Hello,
It’s me, Torben, the one that has no clue about what cryptos are!
It’s before it all started for me. Well I heard about this “BITCOIN” thing and that it’s a currency but beside that I was completely clueless about cryptos. But that didn’t mean I didn’t have a clue how to handle money. I think everybody who wants to become rich with risk investments (and crypto is) first has to make sure it doesn’t fire back. I recommend that everyone who likes to invest and become more independent should follow this steps first (all this should be in your home currency):
Make sure you don’t use more money than you have.
- This is fundamental if you don’t have money you can’t invest money
Make sure you pay all your depts.
- The worst thing someone can do to his goal of financial independence is depts. Depts are generating constant loss of your income by a certain amount of %. If you have depts, try to erase all of them as fast as possible, even small ones.
Make sure you have savings for unforeseen needs. This should be 3 or more times your average monthly income (the more risks you have, the more it should be).
- This is simply to provide a buffer, if something unforeseen happens you can deal with it with this money (i.e. Laptop gets broken).
- If your buffer isn’t filled you will have to make sure it becomes filled again before you start ANY new investments.
- It is helpful to have an additional bank account and at the begin of the month you transfer automatically as much as you can to this account. Make sure you can still live without it.
- It’s recommended to put every month a small amount of money into your buffer, even if it’s already “full”, so it grows and covers more risks.
Make sure to have the insurances you need, most if not all people should have a disability insurance and a health insurance and most likely a liability insurance (if not provided completely by your country). Other insurances depend on your home country, common laws, politics, etc. .
- Insurance in general: Insurances are for those risks you have in your life that are high but aren’t in your control (i.e. you stumble into someone, he gets hurt and sues you for a million dollar).
- Disability insurance: most likely you are working in some way or another, lets say you make 25k a year and you have just 20 years coming, this is already half a million, this needs protection,
- Health insurance: Can’t say much about it except get one, I live in a Country where I don’t have to worry much about it and it is more the question what additions you think you need or want.
- Liability insurance, it can cost you millions to just make one step to much at the wrong time
- other insurances: here it gets tricky, because it’s dependent on laws, people, politics and so on, just a few honourable mentions:
- furniture insurance: if you have things in your home that are worth a lot you should make sure they are protected
- life insurance: more of a family insurance since you will not profit from it
- building insurance: if you have your own home it’s most likely worth a lot and therefore worth protecting
- The insurance that you think is right for you
If all other things are done, start putting a bit of your money aside: this will be for your investments
- “To invest and generate money, you need money”
- Again, an additional bank account is helpful
- use at least 10% of your monthly income (more money makes more profit)
Don’t get greedy!!!
- There is always an opportunity to make even more profit and sometimes it is completely fine to do so but always take a step back and ask yourself: ”Is this a good idea, should I do it and would it hurt me not to do it?”. And then try to make a clever decision.
This guide isn’t complete or bulletproof, you should always ask yourself “What can I do to minimize risks (this is one of the fundamentals inside of investing)”. If you analysed or felt like you should do more, do it. If you felt or analysed that I am missing out something, make sure you don’t (and may add a comment here so others can profit, too).
Well, since I already have done all this as far as I think it is needed, I could start investing.
Let’s see what options I have.
Torben, not into crypto yet.