Entering the New Year With No Investments? Start With These Moves

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Investing is a key way to grow your wealth. If you don’t currently have any investment accounts, you might feel a bit intimidated by it. This makes sense, as there’s a lot to learn. You don’t want to put your hard-earned money just anywhere, so start small and work your way up. There’s plenty of ways to gradually step into investing that don’t require a lot of money or risk.

Here are five investing moves you can easily make in the new year to start growing your net worth.

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Open a High-Yield Savings Account

It’s time to put your money to work. You’re probably not earning any — or much of any — interest in your checking account, so stop storing extra cash there.

“We all need a cash cushion to prepare for life’s uncertainties, but that doesn’t mean your cash has to sit idle,” said Brian Blakeman, founder and financial adviser at Onward Financial Advising LLC. “Moving your excess cash from a checking account to a high-yield savings account provides a significantly higher interest rate while being secured with FDIC insurance — like checking or savings bank accounts.”

Maximize Employer-Match Benefits

Many companies offer to match your retirement plan contributions up to a certain percentage. This is one of the easiest and most effective ways to start investing, Blakeman said.

“If your employer offers a match on retirement plan contributions, take advantage of it,” he said. “Employer matches are essentially free money, providing an instant 100% return on your contributions.”

Open a Brokerage Account

Buying your first investment can be an empowering experience,” Blakeman explained. “Exchange Traded Funds (ETFs) are an excellent starting point, because they offer easy diversification.”

You don’t even need to risk your money with a hefty initial investment. 

“I recommend starting with a low-cost, well-diversified ETF that pays a quarterly dividend,” he said. “Dividend-paying ETFs demonstrate the power of passive income and can keep you motivated to invest — even during the market’s ups and downs.”

Filip Telibasa, certified financial planner (CFP) and owner and planner at Benzina Wealth, said to open a taxable brokerage account on a commission-free platform.

“There are many to choose from nowadays,” he said. “Buy a broadly diversified stock index fund like VTI, Vanguard Total Stock Market Index.”

While you don’t need to invest a lot, it’s best to use money you’re not relying on for anything else.

“Be sure to only invest funds you do not need for at least 10 years,” Telibasa said. “This means your priority before investing should be to set aside at least three months of living expenses in a bank account as an emergency fund.”

Automate Your Investments

Manually transferring money to your investments can be tricky, because temptation to spend the money elsewhere can get in the way. Instead, Telibasa said it’s best to have a set percentage of your paycheck automatically transferred directly into an investment account, such as a brokerage account.

“Ten percent is a good place to start, though, most financial planners prefer to see a total savings rate closer to 20 to 30% for long-term financial goals like retirement,” he said. “In terms of logistics, it is best to schedule the transfer for the same day your paycheck hits your account, so it becomes a priority and not missed.”

Meet With a Financial Planner

Getting started with investing can feel intimidating. Therefore, it can be a good idea to meet with an expert to help you get on the right track.

“Partner with a financial planner to learn more about the different types of investment accounts available and those that will provide you with the best tax benefits,” Telibasa said. “A planner can also build a more diversified investment portfolio, fine tune your savings rate and plan for short-term goals, among other things.”

Depending on your needs, you can opt to meet with a financial planner once, periodically or on a regular basis — whatever works for you.

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