Beginner's Guide to Investing: Where to Start

Investing can feel intimidating. This guide breaks it down into simple actions you can take today to start growing wealth responsibly.

Start with goals and horizon

Ask yourself:

• What am I investing for? (retirement, home, education)
• When will I need the money? (time horizon)
• What is my risk tolerance?

Your answers determine asset allocation. Longer horizons allow more equity exposure.

Choose the right account

• Tax-advantaged: 401(k), IRA, Roth IRA — use these when available
• Taxable brokerage: flexible for goals without contribution limits

Maximize employer match in retirement plans first — it's free money.

Prefer low-cost, diversified funds

For most beginners, low-cost index funds or ETFs are ideal:

• Broad-market index funds (Total Market, S&P 500)
• Bond index funds for stability
• Consider target-date funds for hands-off investing

Costs matter: an expense ratio gap of 0.5% compounded over decades materially affects outcomes.

Simple starter portfolio (example)

• 80% US total stock market index fund
• 15% international stock index fund
• 5% short-term bond fund (or cash) — adjust for risk tolerance

Rebalance annually and increase contributions over time.

Dollar-cost averaging and contributions

Regular contributions smooth market timing risks. Automate monthly transfers.

Avoid common beginner mistakes

• Chasing hot stocks or trying to time the market
• Paying high fees (active funds with high expense ratios)
• Ignoring diversification (only one sector or single stock)

Next steps

1. Open (or log into) a brokerage or retirement account.
2. Set automatic contributions (even a small amount).
3. Buy a low-cost total market index fund and hold for the long term.

Investing is a long-term habit. Start small, keep costs low, and stay consistent.