1. Find a financial advisor
Managing your finances can be a complex job. That is where wealth management firms or financial advisors come in. They work with clients to identify their financial objectives, craft a strategy to achieve those goals over time, and manage their wealth. Since financial goals differ by individual, these firms offer a variety of specialties and services.
2. Pay down high-interest debt
Among the best things you can do before investing $100,000 is reducing debt that carries a high interest rate, such as credit card debt and debt from other loans, like payday loans. The average credit card interest rate is 16% or more, well above the average annual returns from the stock markets.
3. Consider a balance transfer credit card
If you have debt on multiple credit cards, look into getting a balance transfer credit card. Some cards will allow you to consolidate all of your debt and may offer an introductory 0% rate that can help you accelerate paying down your debt.
4. Create an emergency fund
An emergency, or rainy day, fund is cash set aside for emergencies, such as losing your job, having a major car or house repair expense, or any other emergency. Many Americans are not prepared for emergencies. A 2018 report by the Federal Reserve found that almost 40% of American adults would not be able to cover a $400 emergency with cash, savings, or a credit card charge that they could quickly pay off.
5. Decide what kind of investor you want to be
Whether you are a do-it-yourself investor or lean on the advice of a financial professional, before you invest, decide what kind of investor you are, including how much risk you are willing to handle. If you have a high tolerance for risk, more of your portfolio can be invested in stocks. You may be more inclined to take a flier on smaller companies. The motto of investing is high risk, high reward, but this may leave your portfolio more vulnerable.
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A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.