The Ultimate Guide to Investing for Beginners

How to Get Started with Investing

Welcome to the exciting (and often rewarding) world of investing! Whether you’re looking for information to help you get started, or you simply want a refresher on the basics of investing, this guide will prove useful.  

Investing can be an important way to help you define and find your freedom. Did you know that one in four Americans have nothing saved for retirement?1 It’s difficult to envision a retirement filled with freedom when there’s nothing to fund the retirement. 

You don’t have to do it all alone, though. A financial advisor can help guide you based on your goals, risk tolerance and other factors.  

If partnering with a financial advisor sounds good but you don’t know where to start, we have you covered.

If partnering with a financial advisor sounds good but you don’t know where to start, we have you covered.
Financial advisor and client review tax information

Are You Ready to Invest?

Ideally, investing is for your long-term goals. Many people invest with the purpose of enjoying freedom in their retirement because it’s a method for building wealth – and putting your money to work for you. 

Do you have long-term financial goals? If you have dreams for later in life, but don’t yet have a plan on how to get there, investing can be a good option. 

Before investing, defining your risk tolerance is an important step as this will help guide your decision toward what investment strategy is most suitable for you and your goals. 


The Financial Market

Dow Jones. S&P 500. Nasdaq. NYSE. You hear these terms used in the news and might even feel happy when they’re up and perhaps a little sad when they’re down. 

But what does it all mean? What is the “market?” 

The financial market is any method by which buyers and sellers have the ability to trade financial instruments. 

The stock market is an umbrella term used to describe all exchanges in which shares of publicly held companies are bought and sold. There are at least 60 major stock exchanges globally, with the New York Stock Exchange (NYSE) sitting at the top with nearly 40% of the entire world’s stock market value.2 



The New York Stock Exchange is often simply referred to as Wall Street. It is the largest stock exchange in the world. And though the number fluctuates, the New York Stock Exchange boasts a market capitalization of its listed companies at more than $24 trillion. 

More than nine million stocks and securities are traded daily on the NYSE using an auction-based system.3   

Market Indexes

A market index is a market indicator used to gauge market movements. The top three indexes in the United States are the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite. 

S&P 500 Index

The S&P 500 is a stock market index comprised of 500 of the largest companies which have their stocks listed on the New York Stock Exchange (NYSE) and the Nasdaq Composite. It’s considered a reliable gauge for the overall health of the economy. 

Dow Jones Index

The Dow Jones Industrial Average is a stock market index comprised of only 30 stocks, representing the biggest companies in the United States. This index is weighted solely by the stock price of the 30 stocks, unlike the S&P 500, which is weighted on market capitalization (the share price times the number of shares outstanding). 

NASDAQ Composite Index

The Nasdaq Composite Index is comprised of the stocks traded on the Nasdaq stock exchange, which are largely technology stocks but with some other stocks as well. Like the S&P 500, the index is weighted on market capitalization. 

International Indexes

Equities are traded around the globe and the international market indexes track those trades across more than 20 countries. Some of the most popular international indexes include, but are not limited to: 

MSCI World Index  |  S&P Global 100 Index   |  S&P Global 1200 Index   |  FTSE All-World Index   |  Dow Jones Global Titans 504 

Investment Types & Terms

It’s important to understand the basics of the different options before investing – especially since there are so many different options, each with their own potential risks and rewards. 

An experienced financial advisor can help you better understand what investment type may be best for your unique situation.  Get matched with an advisor. 


Stocks provide the purchaser with a share of ownership in the company for which the stock is issued. Stocks do well when the company does well (increasing in value) but don’t perform well when the company isn’t doing well (decreasing in value). 

There are different types of stocks, such as preferred stock and common stock, in which the preferred stock gets paid dividends first and may include some voting rights. Common stock typically includes voting rights, but common shareholders get paid after preferred shareholders in the event of a liquidation.  


A bond is a debt security purchased from a company or government. Essentially, it is a loan you provide to the issuing entity with the expectation of getting repaid with interest.  

Considered a low-risk asset, many investors buy bonds to help diversify their portfolio. On the other hand, bonds don’t typically provide the potential return on investment as stocks, though their relative safety is certainly attractive to some investors. 

Mutual Funds

A mutual fund is a professionally managed investment program of diversified holdings funded by shareholders. Simply put, a mutual fund pools money from many investors and invests in securities such as stocks, bonds and more. It’s a relatively simple way to invest, combining the resources of many investors for shared benefit.  

Individuals “buy into” a mutual fund by purchasing shares. Since mutual funds invest in a variety of securities, their big draw is diversification – and accessibility. Investing in mutual funds is fairly simple and doesn’t typically require the same initial investment as other investment products might. 

Index Funds

An index fund is a type of exchange-traded fund (ETF) or mutual fund featuring a portfolio designed to mimic the components of a financial market index. For example, an index fund might match the S&P 500 or the Dow Jones index. 

An index fund should, in theory, provide the investor with the same returns as the market the index follows. Shares are purchased over an exchange or through a broker. 


Though you’ve likely heard the term ETFs tossed around, you may not know that it stands for exchange-traded funds. Simply put, these funds are traded on an exchange.   

Like a mutual fund, ETFs are a type of pooled investment, but unlike mutual funds, they can be sold and purchased on a stock exchange. 


Options are contracts that give investors the option – but not the obligation – to buy or sell a stock based on an agreed-upon terms between the two parties. 

Buying an option doesn’t mean you own the security. It means that you can choose to “call” (buy the stock) or “put” (sell the stock) the option based on the terms of the initial agreement. 

The right financial advisor can help take the guesswork out of the different types of investments.

Deciding How You Want to Invest

Now that you understand the basics of investing, do you feel ready to get started – but still aren’t sure where to start? You have options, much of which depends on if you want to try your hand at investing on your own, or if you prefer to have guidance from a seasoned professional. 


DIY Investing 

You can invest on your own without first consulting with a financial advisor, though doing so potentially deprives you of objective guidance and advice from a professional. According to the U.S. Securities and Exchange Commission, there are three methods DIY investors can explore: 

Young mother and daughter looking at a computer
Direct Investing

Purchase stocks to the company for which you work through your employer’s DSP (Direct Stock Plan). While this option may save money on broker commissions, you will likely have very little say in when the stock is purchased as most DSPs have pre-set purchase dates.   

Dividend Reinvestment Programs

Those employees participating in a Direct stock Plan may have the opportunity to further participate in a Dividend Reinvestment Program (DRIP). This program reinvests dividends from purchased company stock into more company stock. Review the terms and conditions of any Dividend Reinvestment Program before participating to ensure you understand everything. 

Online Investing

Often characterized as a quick solution to investing as an individual, online investing can be time consuming and should be monitored carefully to ensure all transactions are completed as requested. Most online investing platforms do not come with guidance, and you are expected to research your purchases on your own. 

Work with a Professional

A fiduciary financial advisor can look at your finances in an educated, holistic way that you may have difficulty doing yourself. It can be hard to take a look at your own financial situation in an unbiased way that’s devoid of emotion, but the right advisor can do it for you and make suggestions to your benefit. 

According to a research study conducted by Voya Financial in 2018, people with financial advisors tend to put more thought toward their retirement and also tend to feel more financially prepared for their eventual retirement than people who don’t consult with a financial advisor. 

Effective financial advisors can also save their clients a great deal of time, which is certainly an asset of which most people would like to have more.  

Financial advisor meets with clients

Why You Should Work with a Professional

Different stages of life call for different plans, and finances are no different. There is no absolute formula for when it is time to seek help from a financial advisor, but the following may be good times to get some help:

  • Experiencing a Life Change: An income increase, a divorce or other life event is a good time to have a financial advisor step in to help you.
  • Increasingly Complex Finances: If you find that your finances are starting to get a little more complicated than you are comfortable managing, a financial advisor can help relieve the burden.
  • Help Beyond Investments: Effective financial advisors can take a broader view of your finances and may be able to help with other aspects of your financial life like tax planning, your philanthropic efforts and more.
  • Lack of Time or Expertise: Finances can be confusing, but the right financial advisor can help it all make sense. These professionals are educated and experienced in managing finances and can make your life easier by managing your finances.
  • Making Emotional Decisions: Money can be emotional, but a fiduciary financial advisor is removed from the emotion and instead looks solely toward which money decisions will have the best potential outcome for you. 


Why You Might Not Want to Work with a Professional

If the idea of getting help with your investments and finances makes you uncomfortable, it’s likely due to one of the following reasons.

  • The Cost: Financial advisors do charge for their services, but some estimates state that getting financial advice from a professional has the potential to add 1.5% – 4% to portfolio returns long-term.5
  • You Want to DIY: Unless you have the education and experience of a financial advisor (and the ability to look at your finances without emotion), you may miss out on potential increased returns on your portfolio if you go it alone.
  • You Don’t Like the Advisor: When personalities clash, it can certainly be difficult to have a productive relationship. That’s why it’s important to find an advisor that you can work with. We can help you find your financial advisor. 


Find an Advisor

Not all advisors are created equal. We can help you find a qualified advisor who will work in your best interests while helping you set goals – and helping you set the path to help you reach those goals.  


Couple looking for a financial advisor online