Building wealth is one of the most important steps toward financial freedom, and one of the best ways to do that is through investing. However, investing often comes with a lot of jargon and complex advice that can feel overwhelming if you’re just getting your feet wet.
The good news is you don’t need to be an expert to begin — in fact, the below five simple steps are enough to get your money working for you.
1. Have a solid starting pad
Before you start investing, make sure your financial foundation is solid. Ask yourself:
Do I have an emergency fund to cover three to six months of expenses?
Do I have high-interest debt (i.e. credit card debt) that should be paid off first?
Can I comfortably set aside money to invest without risking my day-to-day needs?
It’s important that your immediate financial needs are covered before putting money into the market. This also makes it easier to determine how much you can comfortably set aside for investing. One way to organize your finances as you try to reach a solid standing is by using a budgeting app like Monarch Money. The app’s user-friendly platform lets you customize your dashboard, so you always see what’s most important to you first. It comes with a fee, but you can test it with the 7-day free trial.
Monarch
Cost
$8.33/month (billed $99.99 annually); $14.99/month (billed monthly) – get 50% off your first year with code CNBC50
Free trial
7-day free trial is available before subscribing
Standout features
Net worth tracker, investment portfolio tracking, goal creation and progress tracking, budgeting and expense tracking
Categorizes your expenses
Yes, but users can modify
Links to accounts
Yes, bank and credit cards, as well as IRAs, 401(k)s, mortgages and loans
Availability
Offered in both the App Store (for iOS) and on Google Play (for Android); web version also offered
Security features
Utilizes industry-leading security practices, according to Monarch’s website
Terms apply.
Pros
Easy-to-navigate money-tracking dashboard, including a net-worth tracker
Easily syncs to your bank, credit cards and other financial accounts
Users can add collaborators for free
Seven-day free trial
Cons
Subscription is pricier than competitors
Recommendations in the “advice” tab are generic
Goodbudget is also a great option for its digital version of the “cash stuffing” method. You can put your funds into different categories, each of which has a virtual envelope. This way, you can get a better sense of where you stand financially.
Goodbudget
Cost
Free for 20 total envelopes; $10/month (or $80/year) for unlimited envelopes
Standout features
Allows couples to use the envelope system digitally for budgeting, and allows couples to track their debt
Categorizes your expenses
Yes, but users must manually input transactions since the app does not sync to your bank account
Links to accounts
No, users must manually input purchases and transactions
Availability
Offered in both the App Store (for iOS) and on Google Play (for Android) and as a version for laptops
Security features
Information is using bank-grade 256-bit SSL
Terms apply.
Pros
Free version of the app available
Ability to share budget and spending with your partner
Digital envelopes help couples save for big goals that matter to them
Money management courses and resources available
Cons
Transactions must be entered manually
2. Label your investing goals
Before putting your money in the market, know why you’re investing. Your goals can determine the type of account that makes the most sense.
Saving for retirement
If you’re saving for retirement, a 401(k) through your employer is the first account you want to look at, especially if your company offers matching contributions. Otherwise, open an IRA on your own through a bank or brokerage, like Fidelity or Charles Schwab.
Fidelity Investments
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance for robo-advisor to start investing
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)
Bonus
Find special offers here
Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®
Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Terms apply.
Pros
No commission fees for stock, ETF, options trades
No transaction fees for over 3,400 mutual funds
Limited-time special offers
Abundant educational tools and resources
24/7 customer service
Over 100 brick-and-mortar branches across the U.S. for face-to-face support
Cons
Fidelity Go® has a 0.35% advisory fee per year for balances of $25,000 and over
Some of Fidelity’s mutual funds require reaching specific thresholds
Reports of platform outages during heavy trading days
Charles Schwab
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
Bonus
None
Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™, Schwab Organization Account and Schwab Trading Powered by Ameritrade™
Investment options
Stocks, bonds, mutual funds, CDs and ETFs
Educational resources
Extensive retirement planning tools
Terms apply.
Pros
$0 minimum deposit for active investing
No commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual funds
Offers extensive retirement planning tools
Users can get on-demand advice from a professional advisor/Schwab expert
Robo-advisor Schwab Intelligent Portfolios® available as a no-fee automated service option (with Premium version available for a fee)
Award-winning thinkorswim® trading platforms and all their cutting-edge tools are now available at Schwab.
24/7 customer support access by phone or chat
Charles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person support
Cons
Specific transactions may require commission fee
Robo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goals
Building wealth
If your goal is to build wealth for something like buying a house or starting a business, a brokerage account can be a better fit because it gives you the flexibility to access your money at any time.
3. Start small, just start
You don’t need a lot of money to start investing. What matters is just getting started. Even small contributions, like $50 or $100 per month, can grow significantly over time thanks to compounding. If you’re unsure where to start, robo-advisors can help by automatically creating and managing a diversified portfolio based on your goals, risk tolerance and timeline.
Betterment and Wealthfront are our top picks for the best robo-advisors as they both come with no minimum balance requirements and offer a range of investment options, including stocks, bonds, ETFs and cash.
Betterment
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn’t require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.
Fees
Fees may vary depending on the investment vehicle selected, account balances, etc. Click here for details.
Investment vehicles
Robo-advisor: Betterment Digital Investing IRA: Betterment Traditional, Roth and SEP IRAs 401(k): Betterment 401(k) for employers
Investment options
Stocks, bonds, ETFs and cash
Educational resources
Betterment offers retirement and other education materials
Terms apply. Does not apply to crypto asset portfolios.
Pros
No trade or transfer fees
Good for automated investing
Customizes users’ portfolios around their financial goals, timeline and risk tolerance
Users can assign specific investing goals (short- and long-term) to each portfolio and invest using different strategies (less and more risk)
Quick and easy to set up account
Able to sync external retirement accounts to your Betterment retirement goal so all your accounts are in one place. Premium plan users get unlimited access to a financial advisor (otherwise, one-time advisor consultations cost a fee ranging from $299 to $399)
Advanced features include automatic rebalancing, tax-saving strategies and socially responsible investing
Cons
Base price for investing accounts is $4/month – recurring monthly deposits totaling $250, or total Betterment account balances reaching $20,000, automatically switch you to an annual price of .25% of your investing account balances
Premium plan requires $100,000 minimum balance
Wealthfront
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts
Fees
Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance
Bonus
Get $30 bonus when you fund your first taxable investment account
Investment vehicles
Robo-advisor: Wealthfront Automated Investing IRA: Wealthfront Traditional, Roth, SEP and Rollover IRAs Other: Wealthfront 529 College Savings
Investment options
Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks
Educational resources
Offers free financial advice for college planning, retirement and homebuying
Terms apply.
Pros
No trade or transfer fees
Good for automated investing
Picks investments based on user’s risk tolerance and time until retirement
Offers a cash management checking account with a debit card
Tax-loss harvesting to reduce the taxes you pay:
Fund your first taxable Investment Account and get a $50 bonus.
Cons
$500 minimum deposit
0.25% management fee
4. Automate contributions
You can easily set up automatic, recurring transfers into your brokerage account. Simply link your bank account and choose how often you want to contribute money, such as weekly or monthly. This ensures that you’re consistently adding more cash to your portfolio so that your growth could be larger.
5. Forget about it
Now that you’ve put money into your account, it’s time to step back and let your investments work for you. The market will rise and fall, of course, and it’s normal to see dips along the way. Instead of reacting to every downturn, remind yourself that these moments are temporary and that markets have always recovered over time. The best strategy is to stay patient, avoid checking your account too often and focus on the bigger picture: long-term growth.
Investing FAQs
What should I invest in as a beginner?
As a beginner, what you invest in depends on your goals, but you can start with robo-advisors that spread your money across different funds, matching your risk tolerance.
What is the 7% rule in investing?
The 7% rule refers to the historical average annual return of the stock market. It’s a reminder that long-term investing can grow your money steadily over decades.
What is the safest investment with the highest return?
There’s no “safe” investment as all money in the market can be lost. Deposit accounts like high-yield savings accounts or CDs are considered very safe, though they typically earn less than stocks over time.
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