8 Things You Should Do Before You Invest

March 4, 2020

Whenever I mention that I invest in stock market people around me will feel amazed. things-to-do-before-you-invest


They start asking how stock investing works and how they can start their own journey as an investor. 


I used to feel overwhelmed when people ask me about investing in stocks. I became an investor at 19 years without any formal education or knowledge on how the stack market works.


But it was one impulsive decision on my part I'll never regret.


In my personal experience, it was only difficult at the start but once you have the hang of it everything will follow.


Today I compiled some helpful steps you should do before you even consider investing your money. The New Year comes with a hopeful promise and I hope starting your investment journey is one of your goals this year.

8 Things You Should Do Before You Invest



1. Define your financial goals

When it comes to the area of personal finance, setting realistic goals is so important. You need to establish your road map to success and it could only be done once you have defined your financial goals.


I love sharing my personal and financial goals for the year ever since I created SavingsPinay.


You can read my all my yearly goals below:










I like setting goals because it helps me visualize how my life will be. It gives me a clear plan on what I want to achieve and the next actions I should take to help me achieve it.


Investing for the first time can be a daunting task especially if you have no idea what you are doing. Figuring out your money goals will help you. Every decision you make as you invest will be anchored to your goals.


How to set effective financial goals

  • Write it all down.

Take a list of the things you are saving up for. Note all the important areas of your life you want to save and to grow your money. From saving an emergency fund to putting up a food franchise business, etc. write it all down.


  • Be specific with your target dates.

Having a specified time frame for your goals will help ensure that your goals are achieved. There are always short-term goals (can be done in 1-3 years) and long-term goals (can be done in 5-10 years). Review your list and categorize whether your goals are short-term or long-term.


  • Focus on your top two goals.

Trying to do everything at once will be very difficult especially in the area of finances. I have mentioned in my debt-management post that paying off debt should be on top of your money goals. This will assure you of positive cash flow necessary to support your other goals. In case your main goal is to travel before the year ends then make sure that you are savings is more than your spending always.


  • Monitor your goals.

Track your progress when it comes to your financial goals. I personally did a Money Makeover page in my Bullet Journal set up this year to monitor how much I am saving (emergency fund) and earning (extra income fund).


2. Know Your Net Worth

Knowing where you are now financially is another important factor to consider before any investment. Knowing your net worth will act as your reference point. It will simply show you what you own and what you owe determining whether an investment is feasible to your current financial status.


READ: Why Knowing You Should Know Your Net Worth Now


How to calculate your net worth


  • First make a list of all of your assets.

This includes the money you have in the bank, cash on hand, retirement savings, value of stocks you own, furniture with market value etc. Everything that you own that has a money value.


  • Next make a list of all of your liabilities.

This includes the money you owe in the bank, credit card debts, personal loans, salary loans, home loans, etc. Every debt that you have should be listed along with the amount.


  • Now subtract.



Once you have subtracted your assets to your liabilities, the difference is called Net Worth. There are three possible answer you will get.

Positive Net Worth means you have more assets than your liabilities. This shows you are more than ready to take the challenge of investing.

Zero or Equal Net Worth means your assets and liabilities are of the same page. Investing your money is possible but it can be a great risk.

Negative Net Worth means your liabilities are higher than your assets. This doesn't mean you can't try investing but you must put a lot of effort to pay off your debts and improve your assets.


Again getting your net worth is just about making sure you are aware of your current financial status. It will set as a guideline before you make any investment or money move. This will even lead you to pay close attention to money habits that give your negative impact.




3. Determine The Kind Of Investor You May Be

We all have different risk tolerance when it comes to investing. This will determine what type of investor we maybe.


In my post How to Invest for Beginners in the Philippines I mentioned that there are three types of investors in general.


Knowing to which type you fall into will guide you on the right kind of investment to make that will maximize your potential income.


How to know what type of investor you are

  • Conservatives or those who have low risk tolerance. 

They lean more on a portfolio that offers steady growth with low risk. They are easily swayed by negative news on surrounding the market and will need further explanation before making a financial decision.


  • Dynamics are people who have the highest risk appetite as an investor. 

They want capital growth through long-term investing. They do not get easily scared if they loss money for they remain positive that as long as they continue to invest things will change. 


  • Balanced are investors who are a mixture of the two. 

Their risk tolerance is on a medium level. They love capital appreciation through investing in a long period of time but will still get fearsome in case things don’t go along their way.


Do not forget to consider your age, years you want to invest and your risk tolerance.


They say that the younger you are the more years you can invest your money and the more risk you can take. This will put you as a Dynamic type of investor or someone who are willing to trade on stock market, invest on equity accounts or try non-traditional investment vehicles. 


Conservatives more often than not go for time deposits, special savings accounts or government securities because they badly needed assurance in every investment they make.


Here is an open link I found online where you can determine the type of investor your may be. LINK.


4. Make sure you have a secured emergency fund

As the name suggests, an emergency fund is a money cushion set for emergency situations.


This is a very handy account for expenses that are unplanned and unexpected like a sudden layoff at work, sickness in the family or a natural disaster that affected your home. Aside from these emergencies an emergency fund will also become helpful for first time investors.


Investing, in general, comes with certain risks. You will never know how the market will perform tomorrow. There are good days and bad days that can shake your confidence as an investor.


Thus, an emergency fund will definitely act as a safety net for your money moves as an investor.


With an emergency fund accomplished you can easily manage how your investments will be. You won't feel afraid with sudden changes because you have a spare money to still function in case of emergency.


For more information about Building an Emergency Fund read below links:

Why an Emergency Fund Should be in Your 2015 Must-Haves And 6 Ways to Build One

3 Envelopes of Your New Life: Emergency Fund

The Different Saving Funds You Should Own




5. Understand the different investment vehicles you can invest

Now another thing you need to know is that there are a ton of investment vehicles out there you can choose from.


There are traditional investments like time deposits, mutual fund, UITF, ETFs, direct stock market and non-traditional investments like precious metals and jewelries.


You need to familiarize yourself with the type of investment that falls along with your goals and the amount you can invent with. You need to take time to understand the things that your hard earned money is going to be invested in.


Managed Funds as an Investing Vehicles in the Philippines >>>


Managed Funds are type of investments wherein a professional financial institution will make the investment options for you.


In a managed fund the investor has his/her utmost convenience in investing. It works like regular savings account where you top up your investments every month. You and other investors' money are pooled together and depending on the buy and sell decisions of your trusted financial institution, your money is invested. Shares are called Net Asset Per Value of Share of NAVPS.


Examples of Managed Funds are Mutual Fund, Unit Investment Trust Fund and ETF.


Other Investment Vehicles You Ought to Know >>>


Below are complete list of other investment vehicles you need to know aside from managed funds:


  • Direct Stock Investing

Here you will rely on your own knowledge when it comes to buying and selling stocks. There are Easy Investment Plan options you can open for low capital and/or invest one time with high amount. READ: FAMI versus COL EIP Beginners Alert


  • Real-Estate

Properties are one of the best investment you could make. You can save and invest in a property then let the market to its wonder to give you a higher return. Market value of properties grow along with time.


  • Jewelries

Women tend to go with this type of investment. Just like properties, jewelries also grow together. CLICK HERE for more info


6. Understand the basic details of your chosen investment vehicle

Once you have chosen the investment vehicle to grow your money with the next smart thing you should do is to learn the basics.


If you choose to invest in a mutual fund for example, you should read and understand your investment prospectus. This document will reveal to you where your money is being invested every month.


Investing in direct stock market on the other hand calls for a deeper analysis. Know that your investments are changing in value daily, weekly and monthly depending on the state of economy. The percentage of your gains and loss should also be taken into account.


If you really want to invest in stock market directly my personal recommendation is to get a good  investment book are like RFP Marvin Germo's Stock Smarts Stress-Free Investing and Bo Sanchez' My Maid Invests in the Stock Market. Both books will teach you the ways of stock market.


7. Pay Down Your Debt

 Carrying a high debt like credit card debts or personal loans can affect your cash flow in a negative way.


I highly suggest to pay down your debt first before making any investment.




Because every amount you spend in paying your debt is a sure return to your cash flow. The faster you get rid of your debt the more money you can save and invest.


How to Pay Down your Debt?

  • Evaluate your liabilities. Make a list of how much you owe, from whom and when is the deadline.

  • Find means to pay. If your current income can't support your debt then try to find part time jobs you can do. There are a lot of side hustles online you can try.
  • Talk to your creditors. Walang hindi nadadaan sa mabuting paki-usapan. Make sure that you talk to your creditors and let them understand your financial situation. Negotiate the amount you can pay on a monthly basis so your monthly budget will still be on track.


Once you are done with your debt or it seems manageable you can now start growing your money through investment. Just take it slowly but surely.


Related Links:

Here's a Strategy to Pay Debt Even With Low Salary 

How to Get Rid of Debt and Reclaim Your Finances

Pinoys Guide on Dave Ramsey's Total Money Makeover




8. Have a Bank that Can Let You Invest Automatically

The idea of automation in personal finance is so important.


Choosing a bank that can support automatic transfer and online banking will make your life as an investor smooth. I, for example have a Metrobank account where I can pay both my FAMI-SALEF Mutual Fund investment and COL-Financial Direct Stock investment.


This also serves as my payroll account so I don't have to worry funding my account on a monthly basis.


READ: How to pay FAMI-SALEF with Metrobank Direct


Automatic transfers can help you build the habit of investing regularly. It autopilots the movement of your money giving you so much room to do other tasks that matter. Also the golden rule of Savings + Investment – Income = Expenses will be done.


Final Notes from SavingsPinay

No matter how eager you might be to start investing I hope you have done the things mentioned in this post first and foremost. This will ensure that you have a smooth sailing journey in growing your money.


Yes, the best time to start investing is now but without proper planning and goal setting you will definitely get lost in the process. 


Remember that that's your hard earned money we are talking about here. Build a strong foundation that will make you a pro in terms of investing. 

Hope this post helps. Good luck.


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Are you ready to invest this year?


Clariza Glino

Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at, a beauty and lifestyle blog for frugal Pinays and manages,, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at

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