Build Your Emergency Fund FIRST

You never know what’s going to happen tomorrow. In January 2020, no one suspected that we’d be facing a nationwide shutdown with massive unemployment and stay-at-home orders amidst a global pandemic. But this sheds light on why it’s so crucial for you to build an emergency fund that includes three to six months of living expenses before you begin investing. Once you’ve managed these types of savings, you can start investigating other investment opportunities, including those with more risk.

Talk to a Financial Advisor

Financial advisors understand a thing or two about the risks and rewards of investing. Even if you opt to “go it alone” for your investing decisions, a financial advisor can be essential in helping you create a long-term strategy for success. Investing isn’t a sprint. It’s a marathon. Keep the long-term goal in mind and remind yourself that the most effective methods for investing involve compounding the returns over many years.

Start Small

Just as you don’t want to bet the bank on your first hand at the blackjack table, you also don’t want to go all-in with your initial investment. Start with baby steps. Take your time and pace yourself. Allow yourself the opportunity to learn from your mistakes and build on that knowledge with future investments.

Continue to Grow Your Savings

Don’t abandon your traditional savings strategy just because you’re now investing in the markets. Consider more aggressive savings options, if possible, like money market accounts or certificate accounts. These investments have little to no risk and are easy to liquidate when life’s unexpected emergencies arise. That is not always the case when you have funds tied up in the stock market.

Finally, it’s important to understand that while you may hear about wild successes in the stock market, like the Gamestop Rebellion, there are far more untold stories about significant losses and failures. For these reasons, it is essential to follow the advice above and avoid becoming one of the many cautionary tales when it comes to investing.

We’re Here to Help!

As your Credit Union, we understand the importance of a robust savings strategy. We can help you open up a savings account to build your emergency fund and supplement your nest egg. Or, if you’re looking into a market-based investment strategy, we have financial advisors available to walk you through the process and answer all your questions.

Visit one of our convenient branch locations or call (949) 588-9400 today to learn more about how we can help in your investment efforts.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.