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INTRODUCTION
Investing can feel overwhelming, but breaking it down into simple steps makes it much more manageable. I learned how powerful investing is when my net worth increased while I was planning my wedding because of my portfolio. Whether saving for retirement, growing wealth, or just starting, you can begin investing confidently in a few steps. Investing can be as simple as 3 main steps and help support the future you hope. In this blog post, we’ll go through how to (finally) start investing and build wealth for your future.
STEP 1: CREATE YOUR VISION FOR YOUR FUTURE
Before you invest, take time to outline your goals and strategy. Why are you investing? Do you want to leave your job? Do you want more time for family? Are you interested in investing full-time in stocks or real estate or want more passive income (making money because you sleep)? Understanding the life you want will influence the investing you pursue. Consider the following:
IDENTIFY YOUR GOALS
There are several reasons to start investing, but knowing your “why” helps shape your investment strategy. Do you want to retire early, build long-term wealth, or have passive income? For example, suppose you're going to retire early. In that case, consider saving 30-70% of your income invested in aggressive growth investments. But, if you want steady income, think about dividend-paying stocks or bonds. Knowing why you want to invest is a key step to building wealth in a way that supports your future.
DO YOUR RESEARCH
Once you know why you want to invest, start researching investing strategies to help you towards your goals. Learn about investment options like stocks, bonds, index funds, exchange-traded funds (ETFs), or real estate. Focus on long-term strategies (think 10-25 years) to benefit from the stock market's long-term success. Over 10 years, the stock market has gained 7-12% over time, and you want to benefit from this long-term growth.
Understand the risk levels and potential return of your long-term investment strategy. Focus on learning key principles like “investing in what you understand” or “investing early” rather than following fads. Read books or listen to podcasts to learn more about what type of investing you like to do. For a curated list of books on investing, check out the Engaged Financials Suggested Research Page.
PICK A STRATEGY THAT WORKS FOR YOU
As you research your investing options, pick 1 strategy that you want to do that aligns with your goals and risk tolerance, and use time-tested investing principles. Some people may love to follow stock reports, trade individual stocks, and read reports. Others may prefer investing in real estate, such as flipping houses or renting homes for income. Or, maybe you want to be very conservative and invest in bonds.
I don't want to spend all my time researching investments or trading stocks. I prefer a more passive way to grow wealth that allows me to live my life. Options like mutual funds, index funds, target date funds, or ETFs that invest in diversified companies work best for a more passive approach to investing.
One popular investment strategy is choosing a broad index fund, such as VTSAX (Vanguard Total Stock Market Index Fund), recommended by JL Collins in “The Simple Path to Wealth,” or the S&P 500, recommended by the legendary investor, Warren Buffet. Once you know your goals and do your research, it will be much easier to pick a strategy that works for you.
STEP 2: START INVESTING IN 4 EASY STEPS
Once you have a vision for your life, have done your research, and decided on a plan, it’s time to implement it. You can start investing in just a few steps. Starting to invest can feel nerve-racking for some when you first get started. You are not alone. Money can feel scary and bring up many fears like “I’ll lose everything” or “What if I mess up?” If you feel overwhelmed or anxious, remember that you have done your research and prepared for this.
Investing is for people like you who want to build a secure financial future, and the sooner you start, the better. Imagine looking back in a few years, relieved and proud that you took that first step today. Let’s break it down into simple, manageable actions so you can confidently invest in stocks.
1. OPEN AN ACCOUNT AT A BROKERAGE
Consider platforms like Vanguard, Fidelity, or Charles Schwab, which offer affordable and user-friendly investment options. Many platforms allow you to start with as little as $1, making investing accessible to everyone. You can even start by using your changes with Acorns. Apps like Acorns can help you begin investing by rounding up your spare change and putting it into investments (check out my review here).
2. CHOOSE A FUND BASED ON YOUR GOALS AND STRATEGY
Pick a fund to start with. If your employer has a retirement plan, that is a great place to start. You can also open up an individual retirement account (IRA) to begin investing now (I talk more about 401(k) and IRA here). You can choose a fund for your retirement account, invest in a fund, index, or both. For example, a 30-year-old bride can start saving for retirement by choosing a Target Date Fund for when she turns 65 in her 401(k). Or, she could pick the S&P 500 for her IRA and then invest in the Vanguard Total Stock Market Index fund.
The most important thing is to start investing by picking a fund (or funds) based on your goals, research, and strategy. For more tips on investing, check out this blog post.
3. PICK AN AMOUNT TO START INVESTING
Pick a starting amount to start investing according to your budget. The key is consistency, even if you can only start with $25 monthly. A small but regular investment can grow significantly over decades. When I started investing in my 401(k) from my employer, I started with 1% of my monthly income and then increased that amount every couple of months until I reached 10%. With the miracle of compound interest, that investment is growing far more over time.
What is compound interest? Compound interest is like a money snowball. The amount you start with begins rolling a tiny snowball down a hill. As it rolls, it picks up more snow (or money) and gets bigger and bigger. The longer it rolls, the faster it grows. When you invest money, your money snowball earns a little extra. Then that extra money also earns more, just like a snowball picking up more snow. Over time, your money keeps growing all by itself! The sooner you start, the sooner your money snowball will start growing.
4. MAKE INVESTING A HABIT WITH AUTOMATION
Automating my finances is the most important tool I used to build wealth beyond the wedding. It makes money work for me without me having to do anything. Automation ensures consistency and eliminates emotional decision-making so that you don't freak out if your investments start to decline. Most brokerages make it easy to set up automatic investments every month. Automating your investments creates a powerful habit that grows your “money snowball” into a mountain of wealth over time.
- Tip: Some brokerages require two steps to automate your investments: first, you transfer money into a cash account and then move it into your investments. Otherwise, it stays in a cash account and is not invested. Make sure your money is invested appropriately in your desired funds.
STEP 3: MONITOR YOUR PROGRESS
Investing is a long-term game, and while it's important to check in on your portfolio, don’t let short-term market swings scare you. When you monitor your progress, you want to remember your long-term goals and have regular intervals to check on your progress. The stock market naturally goes up and down, but staying invested through the ups and downs is key to building long-term wealth. Over time, small, consistent actions like rebalancing and reinvesting dividends will align your investments with your goals and help you make lasting wealth.
REVIEW YOUR INVESTMENTS
Instead of checking your portfolio daily and stressing over every dip, set a schedule to review your investments periodically—quarterly or annually works for most people. Reviewing your investments allows you to make necessary adjustments without reacting emotionally. Over time, your investments may drift and you may need to adjust your investment portfolio to keep it aligned with your goals.
CHECK YOUR NET WORTH
Monitor your portfolio to ensure you’re on track with your goals. Use apps like Simplifi or Monarch Money to see how your net worth grows. Your net worth is the total value of what you own (assets) minus what you owe (liabilities), giving you a clear snapshot of your financial health. Monitoring my net worth while planning my wedding helped me see how my investments improved my finances despite spending money on my wedding. Tracking your net worth at least annually over time lets you see progress, stay motivated, and make informed financial decisions to grow wealth.
CELEBRATE YOUR WINS
Have money dates with your partner to talk about money in general. See if you can save more, live below your means, and invest more. Also, take time to celebrate your money wins and milestones. Common milestones include:
- Saving $1000 in an emergency fund
- Paying off your credit card in full every month
- Stop living paycheck to paycheck by having a budget that works for you
- Zero dollar net worth (BIG VICTORY-you start having more assets than debts at this point)
- Saving a 3-6 month emergency fund
- Pay for big purchases like vacations, cars, and Christmas gifts in cash from savings in a sinking fund
- $10,000 net worth
- Paying off your debt
- $100,000 net worth
- $500,000 net worth
- $1 million net worth
- $1 million in your investments portfolio
- Mortgage paid off
- Financial Independence (your essentials for life are covered by your investments so that work is optional)
Recognize your progress, whether you hit a milestone, grow your net worth, or stay consistent! Investing is a long-term game, and every step forward is an achievement.
CONCLUSION
Starting your investment journey doesn’t have to be complicated. Setting clear goals, following a solid plan, and staying consistent can build wealth. Take that first step today and start investing in the future you hope for.
IN SUMMARY
How to Start Investing: A Simple Guide to Grow Your Wealth
Step 1: Create a life vision and your investing goals
- Identify your goals
- Do your research
- Pick a strategy that works for you
Step 2: Start investing in 4 easy steps
- Open an account
- Choose a fund
- Pick an amount to start investing
- Make investing a habit with automation
Step 3: Monitor your progress
- Review your investments
- Check your net worth
- Celebrate your wins
Are you ready to start investing to build wealth?
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