Funding Your STOCK PROGRAM

If you’re going to invest money in stocks, the first thing you need is . . . money! Where can you get that money? If you’re waiting for an inheritance to come through, you may have to wait a long time, considering all the advances being made in healthcare lately. What’s that? You were going to invest in healthcare stocks? How ironic. Yet, the challenge still comes down to how to fund your stock program. Many investors can reallocate their investments and assets to do the trick. Reallocating simply means selling some investments or other assets and reinvesting that money into stocks. It boils down to deciding what investment or asset you can sell or liquidate. Generally, you want to consider those investments and assets that give you a low return on your money (or no return at all). If you have a complicated mix of investments and assets, you may want to consider reviewing your options with a financial planner. Reallocation is just part of the answer; your cash flow is the other part. Ever wonder why there’s so much month left at the end of the money? Consider your cash flow. Your cash flow refers to what money is coming in (income) and what money is being spent (outgo). The net result is either a positive cash flow or a negative cash flow, depending on your cash management skills. Maintaining a positive cash flow (more money coming in than going out) helps you increase your net worth (mo’ money, mo’ money, mo’ money!). A negative cash flow ultimately depletes your wealth and wipes out your net worth if you don’t turn it around immediately. The following sections show you how to analyze your cash flow. The first step is to do a cash flow statement.