Learn how to start investing today

What you will learn from reading this article:

  • How to start investing money in stocks, real estate and mutual funds to obtain the greatest financial rewards in the future
  • When to start investing as soon as possible, rather than waiting for the perfect moment
  • How to build your money-making machine by automatically putting aside a small portion of your paycheck each month
  • How wealth generates over time due to the power of compounding

when to start investing

When is the best time to start investing your money? Right from your first paycheck? When you have a spouse and are looking to start a nest egg? Sometime in the more distant future? 

Did you ever learn to invest? Chances are that you’ve been waiting for the “right” moment to start investing, but what makes that moment happen? And even then, can you learn how to start investing money with no prior stock market experience? If you want to discover how and when to start investing, follow these tips.  

Create a money machine to achieve financial freedom

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When is the ideal time to start investing?

The short answer is: Invest today, not tomorrow. Because even if you just start investing a little bit of your savings, that amount will have that much longer to grow, thanks to the power of compounding. When to start investing isn’t a question of your income or your debt – anyone can commit a portion of their paycheck to investing. You may need to cut your spending in other areas, but it is worth it to create an unshakeable financial future.

What is the best amount to start investing?

While when to start investing isn’t up for debate, the amount you invest depends on a few factors. You absolutely do not need a lot of money to start investing. Certain types of passive income – like real estate investment trusts, money market accounts and index funds – are easy to understand, reliable and require less than $500 to get started.

What else do I need to consider before investing?

If you want to start investing beyond a basic retirement account, like stocks or mutual funds, there are a few things to consider.

  • Cash flow, debt and budget. Are you realistic about your current financial situation? Anyone can invest a percentage of their paycheck in a 401K or IRA. But if you’re wondering, “How do I start investing in stocks?” or thinking about another higher-risk area, make sure you first pay down debt and have a good idea of your own cash flow and budget.
  • Financial literacy. You don’t need an MBA to learn how to start investing money. But you do need to know certain financial terms and have a basic understanding of how things like the stock market work.

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risk tolerance in investing

  • Risk tolerance. When to start investing and the amount you invest depends on your risk tolerance. Those with a high risk tolerance are willing to invest more, while those with low risk tolerance may want to start smaller. If you’re thinking about investing a lot of money, especially in a high-risk area, talk to an expert who can provide guidance.
  • Goal setting. You won’t know if your investments are successful if you’re not tracking them. As with any other area of your life, always set goals. Specific, measurable goals will keep you on track and provide benchmarks that can help you refine your investing strategy.
Get started creating a money machine

You’re already a financial trader. Maybe you don’t see it that way, but if you work for a living, you’re trading your time for money. That’s probably the worst trade you can make. Why? Because there’s always more money, but you can never get more time. How do you stop this cycle? How can you keep time on your side while still making a profit? The answer is to create what we call a money machine – money that will end up giving you an income for life.  

Set aside a percentage of your paycheck to pay yourself first. Maybe you set aside 10% or 15%. Maybe 3% or 5%. This number will increase over time as your income grows, but decide what portion of your paycheck you’ll invest in yourself now. This is really how to start investing money in the future you deserve. Remember, this amount is off the top and doesn’t factor in any other spending. Your other expenses, such as housing costs, utility bills and restaurants will come next.

The trick is then to put this money somewhere it will begin to work for you like real estate. “Under your mattress” doesn’t have very good interest rates. But put this set percentage of your earnings into savings no matter what happens and you’re going to slowly start building your financial future. Even if it seems like you’ve already accounted for every penny, you can start saving right now and start investing.

Automate your savings

The best way to set your money machine in motion is to automate your savings. You’ve probably heard this before – but it’s true. When learning how to start investing money the secret is making saving as easy as possible, which means not seeing that money in the first place. That way, you’re not even tempted to spend it somewhere else. You’ll always spend what you have, and reducing that just a little more will pay off. It doesn’t matter if you’re living paycheck to paycheck or earning six figures – save now and you’ll be able to reap the rewards later. You’ll be building a money machine that makes money when you sleep, when you eat and when you eventually stop working.

Here’s how you can start investing and saving automatically:

1. Pick the percentage of your income you’re going to set aside automatically. There’s no right answer here, so trust your instincts. From 3% to 10% to 50%, the amount is entirely up to you. Track how much you earn and spend in a month and see how much you can put aside. Save as much as you can, because that money will grow in the bank.

2. If you’re already enrolled in a retirement account through your job, ask HR to automatically contribute your chosen percentage amount directly into that account. If you’ve already got automatic deductions, you can update them to the amount you’ve chosen.

percentage of income

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3. Self-employed, own your own business or working as a contractor? You can start a retirement account with a bank or financial institution. Then just set up an automatic transfer from your checking account.

Say you get a raise or other influx of cash – you can stick that into your money machine directly, spread it among your three asset allocation buckets or increase your ongoing savings percentage to match. 

Don’t wait to learn how to start investing money – you’ll never get that time back that could have been spent making money. But remember, not all investments are created equal. Learn more about the power of compounding and how to build a smart financial blueprint to get your future under your control.

Diversify your investments

A general rule of thumb is to diversify your investments. When you make multiple investments, you reduce the risk for your total investment in the event of one investment’s poor performance. Diversification serves as a buffer, so it’s fundamental to your broader financial freedom strategy. Since some investments generate greater returns than others, you want to be smart in your choices.

Learning how to diversify your investments helps balance your portfolio, with each type of investment featuring unique benefits and risks. Two of the most common questions about how to start investing money are about stocks and mutual funds.

How do I start investing in stocks?

Stocks may seem intimidating, but you don’t need a fortune to get started. According to NASDAQ, you can get started investing in stocks with as little as $1,000. When you’re learning how to start investing money in stocks and bonds, your general rule of thumb is to maximize your returns by minimizing your costs. Your costs of investing can include deposit requirements, account minimum restrictions, commissions and account fees. Secure the lowest costs you can while diversifying as much as possible.

investing in stocks

How do I start investing in mutual funds?

how to start investing money

A mutual fund is another name for an investment company that pools money from many investors. The mutual fund uses the pooled money to invest in various assets (like stocks, bonds and real estate) with any returns added to the pool. When you invest in mutual funds by purchasing shares in the fund, each share represents ownership in part of the fund’s assets. Mutual fund investments are attractive because they offer a single diversified investment package managed by professionals.

Activity: Who saved more?

Let’s use this example of how to start investing money from financial expert Burton Malkiel – he created the idea of index funds:

Take two brothers, we’ll call them William and James. Both are 65 years old. Based on the information below, which brother has more money in his account at the age of retirement? William, who invested for 20 years, or James, who invested for 25? Have your guess ready? Click below for the answer.

Ready to invest in your financial future?

Learn more about how and when to start investing Tony Robbins’ Unshakeable audio. Uncover the knowledge you need to master your personal finances today, not tomorrow.