plan

A 401(k). A 403(b). If you can contribute to an employer-sponsored retirement plan like these, you may have already taken a big step toward investing. With most employer-sponsored retirement plans, you can elect to have money invested from each paycheck. That makes it easier to contribute to your retirement goals. Some employers even offer to match employee contributions to a certain level. That’s free money, and these extra contributions can help a lot over time. If you don’t have access to an employer-sponsored retirement plan, you can look at an individual retirement account (IRA).

Feel like you’re ready to get started? Here’s what you can do:

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements. 

Investing involves risk, including possible loss of principal. 

Asset allocation and diversification does not ensure a profit or protect against a loss. Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. 

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