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.
5 steps to investing when you're just starting out
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
Standout features
Customizable transaction categories, net-worth tracker, investment portfolio tracking, financial forecasting
Cost
$8.33/month (billed $99.99 annually); $14.99/month (billed monthly). Get 50% off your first year of Core Plan with code CNBC50
Categorizes your expenses
Yes, but users can modify
Links to accounts
Automatically syncs with bank accounts, credit cards, loans, retirement plans, investments and more at over 13,000 institutions
Availability
Offered for both iOS and Android. Web version also available
Security features
Maintaining only read-only access, Monarch utilizes AES 256-bit encryption and multi-factor authentication. It is SOC2 Type 2 certified and syncs accounts via Plaid, MX and Finicity.
Terms apply.
Pros
- Seven-day free trial
- Easy-to-navigate dashboard with fully customizable reports and visuals
- Connects with more than 13,000 financial institutions
- Couples or partners can budget together in collaboration mode (each with their own login at no extra cost)
- AI Assistant lets you ask questions about your finances
- Can track property value via Zillow
- Ad-free experience
- Consistent product updates with new features added regularly
Cons
- No free version
- Subscription is more expensive than competitors
- Investment tracking is solid for most users but lacks advanced tools like retirement modeling, fee analysis or Monte Carlo simulations
- Recommendations in the "advice" tab are generic
- No undo feature when reallocating money across budget categories
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 track debt and use a digital "envelope" system to budget funds
Categorizes your expenses
Yes, but free users must manually input transactions
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 for desktop
Security features
Information is protected using bank-grade 256-bit SSL
Terms apply.
Pros
- Free tier available
- Can share budget and spending with a partner in real time across multiple devices
- Digital envelopes help couples and households stay aligned on spending goals
- Offers money management courses and educational resources
- Available on iOS, Android and desktop
Cons
- Free tier doesn't sync with bank accounts (all transactions must be entered manually)
- No bill-paying or investment-tracking features
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, which includes access to unlimited 30-minute coaching calls with a Fidelity advisor and tax-loss harvesting on taxable accounts).
Bonus
None currently. Check Fidelity's promotions page for the latest 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
- Fidelity Go® portfolios use Fidelity Flex® mutual funds with zero expense ratios
- Human advisors manage day-to-day Fidelity Go® portfolio decisions
- Unlimited 30-minute coaching calls with a Fidelity advisor for accounts of $25,000 and over (at no extra cost)
- Tax-loss harvesting available on taxable Fidelity Go® accounts with $25,000 or more
- Abundant educational tools and resources with research from 20-plus independent providers
- 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
- Fidelity Go® invests only in Fidelity Flex® mutual funds (no third-party ETFs or individual securities available)
- No socially responsible or ESG portfolio option through Fidelity Go®
- 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.
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. Base price is $5/month for investing accounts; automatically switches to 0.25% annually once you reach $24,000 in total balance or set up $200/month in recurring deposits. Premium plan is 0.65% annually.
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's resources hub offers expert-written guides on investing basics, retirement planning and personal finance that are designed to help investors at every level make more informed decisions.
Terms apply. Does not apply to crypto asset portfolios.
Pros
- No trade or transfer fees
- Automated investing with portfolios built around your financial goals, timeline and risk tolerance
- Assign specific goals to each portfolio and invest using different strategies
- Quick and easy account setup with the ability to sync external retirement accounts
- Advanced features include automatic rebalancing, tax-loss harvesting and socially responsible investing
- Premium plan users ($100,000 minimum) get unlimited access to certified financial planners (CFPs)
Cons
- $5/month fee for investing accounts (switches to 0.25% annually once you hit $200/month in recurring deposits or $24,000 in total balance)
- Premium plan requires a $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
None
Investment vehicles
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
- Highly automated investing with portfolios built around your risk tolerance and timeline
- Daily tax-loss harvesting available to all accounts to help reduce your tax bill
- High-yield Cash Account earns 3.30% APY base rate (up to 4.20% promotional APY for new clients with direct deposit) with no account fees or minimum balance
- Offers a cash management account with a debit card and access to 19,000+ fee-free ATMs
- Path financial planning tool gives personalized projections for retirement, home purchases and college savings
- Refer a friend and both parties receive $5,000 managed fee-free
Cons
- $500 minimum deposit for investment accounts
- 0.25% annual management fee
- No access to human financial advisors
- Tax optimization features (stock-level tax-loss harvesting, smart beta) only available at higher account balances
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.
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.
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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