The Basics of Investing for Beginners

Sarah was 28 when she realized she had $50,000 sitting in a savings account earning just 0.5% interest. "I was actually losing money to inflation," she recalls. Within two years of starting her investment journey, her portfolio had grown by 15%.

Why Investing Beats Saving

Traditional savings accounts offer 0.5-1% interest, while inflation runs 2-3% annually. Your money is losing purchasing power sitting there.

Investing has historically provided average annual returns of 7-10% over the long term.

The Power of Compound Interest:

• Invest $100 monthly at 7% annual return
• After 30 years: $122,700 (you invested $36,000)

Step 1: Build Your Foundation

• Emergency Fund First: Save 3-6 months of expenses
• Eliminate High-Interest Debt: Pay off credit cards above 6-7%
• Know Your Goals: Retirement, house, or general wealth building

Step 2: Choose Your Investment Account

• 401(k): Get the full employer match—it's free money
• IRA: Traditional (tax deduction now) or Roth (tax-free later)
• Taxable Account: For goals outside retirement

Step 3: Your Beginner Investment Strategy

The Simple Three-Fund Portfolio:

1. Total Stock Market Index (60%)
2. International Stock Index (20%)
3. Bond Index (20%)

Target-Date Funds: The ultimate beginner option—automatically adjusts as you age.

Step 4: Start Today

1. Open an account online (10-15 minutes)
2. Link your bank account
3. Start with a target-date fund or simple ETF
4. Set up automatic monthly contributions

Pro Tip: Start with whatever you can afford—even $25 monthly. The habit matters more than the amount initially.

Your future self will thank you for starting today.