How to Finally Start Investing
- Sarah Tian
- Jul 21
- 8 min read
Updated: Jul 22
You’ve Saved Some Money — Now What?
If you’ve been meaning to “get your finances in order” but still have most of your savings sitting in a regular bank account — don’t worry, you’re not alone. Maybe you've been overwhelmed by all the jargon, unsure where to begin, or just busy with other life priorities.
The good news? You don’t need to become a finance expert to start growing your money.
Here’s a beginner-friendly roadmap to get started, especially if you’ve finally started building some savings but haven’t taken the plunge into investing.
💰 Section 1: Build Your Foundation
💡 Step 1: Move Your Cash Out of Idle Accounts
If your money is just sitting in a traditional checking or savings account earning 0.01% interest, you're essentially losing money to inflation. A simple first step is to move your emergency fund or short-term savings into a high-yield savings account (HYSA).
A few options to consider:
SoFi – user-friendly interface, competitive rates, and extra perks if you set up direct deposit.
Discover Bank – trusted name, no minimums or monthly fees.
Ally or Marcus by Goldman Sachs – consistent rates and easy to manage online.
A good rule of thumb is to keep 3 to 6 months’ worth of essential expenses in your high-yield savings account as an emergency fund — enough to cover things like rent, groceries, insurance, and other necessities if your income were to suddenly stop.
💡Step 2: Understand Treasury Bills
Once you’ve set up your HYSA, consider U.S. Treasury Bills (T-bills) — one of the safest ways to grow cash without much risk. T-bills are short-term government bonds that you buy at a discount and get paid back the full amount when they mature.
The difference is your interest — and it’s exempt from state and local taxes.
You can buy them directly through TreasuryDirect.gov, or through your brokerage (like Fidelity or Vanguard).
For example:
Buy a $1,000 T-bill for $970.
At maturity, you get back the full $1,000.
Your “earnings” = $30 (which is taxed federally only).
If you’re looking for a “safe parking spot” for your cash while still earning better than a bank, T-bills are a great next step.
One drawback to note:
You cannot access your money until the T-bill matures — whether that’s in 4 weeks or 52. Unlike a savings account, there’s no option to withdraw early without selling it on the secondary market (which can involve extra steps or potential losses). So, only put money here that you won’t need in the short term.
📈 Section 2: Start Growing with Confidence
"Simple Ways to Start Investing Without the Stress"
💡Step 3: Invest Smart with Index Funds
If you’re ready to actually invest — meaning take on a little more risk in exchange for long-term growth — index funds are a great place to start.
What are index funds?
Index funds are baskets of stocks that track a segment of the market. Instead of picking individual companies, you’re buying a slice of the whole pie.
They’re low-cost, diversified, and require zero effort once set up. Indeed, The Bogleheads’ Guide to Investing explains index funds outperform most actively managed funds over time.
Here are three popular types:
Tracks 500 of the largest U.S. companies, including Apple, Microsoft, Amazon, Google, and JPMorgan.
Historical average return: ~10% annually (before inflation)
Great for: Long-term growth across the U.S. economy
Examples: Vanguard VFIAX, Fidelity FXAIX
Focuses on 100 of the largest non-financial companies on the Nasdaq. Heavy in tech: includes Meta, Nvidia, Tesla, and Adobe.
Historical average return: higher than S&P but has higher volatility
Great for: Higher-growth exposure with more risk
Example: Invesco QQQ ETF
💰 High-Yield Dividend Index Funds
Focus on stocks that pay out dividends regularly. These funds are generally less volatile and provide a source of passive income.
Examples: Vanguard High Dividend Yield (VYM), Fidelity High Dividend ETF (FDVV)
💡Step 4: How Long Should You Stay Invested?
To fully benefit from compound interest, you’ll want to stay invested at least 10–15 years, and ideally much longer. The stock market may go up and down in the short term, but over decades, it historically trends upward.
The Simple Path to Wealth by JL Collins strongly reinforces this principle: invest early, invest consistently, and let time and compound interest work its magic. It's especially powerful for readers looking for financial independence through minimalist strategies.
The longer you leave your money invested, the more it multiplies.
Example: The Power of Starting at 30
Let’s say you're 30 years old, and you invest $10,000 in an S&P 500 index fund. Assuming a 7% average annual return after inflation, here's what happens if you leave it untouched:
Age | Value of Investment |
40 | ~$19,672 |
50 | ~$38,697 |
60 | ~$76,123 |
65 | ~$106,765 |
That’s over 10x growth, just by investing once and letting time do its thing.
💡Step 5: Pick a Portfolio That Grows with You
You might have heard of the “age-based allocation” rule of thumb. Here’s a simplified version:
100 - your age = % in stocks. The rest = bonds and cash.
This rule of thumb is supported in The Bogleheads’ Guide to Investing, which offers several simple, evidence-based frameworks for portfolio construction.
So if you're 30, you might aim for:
70% index funds
20% bonds or bond funds
10% cash (like in a HYSA or T-bill)
This is just a starting point — you can always adjust based on your risk tolerance, income stability, and financial goals.
💡Step 6: Dollar-Cost Averaging (Your Secret Weapon)
If you’re not interested in tracking markets, reading quarterly reports, or guessing which stock will outperform — good news: you don’t need to.
Instead, try dollar-cost averaging (DCA): Every month, automatically invest a fixed amount (e.g., $100 or a percentage of your income) into your chosen index fund(s). A Beginner's Guide to the Stock Market introduces DCA as one of the most beginner-friendly strategies to enter the market without stress or needing to time it right.
This strategy has several advantages:
You buy more shares when prices are low and fewer when they’re high.
You avoid the emotional stress of trying to “time the market.”
You build wealth slowly, steadily, and with much less anxiety.
Start Small to Build Confidence
If you're nervous about losing money, it’s totally okay to start small. Begin with something like $100 a month. If the market drops 5%, that’s just $5 — enough to feel it, but not enough to panic.
Once you’re more comfortable, gradually increase the amount: Try $500 or $1,000 a month. That way, if the market dips 5%, you’re now looking at a $25 or $50 swing — still manageable, and you're better prepared to ride it out.
Over time, you’ll build both financial resilience and emotional confidence as an investor — which is just as important.
🧠 Section 3: Build Smart Habits to Stay on Track
"Automate and Audit — So You Don’t Have to Think About It"
💡Step 7: Automate Your Money Flow
Here’s another powerful (but underrated) strategy: automate your income transfers.
I Will Teach You to Be Rich by Ramit Sethi advocates strongly for automation as the most important financial habit. He emphasizes paying yourself first and letting systems grow your wealth while you live your life.
Set up automatic transfers to move a percentage as soon as your paycheck hits to:
high-yield savings (for emergencies or short-term goals)
brokerage account (for long-term investing)
retirement accounts (like a Roth IRA or 401(k), if available)
By doing this:
You won’t have to make a decision every time you get paid — it just happens.
You’ll spend less, simply because there’s less sitting in your checking account tempting you.
You’ll build consistency — the most important habit in personal finance.
Think of it as “paying yourself first.” Your future self will be glad you did.
Bonus: Cap Your Spending with a Discretionary Checking Account
Once your savings and investments are automated, consider setting up a separate checking account just for discretionary spending — things like dining out, entertainment, shopping, and travel. Set a fixed amount (say $300 or $500) to automatically transfer to this account every month or week.
This creates a natural spending boundary: When the money’s gone, it’s gone — no guilt, no guesswork. You can enjoy spending freely within a set limit, knowing your future needs are already taken care of.
This kind of structure helps reduce decision fatigue, curb impulse spending, and keeps your financial goals on track — without feeling like you’re constantly budgeting.
💡Step 8: Audit Your Finances Regularly
Before you invest too much too fast, take a moment to zoom out. Where is your money actually going?
Use apps like:
Monarch Money - Use this link to get 50% off your first year.
YNAB (You Need a Budget)
These tools can help you:
Track income, spending, and subscriptions. Your Money or Your Life also encourages daily and monthly tracking of all money flows to understand how your spending aligns with your life energy and values.
Spot your spending patterns (like sneaky unused memberships)
See your net worth over time
Set savings or investment goals — like a big vacation or early retirement
Bonus: Seeing your net worth grow month by month can give you a huge motivation boost to keep saving and investing.
Final Thoughts
"You Don’t Have to Know Everything. You Just Have to Start."
Getting started with investing doesn’t have to be complicated or scary. You don’t need to know everything — just take the first step.
Quick Start: Where Should I Begin?
✅ Open a HYSA for emergency fund
✅ Try T-bills for low-risk savings growth
✅ Set up auto-investing into an S&P 500 index fund
✅ Automate paycheck flow (e.g., 50% investing, 30% saving, 20% spending)
✅ Track your progress monthly
Remember, the hardest part is starting. But once you do, future-you will thank you — not just for the money, but for the peace of mind.
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As always, feel free to reach out to me at jytian188@gmail.com with any questions you have or anything else you'd like help with!
Resources
📊 Where Should You Put Your Money? A Comparison Table
Investment Type | Yield | Volatility / Risk | Access to Money | Tax Implication | Research Required |
Checking Account | 0–0.01% | None | Instant access | None | None |
Savings Account | ~0.01%–0.5% | None | Instant access | Interest taxed as ordinary income (10%–37%) | None |
High-Yield Savings | ~4% | None | Instant access | Interest taxed as ordinary income (10%–37%) | Minimal |
T-Bills | ~4.5–5.5% | Very low | Locked until maturity | Interest taxed federally only (10%–37%); exempt from state/local tax | Low |
Index Funds | e.g. S&P: ~10% annually (before inflation) | Medium (short-term), low (long-term) | Anytime (best held long-term) | Dividends taxed annually: 0–20% if qualified, 10–37% if not; Capital gains taxed when sold (0–20%) | Very low (set-and-forget) |
Individual Stocks | Varies (can be high) | High | Anytime | Dividends taxed annually (0–20% qualified, 10–37% non-qualified); Capital gains taxed when sold (0–20%) | High (requires ongoing research) |
🧾 Recommended Brokerage Accounts to Get Started
Brokerage | Best For | Notable Features |
Long-term investors, beginners | $0 commission, wide range of index funds (e.g. FXAIX), great research tools | |
Set-it-and-forget-it index investing | Pioneer of low-cost index funds (e.g. VFIAX), best for hands-off investors | |
Newer investors, goal-based savers | Intuitive interface, integrates with SoFi savings, no commission fees | |
Beginners who prefer mobile-first access | Easy-to-use app, instant trades, fractional shares, real-time alerts |
I LOVE “I Will Teach You To Be Rich” !!! And I’ve read a lot of personal finance books… Sending money to various accounts each month has decreased my stress level significantly, thanks for posting !