Step number 1. Financial self-control.
Step number 1. Mini-fund for emergency needs.
This is a supply of money for unforeseen expenses caused by unexpected events that sometimes happen in our lives: job loss, damage car, health problems ...
Step number 2. To pay all debts using the method of "snowball"
The method of "snowball" is this: pay on all loans minimum payment. Except for one thing - the smallest in size. It must pay off as quickly as possible. Then will come the next turn, the largerthe loan, etc.
Step number 3. A full emergency fund
It's time to create a full "urgent" fund. This is not an investment, this insurance, you've done yourself a buffer between you and the world that is full of unexpected turns.
Step number 4. Invest 10% of income in retirement.
I do not propose to invest more than 10% in retirement, because there is such goals such as saving for children's education and debt repayment on the mortgage.
Step number 5. To pay the mortgage as soon as possible.
Mortgage payment, whatever they may have been low - reduce your stability during crisis situations and do not allow to invest large sums.
Step number 2. Personal Financial Planning
Step number 6. Gather information about your finances.
All information about your personal finances: how much is to whom and how should, how much you earn, how much and what to spend, the investment profile.
Step number 7. Put the extra financial goals
What do you need a house? Or apartment? What Car? What kind of education you want to give your child? What additional education you want or your loved ones?
Step number 8. Make a financial plan.
Plan your cash flow based on the goals and situation. Check whether your goals are achievable in the context of your current financial status.
Step number 9. Select the appropriate financial instruments
For each of your goals need to find a solution. Need to determine the time horizon for achieving goals, risk tolerance and select appropriate tools.
Step number 10. Implement the LFP
Just do what you planned according to plan. ACT, or your plan - just no one exact set of letters and numbers. By the way, the lack of action - the main cause of failure of any plan.
Step number 3. Investment (portfolio) management
Step number 11. Formulation of investment policy
Determining the expected ratio of "risk-return" in the context of investment goals. Establishing the level of risk tolerance.
Step number 12. Financial analysis of securities
The study of individual groups of securities, types of securities to find undervalued by the market for further investment is in these species.
Step number 13. The business
Identification of the specific securities for investment, their proportion in the portfolio based on a given level of risk and desired returns.
Step number 14. Revision Portfolio
In order to maintain the necessary characteristics of an investment portfolio, you need to periodically look at what the paper should buy and which ones should be sold.
Step number 15. Evaluating the effectiveness of portfolio
Comparison of actual results with the reference portfolio.