The complete beginner’s guide to how to start investing with just two investments.
Learning how to invest feels scary when everyone has different advice about what to buy. Here’s the simple truth: you don’t need to pick stocks, time the market, or understand complex strategies to build serious wealth.
The investment world makes things complicated on purpose. Confused investors buy more products and pay more fees. But research shows that simple beats complex every single time when you’re figuring out how to start investing.
Why Most Investment Advice Doesn’t Work for Beginners
Go to any bank or financial advisor, and they’ll try to sell you complicated funds with high fees or tell you to pick individual stocks. This serves their profits, not your wealth.
Here’s what happens to most new investors learning how to start investing:
- They spend months trying to find the “perfect” investments and never start
- They try to guess when the market will go up or down
- They pick individual companies and lose money
- They get scared during market drops and sell everything
- They pay high fees that eat their returns
The financial industry loves this because it keeps you buying new products and paying fees.
How to Start Investing: Just Two Investments
After studying decades of market returns, here’s how to start investing using the Simple Finance System with only two investments:
90% VTI (Total Stock Market Index) 10% VBIL (Very Short-Term Treasury Bills)
That’s it. No stock picking. No guessing. No complexity. This is how to start investing the right way.
Why VTI Works When You Start Investing
VTI gives you a tiny piece of over 3,500 American companies in one purchase. You own parts of Apple, Microsoft, Amazon, and thousands of other companies all at once.
When American businesses make money, you make money. You don’t need to guess which companies will succeed because you own them all. When new successful companies grow big enough, VTI automatically adds them. When companies fail, VTI automatically removes them.
The fee is only 0.03% per year. That means you pay just $3 per year for every $10,000 you invest.
Why VBIL Provides Security
VBIL holds very short-term loans to the U.S. government. These are extremely safe and pay interest without the ups and downs of stocks.
In the Simple Finance System, your VBIL serves as your long-term emergency fund. As your wealth grows, this 10% allocation grows with it. By retirement, you’ll have a substantial emergency fund that can handle market downturns without needing to sell your stocks at bad times.
This follows our three-tier emergency fund approach:
- Month 1 expenses: Credit union savings (immediate access)
- Months 2-3 expenses: High-yield savings (easy access)
- Months 4+ expenses: VBIL (emergency fund that grows with your wealth)
The Power of Starting Young: Real Numbers
Let’s look at what happens when you start investing early. These numbers assume you put the maximum into a Roth IRA every year ($7,000 in 2024) and invest it all in VTI. Your VBIL emergency fund sits in a regular investment account.
We’re using 8% annual returns, which is conservative based on stock market history.
How to Start Investing at Age 20:
Invest $7,000 per year from age 20 to 59.5 (39.5 years):
- Money you put in: $276,500
- Total value at 59.5: $1,897,000
- Tax-free growth: $1,620,500
All of this comes out tax-free because it’s in a Roth IRA. Plus, your 10% VBIL allocation would be worth about $189,700 – enough emergency fund to handle any market crash.
Starting at Age 30:
Wait until 30 to start investing (29.5 years of investing):
- Money you put in: $206,500
- Total value at 59.5: $1,034,000
- Tax-free growth: $827,500
Waiting 10 years costs you $863,000
Starting at Age 40:
Wait until 40 to start investing (19.5 years of investing):
- Money you put in: $136,500
- Total value at 59.5: $509,000
- Tax-free growth: $372,500
Waiting 20 years costs you $1,388,000
These numbers show why learning how to start investing early matters more than perfect strategy. Simple approach started young beats complex approach started later.
How to Start Investing Today: Step-by-Step Guide
Step 1: Choose Where to Start Investing
Pick one of these six brokers for both your Roth IRA and regular investment account:
- Fidelity: No fees, easy to use, great customer service
- Schwab: No fees, good tools, helpful support
- Vanguard: Created index investing, very low fees
- Robinhood: Simple app, no fees, popular with beginners (referral link)
- Wealthfront: Automatic investing, simple interface (referral link)
- Betterment: Automatic rebalancing, beginner-friendly
All six offer VTI and VBIL with no trading fees. Pick whichever feels easiest to you. You can always move your money later if you don’t like your choice.
Step 2: Open a Roth IRA to Start Investing
Go to your chosen broker’s website and open a Roth IRA. This is a special retirement account where your money grows tax-free.
You can put in $7,000 per year (2024 limit). That’s about $583 per month.
Step 3: Set Up Automatic Investing
Set up automatic transfers from your bank account to your Roth IRA. Then set up automatic purchases of VTI with that money.
This removes temptation to guess when to invest. You just invest the same amount every month, whether the market is up or down. This is the key to how to start investing successfully.
Step 4: Open a Regular Investment Account
Once you’re consistently putting $583 per month into your Roth IRA, open a regular investment account (called a taxable account) with the same broker.
This is where you’ll put your VBIL emergency fund and any extra money beyond the Roth IRA limit.
Step 5: Build Your Emergency Fund in VBIL
Start building your emergency fund using the Simple Finance System approach:
- Keep 1 month of expenses in credit union savings
- Keep 2-3 months of expenses in high-yield savings
- Put 4+ months of expenses in VBIL in your taxable account
As your wealth grows, this VBIL allocation grows with it, eventually becoming a substantial emergency fund for retirement.
Step 6: Ignore Everything Else
Once your automatic investing is running, ignore financial news, stock tips, and market predictions. Your simple system will work better than most complex strategies.
Common Mistakes When Learning How to Start Investing
Mistake 1: Waiting for the “Right Time”
There’s never a perfect time to start investing. Markets go up and down, but over long periods, they go up. Starting with small amounts beats not starting at all.
Mistake 2: Picking Individual Stocks
Stock picking feels exciting, but research shows 90% of people who pick stocks lose money compared to simple index funds. The few who win usually just got lucky.
Mistake 3: Checking Your Account Every Day
Looking at your investments daily creates stress and makes you want to make emotional decisions. Check once per month at most.
Mistake 4: Selling During Market Crashes
Market crashes are when your system works best. While others panic and sell, you keep buying VTI at lower prices. Your best returns often come from scary times.
Mistake 5: Making It Complicated
As you learn more about how to start investing, you’ll want to add more funds, pick stocks, or try complex strategies. Don’t. Complexity usually makes your returns worse while creating stress.
Why This Simple Approach to How to Start Investing Works
The Simple Finance System works because:
Time beats timing: Being invested for decades matters more than perfect buy and sell decisions.
Consistency beats perfection: Investing the same amount every month beats trying to time the market.
Simple beats complex: A boring strategy you stick with beats a perfect strategy you quit during tough times.
Low fees matter: Paying 0.03% in fees instead of 1% saves you hundreds of thousands over decades.
Behavior wins: The best investment strategy is one you’ll follow for 30+ years without getting stressed or confused.
Start Investing Today, Not Tomorrow
Building wealth isn’t about finding perfect investments or timing the market. It’s about learning how to start investing early with a simple approach and staying consistent for decades.
The Simple Finance System gives you exactly that: a boring, simple way to build serious wealth without becoming a financial expert.
Don’t wait for more knowledge, better market conditions, or more money to start. Open that Roth IRA today, buy VTI, and start building your future.
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Important Disclaimer: The information provided in this content is for educational purposes only and should not be considered financial advice. We are financial educators and coaches, not licensed financial advisors. Before making any financial decisions, please consult with a Certified Financial Advisor (CFA) or other qualified financial professional who can assess your individual situation. Past performance does not guarantee future results. All investment examples are hypothetical and for illustration purposes only.