Who Should and Shouldn't Invest?
- Friday, September 29, 2000
Don't Risk Money You Can't Afford to Lose
Reprinted with permission from No-Debt Living, copyright 2000 No-Debt Living. Robert Frank is editor of No-Debt Living, www.nodebtnews.com, which provides financial, consumer and time-management news with a Christian perspective.
The stock market is a great place to invest your money, but timing, attitude and understanding are critical. Today's volatile market it an excellent example of why that principle is true.
Here are five major principles that seasoned investment experts provided to No-Debt Living readers.
First, playing stock market independently (and I'm NOT referring to participating in a corporate 401k program with matching contributions) is designed for those people who have already:
- Eliminated all credit card and consumer debt and established a workable budget.
- Set aside at least one month's living expenses in a bank account.
- Have three to six months' living expenses invested in an interest bearing account.
- Have accumulated enough to meet short-term goals and needs.
- Have established a system for meeting their long-term goals.
Second, when you enter the stock market, you need to have a long-term perspective that will allow you to ride out unexpected dips in the stock price. Risk is always a factor in investing -- particularly in today's market.
Third, you only invest money you can afford to lose or tie up for a long period of time. If it's money you may need soon, don't invest it. Don't presume upon the future. (James 4:13-14)
Fourth, you need to have an understanding of how the market works and of the industry and company you're planning to invest in. Don't invest in a company and industry you don't know.
Finally, you should be able to explain to someone else why the stock you're looking at is a good investment at a certain price, and at what price you'd think about selling.
For more investment and money-saving ideas visit No-Debt Living, www.nodebtnews.com, where you can view more than 100 valuable articles and resources on financial, consumer and time-management news with a Christian perspective. Copyright 2000 No-Debt Living.
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