Understanding yourself is a critical part of investing. It is important that you understand not only your personal view of investing, but also your family view of investing. Start by taking the simple risk-tolerance test, found in Learning Tool 16: Risk-Tolerance Test. The test gives simple recommendations for possible asset-allocation targets (asset-allocation targets will be discussed later). Know how much risk you are willing to take.

Review the top of the investment hourglass. Where are you on the top of the hourglass? Are your priorities in order? Do you have adequate health and life insurance? Are you out of high-interest consumer and credit card debt? Have you written down your goals, are you living on a budget, and are you ready to begin writing your investment plan? Determine where you are and the steps you must take before you begin investing.

What about the bottom of the investment hourglass? Are you ready to invest? If you are already investing, do you know your goals and have a plan? Think about how you should be investing and the order to which you will invest. It will make a difference.