Okay so you are finally coming to terms with the fact putting your hard earned cash in a savings account will not make you wealthy or help you retire comfortably. Regardless of your age you know that investing is the way to make your money work for you. It’s like Shark Tank investor Kevin O’Leary says, “My money are like my soldiers, I send them to war so they can capture more money”. In other words, his money works for him not the other way around. Like anything you are new to, investing takes preparation. Before jumping in, you need to make sure to establish a good foundation. You need a good financial foundation before you even consider investing.

Here are our top 5 things anyone, regardless of age, income or investing knowledge needs to do before jumping in the ring with the Market.

Pay off your Credit Card Debt

The top notch hedge fund managers make an average of 15-20% return on their money and that is when they are having a pretty good year. If you carry a balance on your Credit Cards then you are paying an average of 15-20% in interest and fees. So let’s say you pulled the trigger on some investment products and you were lucky enough to get 7-10% return on your investment but on the other side you also paid 15-20% in interest to the bank. The bottom line is that a return on your investment is not guaranteed however; paying interest on the balance you are carrying is something you cannot avoid.

Emergency Funds

Our economy is unpredictable and can end up in the toilet in the blink of an eye. It’s also important to remember that the economy usually takes your job down with it. For these reasons most people know how important it is to stash 6 to 9 months of living expenses aside in case of job loss. Doing this would also definitely help many of us sleep better at night knowing that no matter what happens tomorrow, you and your family will still be able to buy 3 different kinds of cereal not just the cheap one!!

With all that being said you can’t invest without establishing at least 6 to 9 months of living expenses on the side.

Get “Free Money” From Your Employer

This is a no brainer. If your employer matches some or all of your contributions into a retirement account and you are not taking advantage of this free money, then you are leaving money on the table. C’mon we both know your employer doesn’t pay you enough already, so please take advantage of his free money.

Know What You Are Getting Yourself Into

The investing world is by all means a beast, sometimes an ugly one. You could say it’s the beast from the Beauty and the Beast movie. He is ugly and scary but once you get to know him, he can be rewarding and kind. Before cuddling with this beast, consider learning as much as you can by doing your homework. Know your options and what suites your plan and risk tolerance. You can check our Investing 101 for details.

Know Your Risk Tolerance

How much risk a person can tolerate can differ greatly. To find out your risk tolerance you should consider many factors such as your income and expenses and whether you are single or married with a family. The main elephant in the room is your age.

For example, if you are 5 years away from retirement you might think twice before being an aggressive investor. If you are in your 20s then it doesn’t make any sense to put all of your money in bonds and CDs.

If you will not be able to sleep at night when the market takes a hit then you should consider a very conservative portfolio.