Beginner Investing Guide: What You Need to Know About Investing Money in 2024

Beginner investing: woman happily using her phone

If you’ve never invested your money, you might wonder how to get started. The good news is that investing isn’t only for the rich. Beginner investing is possible with the right tools and investment plan in place.

In fact, there are plenty of investment options available out there, whether you have tens, hundreds, or thousands of dollars to invest.

How and where to invest your money will depend on your financial situation and goals. Follow this checklist on investing money for beginners to guide your investment decisions.

Why beginner investing is so important

Whether you’re funding a retirement plan or you want to save for your child’s education, investing helps you with your long-term financial goals. Investing money today can help you:

  • Stay comfortable during retirement: Even if the country you live in offers government benefits such as pensions or Social Security payments, it may not be enough to fund your lifestyle. Some aspects of your life can get expensive — think healthcare in the U.S. — and you need a sizable nest egg to live comfortably.
  • Beat inflation: Inflation lowers the value of money as time goes on. In other words, a dollar today will be worth less in the future. Investing your money helps you earn interest and combat inflation.
  • Build more savings over time: An added benefit of beginner investing is that it doesn’t matter how much you start with. Starting with a small amount — even as little as $100 — allows you to grow your skill set and learn what works best for you in the short term. As your investment account grows, you will gain momentum in your savings over time.

Beginner investing: taking the right approach

Investing can feel intimidating for beginner investors. For one, there is a lot of jargon associated with investing that can make it difficult to understand.

Sandy Yong, author of The Money Master: Inside Secrets on How to Make Your Money Grow and Stay Safe, agrees. She says that hearing about investing advice from multiple sources can add to the confusion.

“People also get investing tips from friends, colleagues, and other resources, and it’s hard to decipher between good versus bad advice,” she says. “This is overwhelming, and it’s natural to want to procrastinate instead of tackling their financial goals head-on.”

Another challenge is that if you are someone who identifies as an English as a Second Language (ESL) learner, the additional barrier makes it even more taxing.

Andrew Wang, the managing partner at Runnymede Capital Management, understands that the financial services industry tends to create complex products that may be difficult to understand.

“For many, the basic principles of investing are often not taught alongside math and history, adding to the challenge,” he says.

If you feel overwhelmed, there are resources available to help you. Start by taking small steps and know that if you need to change your tactics down the line, you can.

“Investors can always choose one option and several years later decide to switch to another path,” Yong says.

Resources on investing money for beginners

There are many reputable books about beginner investing. Ask for personal recommendations or read online reviews to get a better sense of whether a book fits your needs. For example, some are for certain demographics, while others may focus specifically on getting out of debt or saving for retirement.

While this list is certainly not exhaustive, these personal finance books are well-reviewed and may represent a good starting place for your research:

What to do before investing

Beginner investing: woman sitting on a couch and using her phone

Before you get started, take care of your regular expenses and set enough money aside to handle unexpected events.

First, establish an emergency fund so that if you need quick access to a large amount of cash, you have it. You should set aside the emergency fund in its own savings account and only use it when you really need it.

Once you have that in place, look at your budget to see how much you can afford to invest. Financial worries are high right now, so try not to put pressure on yourself about how much you think you should be investing. It’s OK to start small. Knowing how much you feel comfortable investing will help you narrow down your options, as most investing platforms have minimum amounts.

For example, consider these requirements at the time of writing:

  • Charles Schwab’s robo-advisor-driven Intelligent Portfolio requires a minimum of $5,000 to initiate the service.
  • The Acorns investing app has no minimum requirement. Instead, it has a monthly subscription fee structure of $3 or $5, depending on which option you choose. For those who want to start investing with small amounts of money, the app can also round up your purchases to the nearest dollar and invest the change, which is a low-cost way to invest over time.
  • Robinhood offers commission-free stock trading. You can start investing with as little as $1. However, the platform does adhere to a regulatory minimum of $2,000 to open a margin account.

All in all, be sure to pay close attention to the account minimum and associated management fees of any investing app you sign up for.

Determine your investing goals

As you’re looking through different types of products and services, keep your financial goals at the forefront.

For instance, do you want to retire comfortably, set aside money for a child’s post-secondary education, or buy a new car? You can adapt your investment strategy based on your goal’s time horizon.

Long-term goals, for example, can provide higher overall investment returns, but you may need to invest your money for a longer period of time. For short-term goals, you may choose to seek a lower rate of return that has a shorter required investment period.

One benefit to leaving your money in the stock market for a longer time is that you don’t have to worry about day-to-day fluctuations. You’re less likely to suffer a loss by pulling out of the market in a downswing.

You can always mix up your approach, too. For instance, you could choose a smaller amount to invest more aggressively and then play it safer with an individual retirement account, such as a Roth IRA. Retirement funds can diversify your portfolio so that you’re growing with the market and you’re less reliant on one company’s success.

It’s important to note that all forms of investing come with some level of risk. Since the market goes up and down (which is known as volatility), so will your returns. In some years, you might earn a lot, and in others, you may face losses. Understanding your risk tolerance — or how much you can personally handle the volatility in the markets — will help you determine what you invest in.

Spread your money out

As a beginner investor, you’ll want to diversify your investments. In other words, spread your money out across different types of investments to reduce your risk.

Depending on your investment platform, the software may automatically create a diversified portfolio for you. For example, if you use a robo-advisor or app, investment diversification may be an automatic setting.

For many investors, products like mutual funds, index funds, or exchange-traded funds (ETFs) help to spread the risk. Instead of buying a single stock, these investment products offer a bunch of asset classes, like stocks and bonds, across several industries and sectors to automatically spread out your money.

4 ways you can start investing today

Woman using a laptop

The best plan for beginner investors is to keep it simple. This could mean setting up regular deposits each month automatically from your savings to your brokerage account. It could also mean setting reminders to check your budget to see if you can increase the amount you invest.

Consider the following options to start investing as a beginner.

1. Set up a 401(k) retirement account through your employer.

If you haven’t already, reach out to your HR department to see if your company offers a 401(k) plan for retirement. They can walk you through how to get started and kick-start your investing right away.

In some cases, your employer may offer a 401(k) match, where they contribute to the account on your behalf. These employer matches help you invest more.

2. Try a robo-advisor.

There are a number of robo-advisors designed to make investing easy. They automate the investment process for you. Popular options include SoFi, Vanguard, and Stash.

3. Sign up for an app designed for beginner investing.

It’s easy and free to set up an account with several investing apps, including:

Once you download the app, follow the instructions to set up an account and begin investing with your online broker. Many of these apps allow you to start investing with very little money — sometimes just $5 to start.

The most common way to invest money in these apps is through individual stocks. There are many to choose from, so the next step is to start researching companies you want to buy stock in.

If that’s too overwhelming, many beginner investing apps can help you with allocation based on your goals, budget, and risk tolerance.

4. Invest directly through your brokerage account.

Many banks also serve as brokerage firms. Charles Schwab, for example, offers a brokerage account that’s free to open if you have a savings account.

From there, you can transfer money directly from your bank account into your brokerage account and start buying stocks immediately.

Should you hire a financial advisor?

Employee using a computer

In many cases, it’s perfectly fine to start investing on your own. However, if you want professional financial planning or personalized investment advice, start with a little research.

Yong cautions that not all advisors are equal. Some financial planners will suggest investment products that earn the advisor a commission — but these products aren’t necessarily the best investment for their clients. She recommends asking people you trust for suggestions and then interviewing several financial advisors before deciding who to hire.

Ask about their background, investment philosophy, and experience. Perhaps most importantly, ask how they get paid, whether it’s a percentage from your investment portfolio or a flat-fee upfront.

“A good advisor should explain the risks involved with investing and not try to over-promise their performance results,” Yong says. “They will also ask you to bring proper documentation such as your investment statements, net worth, expenses, and tax return in order to offer you the best advice.”

Looking for a middle-of-the-road option? Robo-advisors develop investment portfolios for you, based on your goals and risk tolerance. They can help you learn and become familiar with the investment world, too.

Simplifying investing

Whatever investment route you choose, make sure you’re not investing in anything you don’t understand. If you don’t know something, ask. We were all new investors at one point.

If you want to get started with beginner investing, consider:

  • Setting up a 401k
  • Trying a robo-advisor
  • Using an investing app
  • Investing through a brokerage account