How to start investing

Many people understand the importance of investing, and doing so as early as possible to make the most of compound interest over time. But where does one start?

As an early first step, you might consider building an emergency savings fund that contains at least three month’s worth of your living expenses. Getting to this point will require some budgeting, and there are a few options. Zero budgeting is where you account for every dollar you have up until you reach zero. If you still have money left over, you would start adding it to your emergency fund. Another common method is the 20/30/50 rule. In this framework, you would aim to put 50% toward your needs, 30% toward your wants, and 20% to savings.

When should I start investing?

The short answer to this is as soon as possible. That’s because of compound interest, or “the interest on interest) and its dramatic effects over time. Compound interest is when you earn interest on a principal (starting) deposit at one point in time and then accumulate interest on top of that overtime. There are many calculators you can use to see the impact first-hand.

Here’s some math to show you how this all works. Say you invest $100 a month for 10 years and get a 6% annual return on average, then you will end up with up $33,300. This result is no doubt more powerful than putting the same amount of money in a standard savings account or waiting five years to invest.

How do I decide how much to invest?

Your company may offer you a 401(K), which is a retirement plan where your contribution is taxed before going into your account. Since you have not paid taxes on the investment, you will need to do so when you withdraw the funds at age 59-and-a-half. This is advantageous if you expect to be making less money later in life than you are at the present time. Many experts suggest setting aside 10 to 15% of your yearly income toward retirement.

Some employers will match a certain percentage of your 401(K) contributions. If this is the case then it is wise to contribute as much as possible, since your company is effectively giving you free money.

Outside of retirement investing, there are general investing strategies for building a portfolio designed to meet other financial goals, such as saving up for a home or other major life milestones. Apps like Public make it easy to build a portfolio that aligns with your interests and beliefs by offering stocks in slices, so you can own a part of your favorite companies without needing to pay for an entire share.

What options do I have to invest?


A stock, also known as an equity, is when you get a share of ownership in a company. Stocks are sold at the price of each share, the cost of which varies from company to company.


A bond is functionally a loan made to a company or governmental organization. You get paid back in the future, and you accrue interest until that payment comes. Bonds tend to carry less risk because you know when you’ll be paid back and how much. However, bonds also earn less over time, which is why they shouldn’t make up a significant portion of your investment portfolio.

Mutual funds

A mutual fund is a cornucopia of investments. They save you the hassle of having to choose stock and bonds. Instead, you can buy a mix of stocks and bonds as a diversified package that has already been assembled for you. This is a less risky investment with less dramatic upside.

Some mutual funds are overseen by professionals while an index fund is designed to mirror a specific stock market index, like the S&P 500. Index funds cost less since they cut out the supervisor. 401(K)s tend to be curated investments with no minimum, but if you plan to do your own investing there may be a minimum.

Exchange-traded funds

Also known as an ETF, an exchange-traded fund is several investments sold as a package. The difference between an ETF and a mutual fund is that ETFs are sold throughout the day just like a stock, and they’re sold for a share price. ETFs often sell for less than the minimum investment cost of a mutual fund. For this reason, ETFs are a solid place for new investors or investors with a small budget.

How do I open an investment account?

Before jumping to the where and how of opening an account, start with why. What are your specific financial goals? What are you looking for in a product or service? By understanding your objectives and overall needs, you will be in a better position to make rational decisions that orient toward your goals.

If your goals align with a brokerage that allows you to select from public stocks and ETFs, and if you are comfortable with intuitive, mobile interfaces, then you might consider Public is a free investing app that offers real-time fractional trading, zero commission fees, and no minimums.

Beyond mobile investing apps are more hands-on services that offer a layer of financial guidance for a nominal fee. There are even AI-based advisors, known as robo-advisors, that can assemble a portfolio by asking you a series of questions. Most likely, the portfolios will be comprised of low-cost ETFs and index funds that come with little to no minimum.

What is a stock?

Automated transfers are appealing to investors with steady regular incomes, and people who are generally hands-on enough with their finances to understand their cash flow over the course of time. If this sounds like you, it might make sense to automate your investing. This has the dual benefit of keeping you accountable and saving the time it would take to manually schedule transfers at a regular cadence.

What investment strategy should I choose?

Your investment strategy depends on your goal. If it’s retirement, then one strategy is to set a target percentage and max out your employer’s match plan, if there is one. After that, you might next address any outstanding debts you may have.

If you have money left over, you might choose to put additional cash leftover in a savings or other investing account, such as a Roth IRA. A Roth IRA is a retirement account in which contributions are taxed but your withdrawal is not.

The advantage of a Roth IRA, aside from it serving as additional retirement savings, is that if you expect to make more money when you’re older than you do today, you could stand to save money in the future since you will be taxed at a lower rate.

How do I monitor my investments?

After making a financial plan, regularly monitor your investments to see how they align with your predetermined benchmarks. Today, digital technology has made tracking your investments easy and streamlined. Many brokerage apps, for example, allow you to view your investments in real-time. The one watch-out with this real-time access is to not get too swept up in the normal ebbs and flows of the market, especially if you have a long-term strategy.

If your investments are significant enough that you require a money manager, there are professionals you can hire to monitor and adjust your investments over time to ensure you’re constantly set up on a path to success.

Bottom line

Committing to your future means sticking to the plan you set up. Budgeting and investing is just like dieting, and most dieting is about upkeep. Investing is a habit and the most successful investors adhere to this habit again and again over time. Hurdles and mistakes are lessons and opportunities to grow. Sometimes we slip back into bad habits, like overindulging our sweet tooth, which we feel in our wallets and on our scales, but that’s easy to correct just be re-committing to our future. Habits take time to build and time to break. Missteps don’t take us far from our destination so long as we stick to our route in the long run.

Pam Velazquez is Senior Marketing Manager at

The above content is provided is paid for by Public and is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the article. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss. Historical or hypothetical performance results are presented for illustrative purposes only.