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The Easiest Way to Start Investing for Beginners (Step-by-Step)

There are a lot of different ways to invest money. Some are more complex and riskier than others, so in this post, we are going to focus on the easiest one for beginners.

The easiest and simplest way to invest for beginners is through already diversified index funds or ETFs. Index funds and ETFs own shares of different companies, and by buying those, you are buying the shares of different companies at once. Depending on the index fund or ETF, of course.

There are differences between funds as well. Some are very low-cost index funds, but there are also actively managed funds with higher fees. I have a post about how fees affect your returns over the span of decades. You can read it here.

Let’s get started with the steps, how you can get started with investing.

Step 1. Create a simple investment plan

The first step is to create an investment plan. The reason this is the first step is because after you have a plan you are following; it is easier to select a broker that meets your needs.

Your investment plan should not be too complicated. I have a few examples you can do or change according to your own taste. The first one is very simple and the other has a bit more diversification, but is also very beginner-friendly.

100 dollars monthly into S&P 500 index fund or ETF

100 dollars monthly, half into S&P index fund or ETF. The other half into some other index funds such as emerging markets or some ETFs you are interested in, such as technology or healthcare.

You can change the amount you put in every month. The reason S&P 500 funds are included in both of the examples, is that S&P 500 is commonly used benchmarks for the markets overall.

By owning S&P 500, you are owning shares of 500 different companies. That is a very well diversified portfolio already, and you can get started with just that.

You can also do less than 100 dollars a month if that sounds like too much. Start small if that is necessary. You can also do more than 100 dollars if your budget can handle that.

Keep in mind that the money you put into the markets should be kept there for at least a decade. Put them in with the mindset that you won’t see them for a very long time. There is also a possibility that your investments lose all their value, that is the risk you are taking in order to get the returns, if you decide to start investing.

Step 2. Choose a broker that offers low-cost index funds or ETFs and is reliable.

After you have decided what you want from your investing journey and how much you are willing to put away every month, it is time to start comparing brokers.

Compare the biggest brokers in your country. Choose one with the lowest fees overall. I have made a short checklist you can use to compare the brokers.

  • Index funds and ETFs should have very little annual fees. They can also be zero. (Everything above 1% is a lot. Ideally 0,1% or less)
  • Your account should also be very cheap to maintain, meaning no fees for having an account.
  • No deposit or withdrawal fees on funds and ETFs is also a big deal.

Try to find the cheapest one with a reliable reputation. Knowing that they have your money should not make you uncomfortable.

Step 3. Create an account and verify your identity

Next up is to create an account and verify your identity according to the instructions of the broker. This should be an easy process if you have all the documents needed, such as a passport or other identification. The difficulty of this process depends on the country you live in and the broker you choose.

Step 4. Make your first deposit and purchase your first index fund or ETF

After you have your account, all set up, you are ready to make your first deposit and purchase the index funds or ETFs according to the investing plan you made earlier.

Step 5. Follow your plan regularly

Investing is not a short sprint. It is like a marathon. The longer you stay in the game, the more you can expect in terms of returns.

Investing regularly, no matter what market conditions, is the key to investing. Thinking the prices are too high and can’t go any higher, they usually can. Predicting the exact bottom of the markets is also very difficult. Stick to your plan, no matter what is going on at the markets.

Final words

This is a step-by-step guide for beginners to start investing. I think index funds and ETFs are the simplest way to invest if you are completely new. They bring in a lot of diversifications already, without having to read thousands of pages of annual reports of individual companies.

Keep in mind that investing will not make you rich quickly. Past returns also are not a guarantee of future returns, but companies are supposed to make profits for their shareholders.

I have more posts about investing you might be interested in. I will link them below.

Can investing make you rich?

How long does it take to learn investing

Other investing-related posts can be found here.

Hopefully this was helpful to you, have a nice day.

This is not investment or financial advice. Past returns are not a guarantee of future returns. Always do your research before risking your hard-earned money.