Getting started in the world of investing can be overwhelming. How do you know how much to invest or where to invest it? Don’t let decision paralysis keep you from starting to invest and building your more beautiful tomorrow. Here’s how to get started investing today.
Begin by following the Financial Order of Operations (FOO). These nine tried-and-true steps will help you maximize your money, know exactly where to put your next dollar, and reach your financial goals. If you follow the FOO, here’s how your investing order of operations will look:
- Get your employer match
- Max-out your Roth IRA and/or HSA
- Maximize your employer retirement plan (like a 401(k))
- Invest in a taxable brokerage account
As you work through FOO and start investing, pay close attention to the expense ratio and fees of investment funds. High expense ratios and fees can eat away at your long-term growth. Index funds often have the lowest expense ratios. You can start investing by contributing to your employer plan or opening up a retirement account with a custodian. Some larger custodial firms include Charles Schwab, Fidelity, and Vanguard.
When building foundational assets, start by looking into index funds. Index funds are a collection of stocks or bonds that track a specific or broad sector of the market.
More specifically, look at target retirement index funds. These are designed to automatically rebalance over time as your investment needs change. The leading providers of index target retirement funds are Fidelity Investments, Charles Schwab, and Vanguard.
Check out the video below for our beginner’s guide to investing!
