Investment Breaks Are Okay
Sometimes life throws us curveballs. Whether it's an unexpected expense or a temporary income loss, it's important to remember that investing should serve you, not the other way around.
Here are some insights on how to navigate these challenges without stressing about your investment goals.
1. Building a Solid Emergency Fund
Calculate Your Expenses: Know your monthly living costs. For me, it’s around €5K a month.
Set Your Goal: Aim to save at least 3-6 months' worth of expenses. In my case, that’s €30K. This cushion ensures you can handle unexpected financial hits without dipping into your investments.
Start Small and Be Consistent: Save a portion of your income each month until you reach your goal. It’s okay if it takes time; consistency is key.
Keep It Accessible: Store your emergency fund in a high-yield savings account. This way, it’s easy to access in case of emergencies, but also earns a bit of interest. Of course, I make use of high interest on my funds from brokers like Trading 212, Lighyear & Trade Republic.
2. Taking a Break When Needed
Life Happens: Sometimes, you might not have extra money to invest. That’s okay. The goal is to ensure your emergency fund is intact first.
Investing Should Serve You: If you need to pause your investments for a while to deal with life's unexpected events, that’s perfectly fine. Focus on getting back on track once things stabilize.
No Guilt, No Stress: Taking a break doesn’t mean you’re failing. It’s a strategic move to ensure your financial stability.
3. Resuming Your Investment Routine
Reassess and Plan: Once you’re ready to start investing again, reassess your financial situation and create a new plan.
Small Steps: You don’t have to jump back in all at once. Start with small amounts and gradually increase as your situation improves.
Remember, your financial journey is unique to you. It’s okay to take breaks and prioritize stability. Investing is a marathon, not a sprint.
Cheers,
Kai
Why I Stopped Investing (For Now)
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