by Jet Villamor
Allow me to share with you this article I’ve come across at citiseconline. Citiseconline is listed in the Philippine Stock Exchange (PSE) and is one of the leading online stockbrokers in the country. I learned my first lessons in the stock market through their web site as I made use of the tools they have in aiding newbie’s. Should you want to learn more, visit the website of citiseconline for yourself.
Many people come to invest for various reasons, be it motivated by personal circumstances or professional ends, but the act of investing by everyone seeks to gain or retain financial security. With prices of goods, utilities, transportation, housing and education being quite elevated nowadays, a dependable plan to build up funds through worthwhile investments must be made. This is the only way you can find security in your and your family’s future.
Start by appraising your net worth
You should begin by taking a snapshot of your current financial picture and appraising your personal worth. This must be done to ascertain how much of it can be adequately utilized for investment purposes.
To establish your worth, you must identify all your personal assets (what you own) less all your liabilities (what you owe). Once you are able to determine this, you will be able to estimate how much you really have and thereby apportion what you can for investment purposes. If the result above shows more assets than liabilities, you can now consider apportioning some of what is left (not all of it) for investment. If the result shows that your liabilities are greater than your assets, then you are less likely a candidate for investment, but may rather seek greater effort in reducing your obligations first before looking for investment options. Once you get your negative net worth back into the positive and can secure yourself with steady income, then you can get into the investment track with greater confidence and security.
Next review your cash inflows
The second step would be to determine your monthly inflows of cash, removing any expenses or obligations that arise on such a period. Start off by highlighting your monthly net income (after tax) from your job, adding all other recurring sources of income then subtracting from it what you spend in terms of living allowances and other constant obligations.
After making all your calculations, see what the resulting balance of this equation is. If the resulting balance is negative cash flow, then you must first try to reduce your overall spending to put you back into the black. If you are looking to invest, your outflow must be smaller than your inflow, so you can adequately take to invest whatever comes out in spare.
If you have negative cash flow, investment decision may be subtly prejudiced by your condition as you would often seek to assess your investments faster than you should have as your need for more cash comes about. This will compromise your holding power into an investment and hinder or limit whatever you may actually come out to earn. Once you come out on top of your financial situation and have a good enough cash flow, you can now endorse yourself to investment options feeling secure about taking on a little risk.
These are just the first two of the five simple basic steps that we need to consider before we will make the first step towards the right direction into trying investments. The next three steps will follow.
(for questions, comments, suggestions and reactions email @ jvvillamor@insular.com.ph)
