How to Start Investing: A Beginners Guide

Here are 3 places where first-time investors can start, without being a whiz at picking stocks and bonds.

1. 401(k), IRA, or other retirement accounts

If your employer offers a retirement plan like a 401(k), this is a great place to start investing. Many employers will offer a company match, meaning that they’ll partially or fully match your contribution, up to a certain amount. (Yep, they’ll give you free money just for investing in your retirement!)

Another great benefit of investing in an employer-sponsored retirement account is that your contribution will be automatically deducted from your paycheck. You don’t even have to think about it and money will head straight to your retirement account. 

If you don’t have an employer retirement plan, you can still put money away into your own retirement account, called an Individual Retirement Account (IRA). Though there’s no employer contribution, these accounts do give you some tax breaks for putting money away for the long-term. 

Retirement accounts also make it easy to pick your investments with something called a target-date mutual fund. With this type of investment, you simply enter the date you want to retire. These funds then pick a mix of stocks and bonds to put your money into, based on your goal. 

2. Robo-advisor

Robo-advisors are another easy entry into investing. Rather than having a human manage the money that you invest — which can be expensive and require you to invest a large amount of money — a computer does the work for a fraction of the price. And as a result, the amount of money you need to start with is lower. 

For example, Betterment requires no minimum investment amount, and Wealthfront requires a minimum of $500.

Robo-advisors will give you a simple questionnaire when you sign up to understand your goals to help the computer decide where and how to invest your money. This approach is meant to be very hands-off, but still check in on your investments. If there’s something you don’t understand, speak to a person working at the Robo-advisor for details. 

3. Investing apps

Investment apps make it easy to get started, right from your phone. You can start with a small amount of money and invest in stocks, bonds, and ETFs. For example, Public lets you get going with as little as $5, and Robinhood doesn’t have a minimum investment amount.