Ready to Invest? These 4 Key Principles Can Help You Get Started

Investing doesn’t have to be complicated. Growing your money can help you achieve your goals such as returning to school, starting a business, or saving for your child’s college. Whether you’re a pro or a novice, following these investing tips can help you get started and build the life you’ve always wanted while setting you up for success.

Separate savings from investments

Everyone needs savings to manage life’s unexpected emergencies, but your savings should always be liquid so you can tap into it instantly if you experience a significant expense. Pro tip: It’s best to keep three to six months worth of your total expenses in cash and cash equivalents. Then you can look at balancing other financial goals such as saving for retirement or paying down debt.

Invest in long-term goals

Financial markets can be volatile in the short term, but they have consistently increased over extended periods of time.* That’s why investing can help with goals you want to achieve over the long term. Pro tip: Agood rule of thumb is to regularly invest a minimum of 10-15 percent of your gross income for retirement in addition to emergency savings.

Invest sooner rather than later

One of the most critical factors in accumulating wealth depends on when you start investing. Getting an early start allows your money to compound and grow over time — even if you don’t have much to invest. Pro tip: Start today because catching up is more expensive the longer you wait.

Tax-advantage accounts

Using tax-advantaged accounts like an individual retirement account (IRA), a workplace 401(k), or a retirement account if you’re self-employed helps you build wealth while reducing taxes over time. Participate as soon as you can in employer retirement plans and take advantage of free matching contributions. Pro tip: Remember, that you own the money, including your vested matching funds, if you leave the company.

Sources:

*. The S&P 500 Stock Market returns from 1957 to 2022 were slightly above 10%. Past performance is not a guarantee of future results.