Investing, step by step: start small and stay steady

Saving and investing do different jobs

If investing feels confusing, you’re far from alone. In 2025, more than half of adults said they weren’t comfortable, or were only slightly comfortable, choosing and managing their investments.¹

53%

of adults weren't comfortable, or were only slightly comfortable, choosing and managing their investments in 2025

Among people who already had a retirement account or other investments, 54% felt confident, compared with 32% of those who didn't.

Source: Federal Reserve Board, Economic Well-Being of U.S. Households in 2025 (May 2026)

Comfort tends to come with practice.¹ This guide walks you through the first steps. The advice comes from Valerie Escobar, CFP® professional, a longtime Advisers Give Back volunteer who led our workshop “Investing Made Simple.”²

Start with what makes saving and investing different. Saving keeps money safe for things you’ll need soon. Savings accounts at an FDIC-insured bank are insured, up to the FDIC’s limits. Investing means buying something you hope will grow, like a small share of a company. Stocks, bonds and funds are not insured by the FDIC, even if you buy them at a bank. Their value can go down.³

So why invest at all? Because prices rise. Between October 2013 and September 2025, prices rose 35%.¹ Cash that sits still slowly buys less. Investing is one way to help your money keep up, and grow.

Valerie’s suggested order is simple. First, save your first $1,000 for emergencies. Then start investing a little from each paycheck, even $25 or $50.² Our guide to building an emergency fund covers step one.

Time does the heavy lifting

When your money earns money, those earnings can start earning too. That’s called compounding.⁴ Valerie compares it to a snowball rolling downhill. Doubling $100 into $200 doesn’t feel like much. But one day, doubling $100,000 gives you $200,000. “That is significant,” Valerie says.²

Here’s how that played out over the past 20 years. Say you put $100 in U.S. stocks at the end of 2005, as measured by the S&P 500 stock index. With dividends reinvested, it grew to about $792 by the end of 2025. The same $100 in 3-month Treasury bills, which are loans to the U.S. government, grew to about $139.⁵

U.S. stocks (S&P 500)3-month Treasury bills

$0$200$400$600$80020052008201120142017202020232025$7922025$139

U.S. stocks (S&P 500): $100 in 2005, $792 in 2025.

Before inflation, taxes and fees. One 20-year stretch, not a forecast: past results don't guarantee future results.

Source: Aswath Damodaran, NYU Stern School of Business, Historical Returns on Stocks, Bonds and Bills (Updated January 5, 2026)

Show the numbers

	U.S. stocks (S&P 500)	3-month Treasury bills
2005	$100	$100
2006	$116	$105
2007	$122	$110
2008	$77	$111
2009	$97	$111
2010	$112	$111
2011	$114	$111
2012	$132	$112
2013	$175	$112
2014	$199	$112
2015	$201	$112
2016	$225	$112
2017	$274	$113
2018	$262	$115
2019	$344	$118
2020	$406	$118
2021	$521	$118
2022	$427	$121
2023	$539	$127
2024	$673	$134
2025	$792	$139

That was a fairly typical 20 years for stocks. Across all 79 twenty-year stretches from 1928 to 2025, the middle result was about the same. The worst, from 1929 through 1948, turned $100 into about $160.⁵

And the growth didn’t come in a straight line. In 2008, stocks lost more than a third of their value.⁵ Stocks can swing a lot in the short run. Savings and Treasury bills are the safest investments, but they earn the least and can fall behind rising prices.⁶ That’s why investing is for money you won’t need for years.

Try your own numbers. The calculator shows how steady saving can add up over time. Its figures are an example, not a promise.

Own a little of a lot

Most investing starts with two building blocks. A stock is a small share of a company.⁷ A bond is a loan to a company or a government, which pays you interest and then pays you back.⁸ Bonds tend to move up and down less than stocks, and to earn less.⁶

So which company should you buy? Valerie’s answer: picking the one winner is a guessing game, like betting on which chicken will run past first.²

Research backs this up. A study of U.S. stocks going back to 1926 found that most single stocks did worse over their lifetimes than one-month Treasury bills. The best 4% of companies made up all of the stock market’s net gain.⁹ If you own only a few stocks, you could easily miss the few big winners.

The answer is to diversify: spread your money across many investments, so one bad pick hurts less. The SEC sums it up as “don’t put all your eggs in one basket.”⁶ A fund makes that easy. A mutual fund or an exchange-traded fund (ETF) pools money from many people and buys many investments at once.¹⁰¹¹

A simple first choice: target-date funds

Valerie likes “the easy button”: a target-date fund.² The year in its name is about the year you expect to retire, like 2060. The fund holds a mix of stocks and bonds. As that year gets closer, it shifts toward bonds, which generally have a lower risk of loss. You pick one fund, and it does the mixing for you.¹²

Two things are worth a look. Funds with the same year can hold quite different mixes, and none of them promises a set amount of money in retirement.¹² Then check the fees. A fund takes its costs out of your money, and even small differences add up over time.¹⁰ Valerie calls a yearly fee of about 0.1% low and 1.5% high.²

Start with the match

Once you have that first cushion, a retirement plan at work is often the easiest place to start investing, if your job offers one. It might be a 401(k), a 403(b) or the Thrift Savings Plan. Money goes in straight from your paycheck, before you can spend it.² In March 2026, 72% of private-industry workers could join a retirement plan at work. But only 52% took part.¹³

Some employers also put in money when you do. This is called a match, and it’s part of your pay. Valerie’s advice: if your employer matches up to 4% of your pay, put in at least 4%.² The Department of Labor suggests finding out how much you need to put in to get the full match, and how long you need to stay to keep it.¹⁴

A traditional 401(k) can also lower your taxes now. Valerie’s example: on a $1,000 paycheck, if you put $100 in your 401(k), you pay income tax on $900.² That’s because the money you put in isn’t taxed as income until you take it out.¹⁶ Some plans also offer a Roth option, which is taxed the other way around.¹⁶ Our guide to Roth or traditional accounts explains the choice, and what to do if you don’t have a plan at work.

Stay steady when markets drop

Drops are a normal part of investing. From 1928 through 2025, U.S. stocks lost money in 26 of those 98 years, counting dividends. But the longer the stretch, the less often they lost money. Across every 20-year stretch in that time, stocks came out ahead.⁵

27%

12%

6%

1%

0%

1 year5 years10 years15 years20 years

• 1 year: 27%
• 5 years: 12%
• 10 years: 6%
• 15 years: 1%
• 20 years: 0%

A new stretch starts each January. Before inflation, taxes and fees. Past results don't guarantee future results.

Source: Aswath Damodaran, NYU Stern School of Business, Historical Returns on Stocks, Bonds and Bills (Updated January 5, 2026)

That held even after inflation: none of those 20-year stretches lost buying power.⁵¹⁷ Still, past returns don’t guarantee future results.¹⁰

Recoveries can take patience. In 2008, stocks fell about 37%. Someone who invested at the start of 2008 and held on was back above where they started by the end of 2012.⁵ In early 2020, as the pandemic hit, the S&P 500 fell 34% in about a month. On August 18, it closed at a new high.¹⁸ Counting dividends, stocks ended 2020 up 18%.⁵

Valerie’s four pro tips are worth hearing firsthand.

The first tip protects your plan: retirement accounts aren’t emergency funds. If you take money out before age 59½, you usually owe an extra 10% tax on top of income tax, though there are exceptions.¹⁹ The third tip is the hardest to follow: don’t sell in a panic. If a drop is too much to stomach, Valerie suggests waiting until you’re back to even, then choosing a safer mix.²

You don’t have to pick the winner. Own a little of a lot, keep adding, and give it time.

Then check in once a year, the way you’d see a dentist. At each checkup, Valerie suggests raising what you put in by at least 1% of your pay.² Small increases add up. In one well-known study, workers who agreed ahead of time to save more with each pay raise went from saving 3.5% of their pay to 13.6% in 40 months.²⁰

Not sure how much to invest, or how much risk is right for you? That’s a good question to talk through with a volunteer adviser, one-on-one and for free.