Question

Sam is currently saving $50.00 from every paycheck. What step from The Five Stages of Investing has he reached?

Answer 1

Answer:

Sam is in the Put and Take stage which is the first stage of investing.

Explanation:

Investing should be taken as a systematic approach towards wealth acquisition. One needs to build a strong financial base before looking into investing any amount of money. The general rule of investing should be, one needs to invest the amount of money he/she is willing to lose. Luckily there is a systematic approach towards  investment. These different step by step stages are as outlined;

1. Put and take: this is the checking account where you put your earnings periodically and take out to meet your expenditure. With careful spending you can save a little over time and let the savings grow.

2. Accumulation: after the savings have grown, take them together with any other bonuses and extra sources of income and put them in a savings account.

3. Investment plan: in this stage, formulate a long-term investment plan on where you will put your money but after dealing with the basic financial needs. In this stage focus more on low return low risk investments.

4. Strategic growth: as your income and savings also grow, you can start investment partly on high return high risk investment since most of your income would be specifically for basic needs.

5. Risk-investing: in this stage, you can fully invest in high risk high returns especially if you have a good cash flow.

In our case, Sam reached the first stage of Put and Take since, he was still saving a specific amount from his paycheck.