Disclaimer: This post may contain affiliate links. Please read our disclosure for more information.
Hey there, future financial guru! Have you been feeling intimidated by all those scenes where only the high-earning corporates in suits and ties are making transactions worth millions, looking all busy and serious? We’ve been there too.
But guess what? Gone are the days when you thought investing was only for the high rollers. Imagine there are no more sceneries of suited millionaires shaking hands in boardrooms. Instead, picture yourself in the driver’s seat of your financial future, with investing being your loyal navigator.
Forget about the old-school pictures of the Wall Street buzz. The tide has turned, with you being the star of the story. You do not need a hefty wallet or a fancy degree to kickstart investing. You are already on the right track if you want to make some pocket change work for you.
Let’s speak the truth: investing has never been easier, thanks to our smartphones. Think of it as online shopping. A few taps, and you have your stocks in your basket, ready for “checkout.”
And the best part? It is absolutely delightful to watch your money grow, be in charge of your future, and stand a step closer to your goals.
This isn’t your grandma’s investing guide. It is your key to financial freedom, whether you’re a newbie or a seasoned saver, written in simple English. So, start small, think big, and let’s get your money to work for you!
Why You Should Invest Early?
You know the feeling of hopelessness when you are stuck in the never-ending line of your morning latte, right? When you wish you had gotten there earlier. To make things even easier, think of investing just like this!
Imagine you are a fresh graduate and have your first real job. The last thing that would be on your mind is investing. Who cares about investing when you can spend your paycheck on a brand-new smartphone that everyone is talking about? But let us tell you this: that’s not the best thing you can do for your future! Investing from early on is one of the smartest moves you can make for yourself.
Let’s touch on some key points step by step.
The Magic of Compounding
The first in line is the concept of compounding. And it is directly related to the point we mentioned above: starting to invest as soon as possible. The effect of compounding is like planting money seeds and watching them grow into a money tree. The sooner you start doing it, the sooner you are going to reap your benefits. Do not underestimate the power of compounding; these trees can grow sky-high over time.
Understanding how compounding works is a cornerstone of building wealth, and the sooner you start, the sooner you enjoy your benefits. In this regard, the legendary investor, billionaire Charlie Munger highly emphasized the importance of saving your first $100,000 as quickly as possible and investing it. This approach is definitely going to change your views on money and the creation of wealth.
Charlie Munger’s wisdom isn’t just another inspirational lines. Instead, it carries the essence of compounding at its core. He highlights that although hitting your first $100,000 is intimidating, it’s worth achieving at all costs. Once you reach $100,000, you will see your wealth experiencing the snowball effect over time.
Example
To grasp this idea more vividly, picture two young people, Ben and Steve, who are currently 20 years old. Ben follows Munger’s advice, puts in all his efforts, and eventually achieves the long-awaited $100,000 by the age of 25. On the other hand, Steve is a bit skeptical about what Munger says, and he hits the threshold by the age of 35. Both Ben and Steve continue to reinvest all dividends and gains throughout their investment journey, ensuring that the money compounds every year. Both of them started at the same point but had different outcomes due to the compound interest effect.
If we assume a 10% return, which is the average stock market return, by the age of 70, Steve has earned $2.8 million, meanwhile, Ben gets an astonishing $7.3 million. Here’s the visual breakdown:
Name | Starting Age | Retired at | Years | Final Value |
Ben | 25 | 70 | 45 | $7,357,941 |
Steve | 35 | 70 | 35 | $2,802,596 |
Ben was able to take full advantage of compound interest thanks to his early start, which has allowed him to achieve these remarkable results. He reinvested his earnings continuously, which helped his money to increase exponentially over time.
Of course, this doesn’t mean that you should give up the idea of investing once you are 40 or even later. What we suggest is to start as soon as possible, for your own benefit. As Warren Buffett once said:
Time is your friend, impulse is your enemy. Take advantage of compound interest, and don’t be captivated by the siren song of the market.
Reinvesting all of your earnings back into your investment portfolio is a critical component of taking advantage of compound interest. By doing this, you enable compound interest, which increases your investment yearly at an accelerating rate.
In conclusion, reinvest 100% of your earnings, start early, and maintain consistency to optimize the benefits of compounding.
The Silent Enemy: Inflation
However tempting the compounding effect sounds, there is one powerful silent enemy along your investment journey – inflation. How it can bring harm is that it can pull away your purchasing power, meaning that whatever you can buy today will require more money tomorrow.
Saving money in a bank is very unlikely to beat inflation due to the rates being too small. Investments, on the other hand, have the power to match and surpass the rate of inflation, increasing your purchasing power and preserving your wealth.
In a nutshell, starting to invest early allows you to achieve financial independence. It is not just a strategy but a smart approach to ensure a solid financial future against all kinds of uncertainties, such as inflation.
Where Should You Put Your Money?
So you made up your mind to invest…but where do you start? Where to put your hard-earned cash? Don’t worry; we have got you covered on this, too. Let us review some easy-to-grasp investment options that might fit your personality, lifestyle, and needs.
Stocks
When you buy stocks or shares, you buy ownership in the company. This means that whenever the company does well, so do you!
So, how can you make money out of stocks? There are two ways to do so: through capital gains and dividend distributions. Let us explain:
- Capital gain/loss is the difference you earn when the stock price goes up/down. Thus, if you buy a stock and its price increases over time, you will profit when you sell your stock.
- Some companies distribute dividends for owning their stocks, usually on a quarterly basis.
Bonds
Bonds are your go-to choice if you are looking for a less risky and more reliable way to invest. It is a debt instrument, meaning that by buying bonds, you provide a loan to the government or to companies with the promise of getting interest payments. You can make money from bonds through:
- Interest payments, or coupon payments, which are paid regularly until the maturity of the bond.
- Selling the bond at a higher price. This happens when the interest rates fall – if you buy a bond that pays a 5% coupon, and the interest rate goes down 3%, your bond becomes attractive so that you might sell it.
Mutual Funds
If you are overwhelmed with which stocks or bonds to choose, mutual funds can be the right fit for you. Professional fund managers are in charge of managing mutual funds, which pool money from investors like you. Then, you reap the benefits of diversification as the fund manager spreads your investment across different assets. You can make money from mutual funds through:
- Dividends and interest, meaning you get dividends from the stocks and interest from bonds in the mutual fund.
- Capital gains: if the fund sells the securities at a profit, these funds are passed to you, usually at the end of the year.
- Increase in NAV: if the value of the portfolio of the fund increases, the net asset value (NAV) of your shares increases as well, netting you a profit.
Exchange-Traded Funds (ETFs)
ETFs are like a mix of mutual funds and stocks, offering the best of both worlds. ETFs are bought and sold on the stock exchange throughout the day, similar to stocks.
Investing in ETFs offers diversification as they hold a collection of stocks, bonds, or other assets, significantly reducing investment risk. One of the most popular ETFs is the SPDR S&P 500 ETF Trust (SPY). When you invest in SPY, essentially, you buy small pieces of each of the 500 companies listed on US stock exchanges.
Real Estate
Thinking about investing in real estate? It’s like an investment that you can touch and feel. There are two main ways you can go into real estate investing: buying directly and renting it out, selling it when the real estate prices go up, or otherwise going for REITs (Real Estate Investment Trusts), which resembles buying stocks.
Cryptocurrencies
If you are looking to spice up your portfolio, cryptocurrencies can be a good fit for you. Although known for being high-risk, these investments provide higher returns as well. Here is how you can make money out of it:
- Buying low and selling high, as cryptocurrencies tend to experience rapid price increases and lead to significant profits,
- Staking and mining: staking means holding funds in a crypto wallet to support network operations, and mining stands for validating crypto transactions. Both staking and mining can provide you with tokens as rewards.
Finest Apps and Platforms to Invest
Alright, now let’s break down some of the coolest apps and platforms to get your investment game started. Here are our favorites:
1. Robinhood

Robinhood would be a great choice for you if you want to minimize your commission fees, which makes it super accessible for beginners. Here, you can start investing in stocks, crypto, options, and more—all in one place!
What makes this our favorite is that the investments mentioned above trade commission-free. As of now, there is also an ongoing offer to earn an uncapped bonus when transferring your brokerage account to Robinhood.
You can also get Robinhood Gold for just $5 per month, which gives you access to many amazing features, such as 5% interest on your uninvested brokerage cash with cash sweep, level 2 market data from Nasdaq, larger instant deposits, and much more.
2. Binance

Binance is one of the top platforms in the world if you’re interested in cryptocurrency. It provides a large selection of cryptocurrencies for investment and trading.
Binance is renowned for offering a wide range of financial products and services, cutting-edge trading tools, and low trading fees. Traders wishing to diversify their portfolios with digital assets, regardless of skill level, will find this platform to be extremely useful.
There are several good points to highlight about this platform:
- It is one of the largest cryptocurrency exchanges, offering more than 500 cryptocurrencies,
- The platform charges one of the lowest trading fees in the industry, starting from 0.1%,
- Binance is known to be highly liquid, meaning that you can buy and sell your securities pretty easily,
- The platform has a very user-friendly interface.
3. E*TRADE

Choose E*TRADE if you want a mix of simple interfaces with the option to later on dive deeper into advanced strategies as you grow. Whether your financial goal is long-term investing, trading, or savings and checking, E*TRADE offers you robust trading tools to unlock your full financial potential.
What’s so cool about this platform? Here are some essentials to know:
- Commission-free trading with US-listed stocks, options, ETFs, and mutual funds,
- Core diversified portfolios, managed by a small advisory fee of 0.3% per annum,
- Retirement accounts,
- Simple tools to trade through Power E*TRADE or mobile apps,
- Wide range of investment choices (stocks, ETFs, mutual funds, options, and more).
4. Acorns

Turn your spare change into a big change with Acorns! This is the app that will make investing seem as easy as getting your morning coffee. And we literally mean this.
Let us explain: every time you purchase your morning latte, a pair of sneakers, or some new fragrance, your total bill is rounded up to the next dollar, and the remaining change goes directly to your Acorns account.
It’s easy—spend like normal and watch your investment portfolio grow and be taken care of by professionals. If you want to speed things up, you can inject regular deposits as well.
Apart from pure investing, Acorn has other cool offerings too, such as the Acorns debit cards, cashback rewards from partners, educational content, and so forth. It’s not only an investment tool but also a gateway to well-educated financial habits.
5. Scalable Capital

Scalable Capital is an excellent option if you are located in Europe, namely if you are residing in Germany, Austria, France, Italy, Spain, or the Netherlands. Consider it your own personal financial advisor, providing a remarkably simple platform for stock and ETF investments.
Scalable Capital is cool since it emphasizes customized portfolio management and automated investing. It’s like having a financial advisor at your disposal without going over budget.
Everyone can invest because scalable capital makes it accessible and affordable. It’s ideal for European investors who wish to increase their money quickly and easily because of its robust toolkit and user-friendly interface.
Common Investing Blunders to Avoid
Now, let’s chat about some classical mistakes you will want to steer clear of. Here, we have included some examples of how to avoid them.
Putting All Your Eggs in One Basket
Imagine if you had invested all your money in BlackBerry in the early 2000s, expecting it to dominate the smartphone market for a long while. See how risky investing in a single stock can be, as BlackBerry couldn’t keep up with powerful competitors like Samsung and Apple.
Diversity, diversify, diversify—it will help you ensure that the poor performance of just one or two stocks cannot ruin your entire portfolio.
If you are unsure how diversification can benefit, try an online investment simulator to create two portfolios—one with an investment in a single stock and the other diversified across stocks from many sectors. Then, track the performance over a period of 10 years to see how both both strategies work.
Forgetting the Tax Man
Selling a stock you’ve had for 11 months at $10,000 could lead you to pay taxes at the rate of 24%, whereas if you held it for one more month, it could drop to 15%, eventually saving you $900.
You can go to any online investment tax calculator and input your short- and long-term gains to get a sense of potential tax differences.
Omitting the Research
Will you buy a car without checking to see if it runs? We believe you should always look under the hood!
It’s the same with investments. Think of someone who invests in high-tech biotech companies without having a clue about the market or this science. Such an investor might have a hard time realizing the viability of such companies.
What you can do is reach out to an investment professional to help, as well as invest in reliable ETFs, such as Vanguard S&P 500 & Invesco QQQ Trust.
Balancing Saving and Investing: How to Weigh Your Options?
Let us tell you this before getting started: banks earn much more than you do from your “high-yield” savings account. The bank loans your money at higher rates as mortgages, for example, while you earn a modest 1% APY.
So why do people still save over investing? It’s the risk.
But look at it this way: aren’t you losing money anyway through lifestyle and inflation without investing? However, with investing, you can get much higher returns compared to saving.
Get started by creating a safety cushion—an emergency fund covering 3 to 6 months of expenses. Once you take care of this, then you can consider investing any extra cash in stocks, real estate, or any other security that will offer better returns over time.
Instead of leaving your money idle in your savings account, put it into the market through the platforms we mentioned above.
But wait, what if money is tight? It is all about timing. You should consider investing only when you have money that won’t interfere with your daily life if it’s tied up for a while.
Don’t just grow your savings account; expand your assets for a more meaningful return. Balancing between saving for security and investing for growth can help you build a more resilient and prosperous financial future.
Understanding and Managing Risks
Now, let’s make sure you know how to handle waves of risk before diving into investments.
Market Risk
Market risk affects everyone. Consider it a big shake-up due to a new policy or a significant economic event. It is unpredictable at a lot of times and can largely affect your investments.
Liquidity Risk
Have you ever tried to sell something real quick, but there was no one to buy? It is the same with investments – some are hard to turn into cash without losing value, and that is the liquidity risk.
Credit Risk
This resembles lending to your friend whose paying ability you are skeptical about. In investing, this is when you lend money, such as when you buy bonds, and there is a chance the company may not pay you back.
How do you keep cool with risks, then?
Diversify
We won’t get tired of highlighting how important diversification is. A little bit here, a little bit there – stocks, bonds, ETFs, some real estate. If one of these investments shakes, the others will keep your portfolio going.
Stay Up-to-Date
Keep an eye on financial news like you’d check if it rains on a gloomy day. The more informed you are, the stronger your reaction to market changes and the better you anticipate them.
Know Your Risk Appetite
Know how much volatility you can handle without getting crazy, both emotionally and financially. It’s about finding the equilibrium—the sweet spot where you can handle the ups and downs of the market without losing sleep.
The Power of Diversification
We dedicated a separate section to diversification because emphasizing it is never enough!
As mentioned in one of the blunders to avoid, diversification is all about not keeping all your eggs in one basket. It is your financial safety net – if one of your investments dips, the others might soar, keeping a good balance.
If you follow a diversification strategy, you can technically mix up different types of securities, like stocks and bonds, global markets, as well as different sectors.
If you invest in high-growth yet high-risk tech stocks, you should also include safer securities, such as government bonds, so that when tech is down, you still have your bonds stable, which will serve as a cushion for you.
Do not just stick to your local market. If the US market is slumpy, maybe your European and Asian market investments would be in good form.
Different sectors react differently to economic events. Tech stocks carry a lot of opportunities for growth, and that’s what makes them so attractive to investors. The tech sector is great, but how about the consumer goods sector or healthcare? Make sure you include securities from different categories. And do you remember the large decline in tech in the early 2000s? Probably, those who heavily invested in health and consumer goods slept way better at night.
Staying Up-to-Date in the Investment World
Investing without staying up-to-date with financial news is like trying to hit a target blindfolded. Being informed helps you react swiftly and wisely, whether it’s a sudden dip in the market or a skyrocketing stock.
We have several tips for you on how to keep up.
Financial news platforms and apps like CNBC, Bloomberg, Yahoo Finance, and Financial Times are your go-to source for real-time market updates. If you don’t want to miss a beat, set an alarm for your desired news on your investments.
Finally, follow investment blogs and websites, such as the Motley Fool, for diverse perspectives and in-depth financial markets analysis. Such platforms can be your reliable companion for market forecasts and ideas for strategy.
Furthermore, we strongly advise you to use Simply Wall St. as this platform provides comprehensive analysis and visuals to assist you in comprehending the fundamentals of different companies. Even beginners can understand complex financial data thanks to Simply Wall St’s easy-to-read infographics. It offers information on thousands of equities worldwide as well as a company’s financial standing, historical results, and prospects for the future.

Too busy to read? Listen to financial podcasts on your daily commute or at the gym. Podcasts like Planet Money, Money For the Rest of Us, and the Ramsey Show can be amazing sources of insights and inspiration.
Investing in the Long-Term: How to Build a Sustainable Investment Strategy?
Congratulations! You’ve decided that investments are your thing, and now you’re wondering how you are going to build a sustainable long-term investment strategy. Well, long-term investing isn’t just about throwing cash into stocks and hoping for the best. It’s about building a strategy that sustains and grows your wealth over decades.
Long-term investing smooths out the ups and downs of the market and gives your investments time to mature, just like a fine wine! Plus, it is ideal for long-term financial goals, such as a college education fund for your offspring or retirement.
To build a sustainable investment strategy, there are three pillars to keep in mind: diversification (again!), quality over quantity, and reinvesting dividends. Your core pillar should be diversification, meaning you can mix stocks, bonds, ETFs, and real estate to spread risk and potential rewards.
Opt for companies that are reputable for their promise of growth and have passed the test of time, like the healthcare and green technology sectors. You can have less number of companies’ stocks, but they can perform super well.
To amplify the growth of your investments, you need to reinvest your dividends. Reinvesting the dividends can turn an initial small amount into a relatively large sum over the years.
Imagine you invested in Apple back in the early 2000s before the iPhone took over the world. That’s the power of long-term growth in tech. Or consider someone who invested in real estate in a now booming city; their initial investment has likely multiplied several times over.
It takes perseverance and dedication to invest for the long-term. You water it and wait, just as you would with a tree. Even while you might not see fruits right away, in the long run, it can give you a significant financial cushion for the future.
The Importance of Patience in Investing
Building on top of our previous discussion, we consider patience to be not just a virtue in life, but also a superpower in investing. It is about keeping it cool when the market gets heated and not jumping ship at every wave.
Investing with patience is synonymous with less stress. You don’t get anxious by every up and down the market makes, and you don’t overreact to every catchy headline you see in the financial news. Instead, you keep your long-term goals in mind and watch your investments grow at their own pace.
Although market downturns are scary, history shows that markets tend to go back to normal over time anyway. If you stick to your investments and stay patient, your portfolio might rebound and reach new heights after a downturn.
Also, as we have spoken about it a lot, do you remember the compound interest magic? The longer you keep your investments, the more compound interest you earn, as it is interest on interest – it adds up significantly over time.
Consider those who had invested in Netflix or Amazon earlier and kept their investments until now. These long-term investors have experienced phenomenal growth in their returns. Or think about all those who kept their investments through the 2008–2009 financial crisis. The investors who remained patient saw a strong recovery during the upcoming years.
Reaping the Reward Along the Investment Journey
Let’s talk about the sweet part of investing—the rewards! Investments aren’t a set-it-and-forget-it-deal. It’s an active journey where you enjoy the wins along the way. Whether it’s a capital gain from a smart stock choice or interest from bonds, each milestone reached adds to the thrill.
The interest and dividends are your investments’ own way of saying “thank you” for sticking with them. Additionally, reinvesting them or using them as a passive income stream can be incredibly rewarding.
On the other side are the capital gains. Selling an investment for more than you paid for it is always a high-five moment. You may have picked a winner in the tech sector or a real estate investment that skyrocketed in value.
Witnessing the realization of your financial strategies is what makes the investment journey so beautiful. Every profit and dividend payment you receive is evidence of your diligence and forethought. Not to mention, as your portfolio expands, so does your capacity to investigate fresh prospects, such as investing in developing markets or cutting-edge startups.
So, keep in mind to enjoy each accomplishment as you proceed down your investment journey. These are moments that are beneficial both for your wallet and your soul.
Wrapping Up
And there you have it, dear investment guru. We’ve covered the twists and turns of starting your investment journey, from the basics of compound interest up to the importance of patience in investing and enjoying the rewards.
Investing isn’t just about stashing your cash and hoping for the best. It’s an active, engaging journey. Whether you’re spreading your investments across diverse assets, tuning into the latest market trends, or patiently watching your portfolio grow, every step you take builds towards your financial independence.
Common FAQs
1. What should I do if my investments decrease in value?
First things first – don’t panic! Sometimes, holding your investments during a downturn might be your best strategy. Understand if the drop comes from the broader market or if it is just specific to your investment. All in all, market fluctuations are a normal part of investments.
2. Is there one best time to invest?
The best time to invest was yesterday, and the next best is today! As we said, starting early on your investment journey is the best thing you can do. However, there is no big deal if you start today. Regarding the timing, it can be challenging to time the market. Even seasoned investors struggle with trying to buy low and sell high; instead, consistent, long-term investing typically produces higher returns.
3. Can I still invest if I am in debt?
Absolutely! But with a solid plan. Prioritize paying off high-interest debt, such as credit card obligations. If you have loans with lower interest rates (such as mortgages or student loans), you can think about making a small investment each month to increase your wealth over time. Just remember to pay off your debts on time!
4. How do I decide where to invest?
Take into account your risk tolerance and financial objectives first. Are you looking for something safe? Consider high-yield savings accounts or bonds. Are you feeling more courageous? Cryptocurrencies or stocks may be more your style. You can get information to assist you in making wise decisions from tools like TD Ameritrade and E*TRADE.
5. Can I lose all the money I invested?
The chances are very little unless the company whose securities you carry goes bankrupt. However, the value of your investments can fluctuate in line with the market’s ups and downs. To mitigate this risk, once again, diversification can be your best friend.
6. How often should I check my investments?
While being informed is important, everyday obsessions can cause tension and hasty decisions. For the majority of long-term investments, you may stay informed without feeling stressed by checking in once a quarter or even once a month.