New to investing? 5 steps when you’re just starting out

Building wealth is one of the most important steps toward financial freedom, and one of the best ways to do that is through investing. However, investing often comes with a lot of jargon and complex advice that can feel overwhelming if you’re just getting your feet wet.The good news is you don’t need to be an expert to begin — in fact, the below five simple steps are enough to get your money working for you.5 steps to investing when you’re just starting outHave a solid starting padBefore you start investing, make sure your financial foundation is solid. Ask yourself:Do I have an emergency fund to cover three to six months of expenses?Do I have high-interest debt (i.e. credit card debt) that should be paid off first?Can I comfortably set aside money to invest without risking my day-to-day needs?It’s important that your immediate financial needs are covered before putting money into the market. This also makes it easier to determine how much you can comfortably set aside for investing. One way to organize your finances as you try to reach a solid standing is by using a budgeting app like Monarch Money. The app’s user-friendly platform lets you customize your dashboard, so you always see what’s most important to you first. It comes with a fee, but you can test it with the 7-day free trial.Monarch Standout featuresCustomizable transaction categories, net-worth tracker, investment portfolio tracking, financial forecasting Cost$8.33/month (billed $99.99 annually); $14.99/month (billed monthly). Get 50% off your first year of Core Plan with code CNBC50Categorizes your expensesYes, but users can modifyLinks to accountsAutomatically syncs with bank accounts, credit cards, loans, retirement plans, investments and more at over 13,000 institutionsAvailabilityOffered for both iOS and Android. Web version also availableSecurity featuresMaintaining only read-only access, Monarch utilizes AES 256-bit encryption and multi-factor authentication. It is SOC2 Type 2 certified and syncs accounts via Plaid, MX and Finicity. Terms apply.ProsSeven-day free trialEasy-to-navigate dashboard with fully customizable reports and visualsConnects with more than 13,000 financial institutionsCouples or partners can budget together in collaboration mode (each with their own login at no extra cost)AI Assistant lets you ask questions about your finances Can track property value via ZillowAd-free experienceConsistent product updates with new features added regularlyConsNo free versionSubscription is more expensive than competitorsInvestment tracking is solid for most users but lacks advanced tools like retirement modeling, fee analysis or Monte Carlo simulationsRecommendations in the “advice” tab are genericNo undo feature when reallocating money across budget categoriesGoodbudget is also a great option for its digital version of the “cash stuffing” method. You can put your funds into different categories, each of which has a virtual envelope. This way, you can get a better sense of where you stand financially.GoodbudgetCostFree for 20 total envelopes, $10/month (or $80/year) for unlimited envelopesStandout featuresAllows couples to track debt and use a digital “envelope” system to budget fundsCategorizes your expensesYes, but free users must manually input transactions Links to accountsNo, users must manually input purchases and transactionsAvailabilityOffered in both the App Store (for iOS) and on Google Play (for Android) and for desktopSecurity featuresInformation is protected using bank-grade 256-bit SSLTerms apply.ProsFree tier availableCan share budget and spending with a partner in real time across multiple devicesDigital envelopes help couples and households stay aligned on spending goalsOffers money management courses and educational resourcesAvailable on iOS, Android and desktopConsFree tier doesn’t sync with bank accounts (all transactions must be entered manually)No bill-paying or investment-tracking featuresLabel your investing goalsBefore putting your money in the market, know why you’re investing. Your goals can determine the type of account that makes the most sense.Saving for retirementIf you’re saving for retirement, a 401(k) through your employer is the first account you want to look at, especially if your company offers matching contributions. Otherwise, open an IRA on your own through a bank or brokerage, like Fidelity or Charles Schwab.Fidelity InvestmentsMinimum deposit and balanceMinimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance for robo-advisor to start investing.FeesFees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over, which includes access to unlimited 30-minute coaching calls with a Fidelity advisor and tax-loss harvesting on taxable accounts).BonusNone currently. Check Fidelity’s promotions page for the latest offers here.Investment vehiclesRobo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®Investment optionsStocks, bonds, ETFs, mutual funds, CDs, options and fractional sharesEducational resourcesExtensive tools and industry-leading, in-depth research from 20-plus independent providersTerms apply.ProsNo commission fees for stock, ETF, options tradesNo transaction fees for over 3,400 mutual fundsFidelity Go® portfolios use Fidelity Flex® mutual funds with zero expense ratiosHuman advisors manage day-to-day Fidelity Go® portfolio decisionsUnlimited 30-minute coaching calls with a Fidelity advisor for accounts of $25,000 and over (at no extra cost)Tax-loss harvesting available on taxable Fidelity Go® accounts with $25,000 or moreAbundant educational tools and resources with research from 20-plus independent providers24/7 customer serviceOver 100 brick-and-mortar branches across the U.S. for face-to-face supportConsFidelity Go® has a 0.35% advisory fee per year for balances of $25,000 and overFidelity Go® invests only in Fidelity Flex® mutual funds (no third-party ETFs or individual securities available)No socially responsible or ESG portfolio option through Fidelity Go®Some of Fidelity’s mutual funds require reaching specific thresholdsReports of platform outages during heavy trading daysCharles SchwabMinimum deposit and balanceMinimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum depositFeesFees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contractInvestment vehiclesRobo-advisor: Schwab Intelligent Portfolios® IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Schwab Global Account™, Schwab Organization Account and Schwab Trading Powered by Ameritrade™Investment optionsStocks, bonds, mutual funds, CDs and ETFsEducational resourcesSchwab offers courses, educational articles, videos, and webinars for investors at every level, plus advanced screeners, research tools, and market insights through the Schwab Center for Financial Research.Terms apply.Pros$0 minimum deposit for active investingNo commission fees for stock and ETF trades; no transaction fees for over 4,000 mutual fundsthinkorswim® trading platform offers advanced charting, strategy testing and multi-device accessRobo-advisor Schwab Intelligent Portfolios® available with no advisory fee or commissionsAccess to on-demand advice from Schwab investment professionalsNearly 400 brick-and-mortar branches across the U.S. for in-person supportCons$5,000 minimum required for Schwab Intelligent Portfolios® robo-advisor$0.65 fee per options contractTax-loss harvesting only available on balances of $50,000 or more within Intelligent Portfolios®High cash allocation requirement in Intelligent Portfolios® may limit returns compared to competitorsBuilding wealthIf your goal is to build wealth for something like buying a house or starting a business, a brokerage account can be a better fit because it gives you the flexibility to access your money at any time.Start small, just startYou don’t need a lot of money to start investing. What matters is just getting started. Even small contributions, like $50 or $100 per month, can grow significantly over time thanks to compounding. If you’re unsure where to start, robo-advisors can help by automatically creating and managing a diversified portfolio based on your goals, risk tolerance and timeline.Betterment and Wealthfront are our top picks for the best robo-advisors as they both come with no minimum balance requirements and offer a range of investment options, including stocks, bonds, ETFs and cash.BettermentMinimum deposit and balanceMinimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn’t require clients to maintain a minimum investment account balance, but there is an ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.FeesFees may vary depending on the investment vehicle selected, account balances, etc. Base price is $5/month for investing accounts; automatically switches to 0.25% annually once you reach $24,000 in total balance or set up $200/month in recurring deposits. Premium plan is 0.65% annually.Investment vehiclesInvestment optionsStocks, bonds, ETFs and cashEducational resourcesBetterment’s resources hub offers expert-written guides on investing basics, retirement planning, and personal finance, designed to help investors at every level make more informed decisions.Terms apply. Does not apply to crypto asset portfolios.ProsNo trade or transfer feesAutomated investing with portfolios built around your financial goals, timeline and risk toleranceAssign specific goals to each portfolio and invest using different strategiesQuick and easy account setup with the ability to sync external retirement accountsAdvanced features include automatic rebalancing, tax-loss harvesting and socially responsible investingPremium plan users ($100,000 minimum) get unlimited access to certified financial planners (CFPs)Cons$5/month fee for investing accounts (switches to 0.25% annually once you hit $200/month in recurring deposits or $24,000 in total balance)Premium plan requires a $100,000 minimum balanceWealthfrontInvestment advisory services provided by Wealthfront Advisers LLC, an SEC-registered investment adviser. Securities investments: not bank deposits, bank-guaranteed or FDIC-insured, and may lose value.Minimum deposit and balanceMinimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts.FeesFees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balanceBonusInvestment vehiclesInvestment optionsStocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocksEducational resourcesOffers free financial advice for college planning, retirement and homebuyingTerms apply.ProsNo trade or transfer feesHighly automated investing with portfolios built around your risk tolerance and timelineDaily tax-loss harvesting available to all accounts to help reduce your tax billHigh-yield Cash Account earns 3.30% APY base rate (up to 4.20% promotional APY for new clients with direct deposit) with no account fees or minimum balanceOffers a cash management account with a debit card and access to 19,000+ fee-free ATMsPath financial planning tool gives personalized projections for retirement, home purchases and college savingsRefer a friend and both parties receive $5,000 managed fee-freeCons$500 minimum deposit for investment accounts0.25% annual management feeNo access to human financial advisorsTax optimization features (stock-level tax-loss harvesting, smart beta) only available at higher account balancesAutomate contributionsYou can easily set up automatic, recurring transfers into your brokerage account. Simply link your bank account and choose how often you want to contribute money, such as weekly or monthly. This ensures that you’re consistently adding more cash to your portfolio so that your growth could be larger.Forget about itNow that you’ve put money into your account, it’s time to step back and let your investments work for you. The market will rise and fall, of course, and it’s normal to see dips along the way. Instead of reacting to every downturn, remind yourself that these moments are temporary and that markets have always recovered over time. The best strategy is to stay patient, avoid checking your account too often and focus on the bigger picture: long-term growth.FAQsWhat should I invest in as a beginner?As a beginner, what you invest in depends on your goals, but you can start with robo-advisors that spread your money across different funds, matching your risk tolerance.What is the 7% rule in investing?The 7% rule refers to the historical average annual return of the stock market. It’s a reminder that long-term investing can grow your money steadily over decades.What is the safest investment with the highest return?There’s no “safe” investment as all money in the market can be lost. Deposit accounts like high-yield savings accounts or CDs are considered very safe, though they typically earn less than stocks over time.Subscribe to the CNBC Select Newsletter!Money matters — so make the most of it. 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