Starting your journey to financial security can feel overwhelming, especially if you’re just beginning to think about saving, investing, or planning for the future.
The good news? Building wealth doesn’t have to be complicated.
With a few simple investment strategies for beginners and a commitment to consistency, you can set yourself on a path toward financial wellness.
Whether you’re looking to create a budget, grow your savings, or make your first investment, this guide is here to break down the basics and help you take the first steps toward achieving your financial goals.
Let’s dive into the essentials of building wealth—no jargon, just practical tips you can start using today.
Simple Investment Strategies for Beginners
1) Invest in ETFs and Index Funds
These are low-cost, diversified investments that track the overall stock market (e.g., S&P 500). Over the long term, they average about an 8–10% annual return.
Index funds and ETFs (Exchange-Traded Funds) are among the simplest and most effective ways to invest in the stock market. They pool money from investors to buy a diversified basket of stocks or bonds, reducing risk while providing steady returns.
Index funds like those tracking the S&P 500 spread your investment across hundreds of companies, ensuring your portfolio isn’t overly dependent on one stock's performance. Historically, the S&P 500 has provided average annual returns of around 8–10%, making it an excellent long-term growth strategy.
2) Invest in Real Estate (without buying property!)
A lot of people think you need to be rich or own extra property to make money in real estate, but that’s not true. Thanks to modern investing tools and resources, you can start generating passive income from real estate WITHOUT becoming a landlord.
Here are a few ways to invest in real estate (even if you don’t have a lot of money!):
- REITs (Real Estate Investment Trusts): These are companies that own income-generating real estate. You can invest in REITs like stocks through any brokerage platform. Some examples include VNQ (Vanguard Real Estate ETF) or O (Realty Income).
- Crowdfunding Platforms: Websites like Fundrise, Roofstock, and RealtyMogul let you invest in real estate projects with as little as $10–$1,000.
- Real Estate ETFs: A Real Estate ETF (Exchange-Traded Fund) is a type of investment fund that is traded on stock exchanges and invests primarily in real estate-related assets.
3) Leverage High Yield Savings Accounts or CDs
For short-term goals or emergency funds, you need a place to park your money where it’s safe and accessible but still earning more than traditional bank accounts offer.
High-yield savings accounts are a type of savings account offered by banks or financial institutions that typically offer a higher interest rate compared to traditional savings accounts. These accounts are designed to help you grow your savings faster by earning a higher rate of return on their deposited funds. They typically offer 3–5% interest, compared to the national average of around 0.5%.
Best high yield savings accounts!
Like high yield savings accounts, Certificates of Deposits (CDs) tend to have a much higher interest rate than a traditional savings account.
A benefit of putting your money into a CD is that your interest rate is locked, unlike a high yield savings account, where the interest rate fluctuates based on external economic factors.
This means that if you get a 5-year CD with a 5% interest rate, you’re guaranteed that 5% no matter how much interest rates rise or decline over the next 5 years.
However, CDs are not as liquid as high-yield savings accounts.
Unlike a high yield savings account, when you put your money into a CD, you agree NOT to withdraw it for a specified period of time. This could range from a few months to years. If you withdraw your money early, you will have to pay a penalty fee to the bank, so make sure you pay attention to that before investing your money.
Should you invest in high yield savings accounts or CDs? Here are the key differences…
4) Use Tax-Advantaged Accounts
Tax-advantaged accounts can help you save and invest more efficiently by reducing or deferring taxes, allowing your money to grow faster.
Key Tax-Advantaged Accounts:
- 401(k): Employer-sponsored retirement accounts let you contribute pre-tax income (or post-tax with Roth 401(k)s). Contributions may also receive a company match, boosting your savings.
- IRA (Individual Retirement Account): Choose between a Traditional IRA (tax-deferred) or Roth IRA (tax-free growth).
- Health Savings Account (HSA): If you have a high-deductible health plan, an HSA offers triple tax benefits: tax-free contributions, growth, and withdrawals for medical expenses.
- 529 Plans: Use these accounts to save for education expenses tax-free.
Pro Tips:
- Maximize contributions to accounts with employer matching first—it’s free money!
- For IRAs, focus on Roth if you expect your income (and tax rate) to increase in the future.
- Review contribution limits annually (e.g., the IRA limit for 2025 is likely $6,500 or $7,500 if over 50).
5) Invest in Yourself
Investing in yourself offers some of the highest returns because it directly increases your earning potential, knowledge, and skills. Unlike stocks or real estate, self-investment compounds through your career and personal growth, paying off for decades.
This could mean joining a financial education program like Million Dollar Year or doing a deep dive into a specific aspect of personal finance that you want to learn more about.
I great way to start investing in your financial literacy is by joining our free Master Your Money class! In it, we'll teach you how to build strong financial habits, financial confidence, and a new way to manage your money that feels easy!
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