It’s Never Too Late To Start Investing

Written by: Lilly Cobal

The younger you are when you first start investing, the better chance you have to make the most out of it.  But a common mistake that people make is thinking they’ve missed the window to start investing in the first place.  Very often it all seems so overwhelming that you put off investing for months or even years.  But the best time to invest is not at any particular age; it’s today.  Don’t let fear or confusion stop you from making the best decision for your financial future today.

If you’re a beginner investor, there are several places that you can start:

A 401(k)

By far one of the best places to invest your money is in a 401(k).  A 401(k) is a retirement savings plan sponsored by your employer, allowing you to save and invest a part of your paycheck before taxes are taken out.  You don’t have to pay taxed on the money until it is withdrawn from the account, and very often your employer matches the amount that you put into the 401(k).

You control how your money is invested in a 401(k).  Most plans offer a spread of mutual funds composed of stocks, bonds, and money market options.  The most popular option is target-date funds, which is a combination of stocks and bonds that become more and more conservative the closer you get to retirement.

One of the downsides to a 401(k) is that you can’t immediately access your employer’s contributions.  There are also some pretty complex rules about when you can take out your money, with penalties for withdrawing funds before the age of retirement.

Still, a 401(k) is usually an excellent option to invest because of the amount that your company invests to match you.  Consider building up to the highest amount offered by your company to take advantage of what is essentially free money offered to you by your employer.

A Robo-advisor

Robo-advisors are services that use computer algorithms to manage your investments for you.  One of the things their algorithms are based on is your risk tolerance, which is your personal comfort level with risk. While some people are able to weather the volatility of the stock market, others are not.  Changing your plan and pulling out investments at the wrong time can result in significant losses, so evaluating your level of risk tolerance is key to long-term success.

Another factor used in the algorithm is time horizon, which is the length of time over which an investment is made before being liquidated.  The time horizons of your investments are determined by your goals for investing.

Human investors typically charge much higher fees than robo-advisors, which make robo-advisors an excellent choice for those who don’t have a lot of money to invest when starting out.  However, they do offer less flexibility in where you invest and also require a bit more time and research than if you were to pay a financial advisor.

Robo-advisors can help you learn more about investing by showing you how it constructs a portfolio and what investments it uses.  You can also take advantage of online tools and educational content offered by many robo-advisors, helping you grow as an investor and make even smarter investments down the road.


There are many investing apps designed specifically for beginners.  One of the most well-known investment apps is Acorns.  Acorns has you link your debit or credit cards and then rounds up your purchases, investing the change in a portfolio of exchange-traded funds (ETFs) which it then manages for you.

Acorns doesn’t require a minimum to open an account and starts investing once you’ve accumulated at least $5.  It charges $1 a month for a standard investment account and $2 for an individual retirement account. Its fees are small, although if you have a low account balance then it ends up being a relatively high percentage.

Acorns is perfect for college students as it waives the management fees for up to four years if you register with your college email address.  The automatic saving aspect of it is helpful in that it takes the pressure off you to set aside each month and save in order to invest. It also allows you to invest lump sums manually or set up recurring deposits on a regular basis.

The downside to Acorns is the flat fee each month.  Whereas most robo-advisors charge a percentage of assets under management, Acorns’ flat fee means that an account balance of $100 is being charged 12% of its total balance per year, which is staggeringly high.  Other apps charge percentage, but Acorns provides a better value through its use of roundups and portfolio management.

What To Know Before You Start

Before you start investing, make sure you’re specific about what you want out of investing. Most people invest for retirement, but many people don’t.  Retirement isn’t always the best motivator for investing because it’s viewed as being so far off.  A much more practical motivator can befinancial independence, which can be reached at any time.  Financial independence can allow you to do things like change your career or start a business.  It can even just let you do things that you love to do like travel or volunteer for things you care about.  These things might not be possible without the financial resources acquired through investing, and are excellent motivators when first starting out.

The amount of money you save is a bigger factor in your success in investing than what you invest in.  In order to invest, you’re going to have to start saving.  Even the best investments won’t earn you hardly any money if you don’t put enough into them.  Take advantage of things like your 401(k) employer match to maximize the amount you can invest.  If you receive a tax refund, invest it and watch that money grow.  The more you save, the more you have to invest, and the bigger return you’ll get.


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It’s Never Too Late To Start Investing

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