Before You Invest (1252)

Saving is setting aside money for future use, while investing is setting aside money for future gain. The difference is not a large one, but the implications are many. Keeping these two definitions in mind, let’s look at some financial requirements you probably need to meet before you start to invest:

- Emergency Fund. Financial experts say you need the equivalent of three to six months’ living expenses set aside for emergencies. You need an emergency fund so you do not have to cash in investments to cover a financial crisis (e.g., car repair).

- Adequate Insurance. You’ll need health insurance with good major medical coverage, disability income insurance for any bread winner, life insurance as income protection for dependents, property and vehicle insurance for your possessions, and liability coverage.

- Retirement Plan. You should establish a retirement plan through an employer, or on your own with an individual retirement account, Keogh, or similar plan. Be sure to make regular contributions for retirement.

- Equity if Home Ownership Is Important. Some equity in a home may be desirable before starting to invest. If home ownership is not important or home ownership is the reason for investing, meeting this requirement is not necessary.

Investing is a complex and ever-changing field. Before investing, consider the financial objectives you are trying to achieve.

For more information on this subject, Please visit the College of Agricultural Sciences Publications Web site.

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