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First steps of investing - planning

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@alexvan
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Hello,

last week I told you a little about self assessment. That is the first and most important step in investing. Without it, everything else is futile.

The second most important step in investing is to have a plan or better said a purpose. Most people want to have money, but money is only a mean to achieve something. The more money one has, most of the time, the faster a target can be achieved.

If we want to achieve something we need to know first what we want to achieve and how long shall it take. Here we need to be very specific.

We can say for example that we want to have in 10 years 1000 euros passive income. I've chosen this figures as they are easy to handle. For 90% of the worlds population this number might be impossible to achieve. First we need to see why we want to do that and what is the meaning behind that number. Well for me it would be the free time it gets me to focus on my family. The more passive income I have, the more time I can spend with them. The mean of money is freeing me time.

Ok, we as humans are very bad at long term planning so we need to split this 10 years into smaller chunks. The first split is in years. So by this we would need to have 100 extra euros a month after a year. This also seems to be a huge number. Let's split it than in 6 months. This looks different now as you need to make 50€/ month. I think quarter to 25€ or monthly to 8,(3)€ would be a better choice.

So you need to think how you could make an extra 9€ a month passive income. The thing you need to do that can be repeated so that you can stack up every month to the snowball. It is not complicated, find something to invest in so that it gives you an extra every month. Repeat it monthly so that it ads up. Most will do the same thing without staking up, like will bring only 9€ more. You should bring in the first month 9€, second 18€, third 27€ and so on.

This monthly plan can help a lot on the long term,even if it seems so little. To be able to do it on the fast mode, always reinvest the profit. Maybe into different asset class but always reinvest it.The power of compounding is here a big leverage.

Do this and you will be able to achieve your targets faster.