I often get asked this question, and it's always an interesting one because it is so dependant on your personal situation.

Typically I believe that you should only ever be investing once you have these things;

• An Emergency Fund

This is an easy-access savings pot that has enough cash in it to cover your average monthly expenses for 3-6 months.

The last 18 months have proved why an emergency fund is vital, as many lost jobs or were placed on a reduced income.

• No Bad Debt

By 'bad debt' I mean credit card debt, bank loans, payday loans, etc.

Mortgages, student loans, and car PCP are often valuable as they help you to leverage your income. I class these as 'good debt'.

You should eliminate bad debt because often the interest you are paying on this is far higher than any returns you could make from investing.

• Don't need the money

A fortunate position right? Effectively what I mean is that you won't need to access this cash within the next 12 months.

This is because the stock market is volatile and the value of your investments will go up and down. So you don't want to suddenly need it whilst you are down on your investments.

How to invest

If you have the above locked down, then it is time for you to begin your investment journey.

Before you start I would ask yourself these three questions;

• What are you investing for?

• Are you happy to be patient with getting high returns?

• Do you want to be involved with managing your investments?

If you can answer all of these then head over to our free investing guide where we cover all of the nitty-gritty for new investors!

(Plus we have some great offers like 6 months fee-free on a fully managed Nutmeg portfolio)

If you want to save

There is nothing wrong with wanting to save over investing. Particularly if you are looking for a more secure amount of cash.

This is often important if you are looking to purchase a house, a car or are saving for a holiday.

Just make sure that your money is getting a (somewhat) decent return in the bank! You can check out some of the best accounts in the UK here.

Conclusion

There is no right or wrong answer, but just having a general think about it all is vital before you begin!