Sterling Investment Management

First Steps… First

Keep it simple.

  • Goal 1: Live within your means (more later).
  • Goal 2: Pay off all your credit card bills (it is probably the most expensive debt you owe).
  • Goal 3: Pay off all your short-term personal loans (most likely the most expensive after credit cards) but perhaps not your mortgage (perhaps the cheapest form of debt).

Having cleared the debt burden, your next step is

Create a Rainy Day Fund

No one in the world can predict what’s going to happen next. Always prepare for the worst and hope for the best. Having an emergency fund keeps you covered for a few months if you lose your job or other earnings. This Fund is typically to cover expenses for 6 months, in case of emergency. Put the money away in the best instant access savings account you can find in the market.

Building wealth does not depend on the amount of money you earn, rather it depends on your saving and investing habits. The earlier you start saving and investing, the more wealth you can build over time. Before starting this habit, it is important that you define your financial goals and objectives. If you are saving for your long-term goals, then you should consider investing in equities as this asset class has provided the most returns in history. (Do not take our word. Instead, we encourage you to google “equity returns over the long term” or something similar and read research papers and studies that have demonstrated this). Be curious and read more.

If you are saving for short-term goals, then you should put your money in a savings account. It will earn only a small interest but you will avoid all the stress that comes with stock market volatility.

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