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Before You Invest – 7 Critical Steps To Scrutinize

Have you ever wondered what information you should research and what to consider before you invest

Even if you are eager to invest $1,000 or $1,000,000, you need first scrutinize the following 7 critical steps.

But first, let me share something.

When I was in my twenties, I invested in a couple of dubious systems over which I had no control. 

Unfortunately, I didn’t learn the lesson, and I made the same mistakes repeatedly. 

And guess what?

I always lost that savings that I should rather invest in myself.

But luckily, while studying and living abroad, I got the chance to start over. 

I immersed myself in intense self-education about how wealth is built and how rich people create their net worth.

As a result, I created the 7 Wealth Stages of life.

And these stages have helped me to take strategic action to accelerate my success.

So today’s topic belongs to a stage called Invest to Grow Wealth

Introduction To Before You Invest

In fact, making the decision to invest is a big movement, and it needs a mind shift.

Most importantly…

Successful investing requires education and strategic preparation.”
Pat VC

Would you agree?

For that reason, I created this stage right after you’ve gained the confidence to control your money and you are ready to invest it. 

But before we get started, I want you to doerly pat the Like and Subscribe button with the bell icon on YouTube to get notified.

Because after that you will receive every week one proven prosperity strategy within the 7 Wealth Stages that help identify the starting point toward prosperity. 

With this purpose in mind, let’s talk about 7 critical steps that you need to scrutinize before you invest one single dollar. 

The starting step is…

7. Analyze Your Spending And Then Shift Your Mind

Before You Invest - Analyze Your Spending And Then Shift Your Mind

The key point here is to sit down and be honest with yourself. 

First, I want you to list all your income streams. Even if you have just one, write it down. 

Second, create simple two columns with income and expenses. 

Pat VC - Before You Invest - Income and Expenses

Jot down all numbers on paper or you can use excellent free money management tools like Mint or Personal Capital

Third, once you find out how much money goes in and out, now you need to shift your mind and implement the PYF strategy.

It means Pay Yourself First before you pay the tax and any other expenses.

In fact, 

“You need to find a way to save between 30 to 49% of each of the income you receive.
Pat VC

The average sweet spot is 40%.

And if you do it month after month, these savings will be poised to invest in the future. 

You may be saying, oh I can save from my salary neither 10 nor 20%, how can I save 49%?

Then you have an income problem and you need to find a way to increase your earning. 

But before doing so, you must understand the following step…

6. Remove All High-Interest Debt You May Have

Before You Invest - Remove All High-Interest Debt You May Have

This is usually an unspoken, stressful part. 

If you cannot save 30 to 49% of your income every month, be even more transparent about your liabilities and bad debts. 

A question for you.

  • Do you swipe your credit cards often while browsing shopping malls? 

Stop going there.

Why do I mention it?


“Before you invest one single dollar, you get to remove all your bad debts.
Pat VC

List all debts one by one and start repaying first those with extremely high-interest rates

Because if you didn’t do it, you would end up always paying more and more every month. 

On the other hand, if you can wipe out all your bad debts, it will allow you to have full control over your personal finances, and your path to investing will be faster.

The next essential step you get to scrutinize on this list before you invest is…

5. Build an Emergency Fund And Maintain It

Before You Invest - Build an Emergency Fund And Maintain It

Let me ask you a question.

  • Would you like to have peace in mind?

Why do I ask you?

Because many professional investors keep some cash, which refers to keeping an emergency fund


“I found a sweet spot between the 3-6 month cash reserve to sleep well at night.”
Pat VC

But it depends on whether you are an employee or you run an online business and how much is your monthly expenses.

Either way, 

in any unforeseen circumstances, this account must keep the peace in your mind that will give you enough time to recover.

Don’t neglect this step and take it seriously.

After you’ve accomplished the previous three steps, another crucial one is…

4. Evaluate Your Risk Tolerance, Time Horizon & Financial Goals

Before You Invest - Evaluate Your Risk Tolerance Time Horizon and Financial Goals
“You get to know that investing involves a certain level of risk, and you can’t just blindly dump all your money in one investment.”
Pat VC

Would you agree?

What you need to evaluate first is your risk tolerance

But it doesn’t have to be on your own. You can ask anytime for the help of experienced successful people. 

And to clarify, there doesn’t exist any guarantee that you will make money on your investment. 

But when you understand and follow these steps, you will be prepared with a strategic plan. 

Moreover, you will understand basic finance terms and gain financial literacy in managing your money. 

Next thing is, as every investment has a risk tolerance, in the same way, every investment should have its…

  • time horizon,
  • and financial goal.

For example,

when you have long-term financial goals, your investment allocation can be in real estate

On the other hand,

if you aim for short term financial goals, bonds or a high-yield interest savings account could be your choice.

The next step is… 

3. Research And Find Your Investment Vehicle

Before You Invest - Research And Find Your Investment Vehicle

You may study this part and be prepared together with the previous four steps. 

The reason I’m saying it is that it may be very daunting for you.


Because if you are not yet sure what to invest in, you have to dive into it. 

And it takes a freaking long time to study. 

“You need to commit to learning the assets you want to invest in.”
Pat VC

Do not leave your first savings to someone else. 

If you are serious about investing, learn it, and do it first on your own, even if with a smaller amount of money. 

Along the way, you learn and make mistakes that will prepare you for bigger deals. 

Read books and implement at least seven ideas in your life.

Learn as much as you can from the wealthiest people on the planet who manage billions of dollars worth of portfolios. 

The next critical step before you invest is to…

2. Weigh Up Relevant Asset Classes And Sectors

Before You Invest - Weigh Up Relevant Asset Classes And Sectors

There are several reasons to diversify your investments across different asset classes and sectors.

The vehicle you are about to choose should synergize with you.

For example:

If you are a daily consumer of cannabis tincture and this product helps you or your family, consider investing in the cannabis industry

I know what you are thinking. 

This is a very risky and volatile industry. 

Although it may or may not be true, it depends on previous steps about:

  • knowing your risk tolerance,
  • time horizon,
  • financial goals, and so on. 

Moreover, every asset class has its own cycles up and down.

It means…

“If you are heavily focused only on one sector, it might end up with significant losses.”
Pat VC

And this is something that you don’t want to allow. 

The last most critical step to consider before you invest is…

1. Be Aware Of Scammers

Before You Invest - Be Aware Of Scammers

I left this as the last part because I want to emphasize it again.

And I mentioned it in a video or a blog post 7 Money Myths

But I want to stress it once more. 

Today, scammers are advanced professionals, and they are highly educated to deceive people. 

They advertise their “lifetime investment opportunity” or invite you to a free seminar, which sounds too good to be true. 

Unfortunately, many people have been caught in this trap and it might be very emotional and financially expensive to get out of this situation. 

Anytime you are unsure, invest your time to investigate.

Or better off, entirely avoid this type of untrustworthy source. 


“Under any circumstances DO NOT invest in a dubious system that can lead to fraud.”
Pat VC

Sounds good?

Are You Ready To Scrutinize These 7 Steps Before You Invest?

To conclude this topic, my recommendation is this for you.

When you decide to invest, consider the following two powerful criteria. 

First, you can’t lose money.
Second, invest primarily in assets that give you drip or cash flow every month.
Pat VC - You can not lose money and invest in assets that drip every month

And if you should remember just one thing, get this. 

“Building wealth takes time in any assets.”

This is the real secret of the millionaire mind.

Would you agree?

Leave us a comment below on what are your steps before you invest. 

And as a reminder,

Click HERE to subscribe to our growing Doer’s community newsletter.

Because every week you will receive one prosperity strategy within the 7 Wealth Stages of life.

I invite you to become a Doer.

Thanks for reading or watching and I will see you next week.

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About the Author

Vlastimil Cícha

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