Laura McCamy

<p>Angela Moore's first job after college was as a finance director for a car dealership. She spent all day looking at other people's credit and, she said, "I quickly realized that there was a huge financial literacy problem in the community." </p>

<p>Moore decided to go back to school so she could help people close this gap. She is now a CFP and a certified financial education instructor with her own <a id="7e3f7374-5a3b-3a17-a7a2-998aa378a80a" href="https://www.modernmoneyadvisor.com/">  firm </a> .</p>

<p>Whether you have a little money saved up or you just got a windfall, Moore thinks "everybody should look at opening some type of investment account." She noted that most bank accounts pay interest rates that don't keep up with inflation, so your savings lose value over time. </p>

<p>Your <a id="d565bae2-8540-33a3-a34d-cba027fd867b" href="https://www.businessinsider.com/category/investing?utm_source=intl&amp;utm_medium=ingest">  investment </a> account can be an IRA, 401k, or any brokerage account that hold funds made up of stocks, bonds, and other investments. Here are six things to think about before you open your first <a id="7338093b-77c4-3bb0-ab6e-1c021a1267a8" href="https://www.businessinsider.com/category/investing?utm_source=intl&amp;utm_medium=ingest">  investment account </a> .</p>

<h1> Create a rainy day fund first. </h1>

<p>"You don't want to take all your cash and put it in investments and then not have any cash in case of an emergency," Moore said. That could force you to withdraw money from your investment account when the market is down. </p>

<p>Instead, set aside between three and 12 months of living expenses in an <a id="fa542158-dd08-3ce8-afdc-785d4bbe8f7c" href="https://investor.vanguard.com/emergency-fund/amount">  emergency fund </a> , Moore suggested, noting that "the amount that you need depends on the stability of your income." Freelancers need a bigger <a id="65005a24-5ca7-34aa-a267-36252ac9d57a" href="https://www.thebalance.com/how-much-should-i-have-in-my-emergency-fund-2388353">  cushion </a> than someone with secure employment. Plan on having at least a couple months of emergency savings before you begin investing.</p>

<h1> Understand the costs associated with investing. </h1>

<p>There are two primary types of costs associated with investment accounts, according to Moore: management fees, charged by your investment manager, and fees charged by the funds you invest in. </p>

<p>Total fees are usually in the range of 1% to 2%. If you start investing at a young age, Moore said, those fees will " <a id="69d65793-265d-3114-a122-2ac1caf79ada" href="https://www.fool.com/investing/general/2016/03/04/4-investment-costs-to-watch-out-for.aspx">  add up </a> over time."</p>

<p>Don't let this discourage you from investing – just understand the costs associated with your accounts and look for low-cost alternatives.</p>

<h1> Get investment help from a robot. </h1>

<p>Moore has a suggestion that can save you some management fees: "There's a lot of robo-advisors where there's a very little fee or no fee at all." A <a id="07dbed7f-2335-3fbc-ab8d-42f0501a91db" href="https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp">  robo-advisor </a> is AI that asks you a set of questions about your goals and your tolerance for risk then uses an algorithm to recommend investments.</p>

<p>"For the average investor who's just getting started, a robo-advisor is great," Moore said. "I'm a financial advisor with a master's degree, and I use robo-advisors for myself." </p>

<p>She noted that accounts associated with robo-advisors often have lower minimums than accounts managed by humans. Some have <a id="539fb3d3-c403-35d0-afba-cb1a29839f92" href="https://www.nerdwallet.com/blog/investing/betterment-review/">  no minimums </a> , so you can start building your portfolio with a small monthly investment.</p>

<p>Nerdwallet has a <a id="4f1986e8-30f4-3c98-aaa4-039d0521976c" href="https://www.nerdwallet.com/blog/investing/best-robo-advisors/">  list </a> of the top robo-advisors for 2018.</p>

<h1> Keep your focus on your investment goals. </h1>

<p>"A lot of people make the mistake of choosing investments based on their performance," Moore said. While it's tempting to pick a hot stock, that stock could easily take a big tumble. </p>

<p>Instead, Moore suggests that you write down your investment goals, such as saving for a house, a wedding, or your retirement. Figure out how much you need and your time frame, then figure out what return on your investments will allow you to meet your goals. </p>

<p>Moore's suggestion: "Take the least amount of risk possible with the highest return to reach your goals."</p>

<h1> Follow your head, not your heart. </h1>

<p>" <a id="5f7b79ef-86ef-343f-a71f-e977bba330cc" href="https://www.investopedia.com/terms/b/behavioralfinance.asp">  Behavioral finance </a> is one of the most discussed topics in the financial planning world now," according to Moore. Many investors, she said, "operate based on fear or greed and often have overconfidence in the market or a false sense of fear."</p>

<p>Neither of those emotions are good investment advisors. Instead, Moore said, "Have a strategy based on your goals and practice prudence."</p>

<h1> Dont put all your eggs in one basket. </h1>

<p>"You want to have different kinds of investments that do different things in different markets," Moore said. A portfolio with too much of one <a id="02f76c3a-0855-3863-aa2b-1b7acd18ce91" href="https://www.nerdwallet.com/blog/investing/types-of-investments/">  type of investment </a> is susceptible to big losses when there's a downturn. A <a id="2f8291ce-b4c8-3482-a121-e5f16a3a6fe0" href="https://www.fidelity.com/learning-center/investment-products/mutual-funds/diversification">  diversified </a> portfolio protects you from the vagaries of the market. Moore noted that a robo-advisor can also help you balance your investments here.</p>

<p>At the end of the day, Moore said, "The important thing is that you get started and you don't allow fear of the unknown hold you back or make you procrastinate." The sooner you start investing, the sooner you start saving for your goals.</p>

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<p><strong> SEE ALSO: <span id="39d723f7-b0e3-3890-aca5-7fa4fb464b89" itemtype="link" itemscope="itemscope">  How to easily find a savings account that will earn you more money </span> </strong></p>

6 things you should know before opening an investment account

<p>Despite the <a href="https://www.businessinsider.com/category/entrepreneur?utm_source=intl&amp;utm_medium=ingest" id="5ca47f94-8994-3db9-a668-22bba9b0a680">  entrepreneurial </a> hype of the Silicon Valley era, not everyone is suited to <a href="https://www.businessinsider.com/tips-for-starting-a-business-2018-10?utm_source=intl&amp;utm_medium=ingest" id="b20b10c3-5c2d-3d8c-a576-61b19a535578">  owning a business </a> — and that's OK.</p>

<p>"Starting and growing a business takes a lot of energy. It's very risky," <a href="https://blog.uptimabootcamp.com/are-you-cut-out-to-be-an-entrepreneur/" id="5e3fd087-90ea-3002-aebb-5da8d0501276">  Rani Langer-Croager </a> , the cofounder of <a href="https://uptimabootcamp.com/meet-the-team" id="9b9dcf49-dd86-3a13-a8b7-9adea4d3f322">  Uptima Business Bootcamp </a> , told Business Insider.</p>

<p>There's no shame if you are happier as an employee, as some people don't have an <a href="https://www.businessinsider.com/category/entrepreneur?utm_source=intl&amp;utm_medium=ingest" id="5ca47f94-8994-3db9-a668-22bba9b0a680">  entrepreneurial </a> mindset. Though you can develop entrepreneurial traits, your business would need to be something "that you can't not do," according to Langer-Croager.</p>

<p>From issues of risk appetite to matters of personal finance, Langer-Croager shared eight signs you might want to keep your day job, at least for now.</p>

<h1> 1. You have a low appetite for risk </h1>

<p>Strelka Institute for Media, Architecture and Design/Flickr</p>

<p>Here's the harsh reality of starting a business: around 70% of startups are no longer in business by year 10, according to <a href="https://www.fundera.com/blog/what-percentage-of-small-businesses-fail" id="9324f56c-172f-376a-a6f1-468cf3e335d8">  Fundera </a> .</p>

<p>Even if your product or service is fantastic, there are a host of snags you can hit, from running out of money to running out of steam. To deal with this risk, "every entrepreneur should go into this with their own timeline" for when they expect the business to turn a profit — and pay its founder a salary. </p>

<p>This timeline should be "tied to their own financial wellbeing," Langer-Croager said. In other words, figure out how long you can afford to allow your business to grow without getting something back from it, knowing that there's a chance your startup might never turn a profit. She said that doing so "makes managing that risk a little easier." </p>

<h1> 2. You have a "scarcity mindset" </h1>

<p>"People who are in a scarcity mindset think there aren't enough opportunities or resources for them," Langer-Croager said. This can result in a sense of desperation that can lead you to pursue avenues that hurt your business, rather than holding out for better opportunities. This is a pitfall even for seasoned business owners during down times, she said.</p>

<p>"Working on your own relationship with money and knowing that relationship might be deep-rooted" may be necessary to remove this obstacle to becoming your own boss, according to Langer-Croager.</p>

<p>Small Business Trends <a href="https://smallbiztrends.com/2016/11/startup-statistics-small-business.html" id="c2edcc88-4a8f-3611-aa4f-a873e0de1aa6">  reported </a> only 40% of startups actually turn a profit and 82% of small business failures are tied to cash-flow problems.</p>

<p>It can take years for your business to become profitable enough to pay yourself a living wage, Langer-Croager noted. "If you're trying to make cash quickly, you're going to put a lot of pressure on the business that's not going to allow it to grow the way it needs to grow," she said.</p>

<h1> 4. You don't understand your business numbers </h1>

<p>It's crucial for an entrepreneur to understand his or her business finances, Langer-Croager said. If you're not keeping tabs on your financials, you could miss important clues that you need to adjust your plan based on actual rather than projected performance.</p>

<p>"When you're not doing that backend financial work," she said, "it can lead to making emotional decisions as opposed to informed decisions." And that could spell disaster for your startup.</p>

<h1> 5. You don't have a business plan </h1>

<p><a href="https://hbr.org/2017/07/research-writing-a-business-plan-makes-your-startup-more-likely-to-succeed" id="8ce9fabb-6d89-3ef2-aa66-4102d77983ba">  Research </a> from the University of Michigan's Panel Study of Entrepreneurial Dynamics II supports the argument that a good business plan will increase your startup's chances of staying alive.</p>

<p>"I encourage you, if you're starting a business, that you market test and then create a plan," Langer-Croager said. Even if you've already started your business, it's not too late to create a plan that will give you a roadmap for how to achieve your goals and stick with your mission, she said.</p>

<h1> 6. You haven't market-tested your business idea </h1>

<p>A CB Insights <a href="https://www.cbinsights.com/research/startup-failure-reasons-top/" id="b7c20727-7dae-3b35-a706-860efcddc3e1">  survey </a> of "startup failure post-mortems" found that the top reason for closure was a product with no market.</p>

<p>"You can spend a lot of time and effort and money creating something that is not going to be adopted in the market," Langer-Croager said, so make sure you have done your market research before you commit to your business idea. </p>

<p>This could mean anything from market surveys to test-marketing a few prototypes, to getting help from a <a href="https://www.score.org/find-mentor" id="0571a878-3458-38f1-a32e-a116bd4df015">  SCORE mentor </a> with experience in your industry.</p>

<h1> 7. You're not willing to go out and market your idea </h1>

<p>If you know anyone who runs their own business, you've probably heard them complain about marketing – one of many business owners' <a href="https://www.flyingsolo.com.au/marketing/business-marketing/think-hate-marketing-heres-actually-hate" id="e483512c-14eb-3de5-abc9-978b4ac8fc9b">  least favorite </a> tasks.</p>

<p>"This business is personal, so you're really putting yourself out there" when you have to market yourself, Langer-Croager said. You can't overcome your fear of being seen and become an advocate for your business, entrepreneurship is probably not your thing.</p>

<h1> 8. You bootstraps are too short </h1>

<p>"There's comes a point where, in order to grow the business, you really need to hire people, so you can delegate activities that are no longer a good use of your time," Langer-Croager said. </p>

<p>Too much bootstrapping (founding and running a company from limited personal capital) can stunt your business growth by denying it resources at a critical time, when you may need to hire employees. But a business loan could put you on the hook for debt you will repay for years if the business fails. </p>

<p>The question comes back to this: how much risk are you comfortable with?</p>

<ul><li> <a href="https://www.businessinsider.com/benefits-learning-say-no-in-work-life-2018-11?utm_source=intl&amp;utm_medium=ingest">How learning to say 'no' allowed me to build a life that I love</a> </li><li> <a href="https://www.businessinsider.com/what-to-do-after-a-long-weekend-2017-8?utm_source=intl&amp;utm_medium=ingest">7 things successful people do right away when they return from a long weekend</a> </li><li> <a href="https://www.businessinsider.com/how-successful-people-spend-long-holiday-weekends-2017-5?utm_source=intl&amp;utm_medium=ingest">17 things successful people do over long weekends</a> </li></ul>

<p><strong> SEE ALSO: <span id="a7d8ee3d-3d4f-3674-afde-f57e136e6cee" itemtype="link" itemscope="itemscope">  8 things that could increase your chances of being audited, and how to avoid them </span> </strong></p>

8 signs you’re not ready to start your own business

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Pulse Ghana is the most followed news and entertainment platform, informing and engaging young Ghanaians round the clock, providing updates by the hour.

Laura McCamy

Articles written by the author

6 things you should know before opening an investment account

8 signs you’re not ready to start your own business