If you feel unsure about how to start investing, you’re not alone. Many people find investing intimidating or think you need large amounts of money to get started. The truth is that investing can be accessible for anyone once you understand the basics. 

Here’s a beginner’s guide to investing and how to take the first steps:

Why Invest?

Investing allows your money to grow faster over time through the power of compound growth. By investing early and consistently, you can steadily build wealth and work towards financial goals like retirement, buying a house, or funding education. Investing also provides a way to stay ahead of inflation and build a nest egg for the future.

Getting Started

The easiest way to begin investing is through employer-sponsored retirement accounts like 401(k)s or 403(b)s if available to you. Contributing to these tax-advantaged plans allows your money to start working for you without needing to open a separate account.

If your workplace doesn’t offer a retirement plan, the next step is opening an individual retirement account (IRA) or taxable brokerage account. Robo-advisor platforms simplify this by handling account setup and investment management through an online process and automated algorithms.

What to Invest In

As a beginner, the best approach is often “passive” index investing with mutual funds or ETFs. These funds provide instant diversification and ownership of hundreds of stocks within a market index for relatively low fees. Focus on broad stock market and bond market index funds to build a balanced, diversified portfolio aligned with your risk tolerance and time horizon.

While individual stock picking can be tempting, it requires research and involves more risk. Index funds help remove emotion from investing for most investors. Time in the market is more important than trying to time the market.

Start Small, Think Long-Term

You don’t need thousands of dollars to begin investing. Consistency and discipline are key. Invest a little from each paycheck and build from there. Let compound growth work its magic over decades, not days or weeks. Patience and persistence are rewarded when it comes to investing.The most crucial first step is getting started. Don’t let uncertainty hold you back from investing. Take it slow, learn as you go, and let your money start working for you.

For beginner investors seeking guidance on everything from opening accounts to choosing investments, check out our new YouTube series “So You Want to Invest? Feat. Kelley O’Hara”. This video series walks through the basics in an approachable way, from what a brokerage account is to how compound interest works. Don’t let uncertainty stop you from getting started on the journey!