CWM's Christina Ubl Featured as MoneyGeek Expert

Q. How much should beginners invest in stocks and bonds? And when is a good time to increase those investments?

A. How much a beginner should invest in stocks and bonds is based on your financial plan and a current snapshot of your financial situation.

Ask yourself:

• Are you paying only the monthly minimum on credit cards or other high-interest debt? If so, investing in stocks and bonds should wait until your revolving debts are paid off.
• Can your emergency fund cover 3–6 months of living expenses? If not, it’s smartest to wait to invest in stocks and bonds until your emergency fund is adequate.
• Are you progressing on savings for your mid-term financial goals — like a new car or next year’s vacation? Will your mid-term goals be derailed by investing in stocks and bonds, which have a longer time horizon?
• Can you invest in stocks and bonds through an employer’s retirement plan with a match? If so, you want to invest the maximum amount your employer will match — for what many consider to be an immediate 100% return on your investment.

If you are a beginner because you are a younger adult, investments in stocks and bonds outside a company’s retirement plan should be limited until high-interest rate student loan obligations have been met.

If you are a beginner because of a life transition — for example, the recent death of your spouse, divorce or, more happily, a sudden inheritance or lottery win — then proceed carefully. Emotions and money are a dangerous combination. Start by determining the amount of money you can afford to lose without severe angst, divide that amount by 12 and invest that figure each month for one year. You will gain experience and the emotional buffer you need before increasing your investments.

If you'd  like to read the whole article visit "How to Start Saving and Investing" on the MoneyGeek website.