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Financial Planning Before You Invest in Stocks [8 Steps] - YouTube
Channel: Kiana Danial - Invest Diva
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you can't begin to invest before first
going through the financial planning
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process when you first begin to even
start thinking about investing in the
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online financial markets it's very
tempting to simply give in to one size
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fit all investment strategies that some
guru on the internet claims to be the
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winner well they may have made some
money with that strategy on their own
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chances are their strategy is not
going to work for you and while that
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strategy may have worked in the past
there is no guarantee that is going to
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work again in the future but the most
common reason why these
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one-size-fits-all
investment strategies don't work for a
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lot of people and most people end up
losing their money is that those
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strategies are not designed for your
unique risk tolerance for your unique
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financial situation and your unique
financial goals this is when financial
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planning steps in and guess what you can
actually do it yourself personally I
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lost $15,000 when I first started
trading on Wall Street even though I was
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literally reporting on the financial
markets on the floor of the New York
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Stock Exchange on Wall Street and I was
taking advice from arguably one of some
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of the best traders out there but their
strategy didn't work for me for one
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because they were treating gazillion
dollar accounts for other people's money
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while I was basically trading my life
savings in a tiny fifteen thousand
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dollar account later when I discovered
the way to create my own investment
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strategy that are suitable for me and my
level of risk tolerance I was able to
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actually restart again with a tiny five
hundred dollar account and I was able to
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grow that 50 thousand dollars in the span of three years so in this episode
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of the Invest Diva Movement I'm gonna
show you the 8 most important financial
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planning steps that you need to take
before you begin your investing journey
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and step number two is literally the
most important step that almost all
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investors and traders forget about we're
gonna cue in the intro and dive into the
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eight financial planning steps before
you start investing and while we do that
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head over to the comments section and
tell me if your parents did their own
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financial planning I'm really curious to
know because in
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most families even talking about money
is taboo we're now gonna cue in the
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intro and let's go
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hey guys I'm Kiana Danial 3-time author
and the founder of the Invest Diva
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movement the march to jump on if you
want to take control of your financial
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future and to make your money work for
you now let's dive right into the eight
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steps of a financial planning process
before you begin to invest step one is
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fairly easy you need to set financial
goals so that you know where you're
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going you first have to decide where
exactly you are right now and where we
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want to go right let me ask you a
question would you take a long road trip
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without Google Maps or ways or map of
some sort what a pilot fly a plane
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without reviewing the weather forecast
and planning the route but a
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construction company build out a house
without a blueprint or planning would a
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teacher teach a course without a
curriculum that is specific to the
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students needs and little expertise
these are just a few examples but don't
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trick really that in each of these cases
if you don't have a plan you've got to
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plan to fail right and there is this
massive comment myth that I'd like to
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address and that is that many financial
planners have us believe that financial
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planning is only for the very wealthy
people
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the reason they make us believe that is
that they it wouldn't make sense for
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them to manage your $5,000 portfolio
they want to make a living out of the
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Commission's they can charge you so
that's why they want to go after people
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have millions of dollars but the matter
the fact is that financial planning is
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not just for the very wealthy actually
the other way around there is so much
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value in starting a plan early on for
all parts of your journey especially the
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ones that will catch you off guard who
caused you a ton of stress and confusion
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like weddings funerals divorce
retirement vacations you name it they
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all need planning in advance so I'll be
honest with you I'm not the best when it
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comes to planning for small things and I
kind of take things and I work through
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them but I have trained myself these
plan for the major events that have come
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to are risky as a family time and time
again now I have a question for you what
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is your biggest 5-year fine
go head over to the comments section and
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let me know step 2 as the most important
step that you must take before investing
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in anything ever and that is calculating
your risk tolerance this is what will
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give you the ability to invest in assets
to match the amount of risk that you can
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take if you calculate every stone as
prior to creating your investment
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strategy you won't panic all the time
and wonder which direction the market is
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going you'll have a feeling of safety
because you know that the strategy
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they've developed can tolerate the risks
that you have set up for it there are
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two components to risk tolerance one is
your willingness to take a risk and two
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is your ability to take a risk so how do
you calculate this this is where things
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get fun you need to spell out your
investment goals your time horizon and
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for each goal you're in need for
liquidity and your tax situation among
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some other metrics you do need a
calculator or you can just simply reach
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out for that thing in your pocket you
know your cell phone and calculate some
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of the main ratios that you can see here
and that includes your emergency fund
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current liquidity basic housing debt and
net worth ratio to help you figure this
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out I'm giving away my risk management
toolkit for free if you register your
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seat and attend my upcoming master class
by going to learn.investdiva.com/yes
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I'm also adding the link to
this in the description area of this
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video so you can open it up in a new tab
save your spot for the next available
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session and then go watch it after this
video is over your risk tolerance and
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portfolio structure also depends on your
life cycles for example between ages
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twenty forty five you're probably more
growth oriented can accept more risk
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because a long term horizon between ages
forty-five to sixty your conservation
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and protection oriented your concern
about protecting what what you've
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accumulated and you probably are taking
less risks after sixty you're probably
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thinking about your retirement concern
about generating income protecting what
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you have already and maybe even gifting
to your grandchildren that is called a
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generational wealth now I'd love to hear
from you what stage of your life cycle
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are you in right now head over to the
comments section and let me know alright
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now let's say that you get in my master
class get my risk management toolkit and
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you realize that you
don't like your risk tolerance what are
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you gonna do well you can either cry
about it or you could get started with
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step number three which is budgeting and
evaluating your spending and saving
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behavior the budgeting process includes
establishing goals checking your income
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checking your expenses and finding out
if you're a net cash flow positive or
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negative and then you've got to monitor
it over time. In Invest Diva's Make Your
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money work for you power course we have
the system that helps you calculate your
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cash flow very easily and almost
automatically without having to do any
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math so you can go ahead and increase
the amount of cash that you can invest
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so that you have more money to get it to
work for you right I have another
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question for you
are you currently budgeting head over to
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the comment section and let me know tip
number four is creating a written
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investment policy statement with the
risks column is derived from the
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questionnaire that you're gonna get once
you attend to make your money work for
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your master class which will eventually
help you build your own investment
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strategy this helps you create an
investment policy to ensure realistic
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return of goals consistent with the
acceptable risk and enforce discipline
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in the investment process so here are
the simple steps you need to take when
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you're writing your investment policy
statement you've got to document your
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financial goals as detailed as possible
then you need to document and risk
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tolerance you're going to calculate
using my risk management toolkit then
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you've got a document your current
investments if you have any then write
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down your target asset allocation based
on your risk tolerance and financial
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goals having these actually written down
and document it might sound a little bit
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unnecessary because you might say well I
just have them right in my head or just
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put them here and there is in my notes
like all scatters over the place but
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trust me writing them down in one policy
statement that you can just reference to
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anytime that you need and have them all
in one place is not only going to put
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you in the right mindset about money but
will also guide you with appropriate
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investment choices that will serve you
as a benchmark to measure your
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performance and will prevent you from
panicking every time the market goes up
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and down and to help you manage
emotions because you basically can just
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plug your big-picture strategy in the
policy statement out of your sleeve and
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let the day-to-day market - FOMO go away
it's a lot less stressful this way trust
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me once you have all these four steps
down it's now time to select the type of
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assets that best match your investment
policy statement depending on your
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wristt elements and financial goals you
can create a diversified portfolio
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including different assets and
securities such as stocks
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cryptocurrencies futures ETFs fixed
income options real estate and even
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Forex again depending on your risk
tolerance you may find out that your
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portfolio can be exposed to a number of
different types of assets so the goal in
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this step is to figure out the right
asset mix for you then of course within
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every category we can again go one a
little deeper to see which categories
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within that category is suitable for you
for example even with stocks there are
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actually nine different types of stocks
that you can select from I previously
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made a video about nine different types
of stocks that you can choose from and
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on YouTube so make sure that you check
it out by clicking here or here I'll
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also add a link to it in the description
area of this video so for example when I
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was younger and I was single and I had
more time in my hand and I had more
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willingness to take a risk I used to
trade Forex but now that I've become a
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mom I no longer trade Forex and I
focused more on stocks and ETFs and
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cryptocurrency in a medium to long time
frame so that's why we want to go back
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to our investment policy statement every
once in a while and when major life
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event happens and update it so that it
suits our current financial situation
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and our current risk tolerance and the
percentage that you allocate to each of
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these investment assets in your
portfolio depends on your risk tolerance
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financial goals and economic cycle and
your life phase by compounding these
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types of assets in your portfolio you
can basically put your money into work
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and reach your short-term medium-term
and long-term goals now that you have an
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idea about what type of assets you want
to invest in it is time to examine the
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external environment
the economic and geopolitical events may
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impact your asset class this is step
number six and it's where my signature
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Invest Diva Diamond Analysis or the IDDA comes in and that analyzes every
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asset from five different points
fundamentals technicals market sentiment
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capital which is basically your personal
investment policy statement and the
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overall how it fits within your
portfolio so examining the external
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environment is IDDA's point one or
fundamental analysis step number seven
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is developing an investment strategy by
incorporating all the previous steps but
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this time you'll be determining what
price you should buy what price you
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should sell to take a profit and how
long it should hold your investment
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these are defined in IDDA's technical and
sentimental points now if you've been
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curious about investing or trading for a
while and you probably have come across
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trading gurus who sell trading signals
and promise they'll make you a
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millionaire the problem with those
signals even if those gurus are actual
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legit and really successful with their
own portfolio is that their signals are
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one-size-fits-all your investment
strategy cannot and will never be the
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same as a next person because you are
unique in your unique stage of life that
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is different than the rest of the people
you probably your ability and your
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willingness to take a risk is different
than others and of course your goals and
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personal preferences are different at
the beginning of this video I talked
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about how I lost fifteen thousand
dollars when I was reporting at the New
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York Stock Exchange so what happened is
that I was actually surrounded by all
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these best traders and investors and
naturally I was watching what they were
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doing and making my choices based on
what other people were doing and what
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they were telling me to do so I went all
in with my savings of fifteen thousand
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dollars at the time and it was excited
to start growing that account but that
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didn't get me too far
I kept following what everybody else was
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telling me to do and to the market noise
and what happened I lost a whole fifteen
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thousand dollars my entire savings and I
was so upset and disappointed in myself
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I mean how could I lose all of my money
when I was just listening to what all
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these successful people were doing we're
making millions so the problem was that
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I act on almost every news buying and
selling a ton of things
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about having an actual plan and my
investment account was being pulled over
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in so many different directions it was
just a mess
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and had nothing to do with my financial
destination the result was losing a big
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fat fifteen thousand dollar account and
that's why once you develop a financial
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plan and you only have to do it once
then you've got to monitor it once or
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twice a year or depending on your
timeframe or if something major happens
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in your life for example if you get
married or have a child or lose your job
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or buy a house or receive an inheritance
then you can sit back and relax and let
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your strategy do the job for you can you
imagine your money making you more money
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on its own while you sleep that is the
definition of wealth and is a reason why
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I consider myself wealthy because every
time we take a vacation for example my
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money is still working for me in the
background and sometimes even paying for
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the whole vacation while we are away in
this picture of my husband and I are
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taking vacation in Bora Bora so you
might have already guessed step number
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eight but that is monitoring and here's
what I don't mean by monitoring sticking
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to your screen all day and following the
markets ups and downs that is not
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monitoring your portfolio and that will
actually bring out the worst emotions
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out of you that will lead you to losing
sight of your investment policy
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statement and increase the chances of
making a stupid decision and losing all
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of your money personally I monitor my
four portfolios once a week on Tuesdays
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at 10:00 a.m. New York time and that
also includes my husband's on my dad's
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portfolios that's actually what I also
go live with our Premium Investment
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Group or the PIG members and now there's
a funny story about those we created the
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premium investing group like years ago and
it wasn't until last year that I
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realized it stands for PIG so now the
group our premium investors called
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themselves pigs which makes me laugh but
following these steps and not sticking
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to your screen all day when investing is
a definition of making your money work
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for you so that your money can grow and
turn more while you sleep and yes that
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is my daughter
taking over our bed while my money is
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working for me but I'm totally supportive of that all right now if
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want to learn all the nitty-gritty and
the three secrets I'm able to make my
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money work for me go ahead and register
you see for my free master class so that
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not only you get that free or risk
management toolkit but you also are
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gonna learn how I do this without taking
too much risk and how I do this without
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even being a math whiz and why being a
math whiz can actually cost you when it
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comes to investing so open up a new tab
type in learn.investdiva.com/yes
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or simply click on the link in
the description area and I'll see you in
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the masterclass chat box thank you so
much for tuning in and remember the only
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path to true wealth is by making your
money work for you
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