Your First Investment Is Not About Making Money

Start small. Get comfortable doing it yourself.

If you contribute to a 401(k), you're likely already investing in the stock market. You may not think much about it because your employer gives you a process to follow: enroll, choose from the plan's investments, and have part of each paycheck go into the account. Once it's set up, it can feel pretty automatic.

But now you have extra cash outside that system. Nobody is walking you through what to do with it, and suddenly the questions pile up. Where do I invest? What type of account? Which investment? How much should I put in? What taxes will I owe? What am I even trying to accomplish with this money?

They're reasonable questions. Together, though, they can turn into a reason to do nothing. The money stays where it is while you wait to have the whole thing figured out. That's the inertia I want to help you get past.

I spent four years as a financial advisor at UBS, working with wealthy families, and saw how complicated investing could look compared with what was actually happening. In my view, the industry has done a great job of making itself seem necessary. Whether that's a good job or a bad one depends on which side of the table you're sitting on. Complexity can be a pretty effective way to keep people dependent on you.

Part of what I want to do here is pull back that curtain. Some financial decisions deserve expert help, but making a small investment yourself doesn't have to be one of them.

Before I'd written a word

I talked about starting Finance Dad for years. I love talking about money, but whenever I thought about starting the blog, my mind went straight to everything around it. How would I build the website? How would anyone find it? Should I make videos? How would I monetize it? Did I need an LLC?

Some of those questions would matter eventually. None of them needed to stop me from writing an article.

My wife encouraged me to just do it and see what happened. She was right. I enjoy this, and the first version doesn't have to be perfect. I can improve the site, try different ways of reaching people, and learn what readers actually want to know as I keep writing. But I have to start writing to find any of that out.

Here's my ask

You don't need to answer every investing question before you begin, either. My ask is to invest a small amount, enough to keep you interested without making it a big deal. Maybe it's $100. Maybe it's $1,000. If $10 gets you moving, that's fine, too. Just use spare money you don't need and can afford to leave invested or lose.

Choosing that amount is like picking a weight on your first day at the gym. You want to get a feel for the movement, not find out the absolute most you can lift. Keep it manageable so you can focus on learning how it works.

There are only two goals here. First, see how easy it is to get going. Second, once you've done it, figure out what you want to learn next. This isn't a test of whether you're good at picking investments.

Look how simple this can be

Let's use Fidelity. Go to its brokerage account page, click the button to open an account, and follow the prompts for a regular brokerage account. Then connect your bank, transfer the amount you've chosen, and buy a stock or stock fund. That's the process the graphic is showing.

Skip options and margin. Those are extra features you don't need for this, and may never need. We're keeping this to a simple purchase with your own money.

What should you buy?

To keep that last step simple, I'd lean toward Vanguard's S&P 500 ETF, VOO. Search for VOO at Fidelity. It's a fund that gives you a small stake in a whole bunch of large U.S. companies through one purchase.

Or, if owning a company you know makes the experiment more interesting, you could buy a little Apple stock, AAPL. That's one company rather than a diversified fund. Both can lose value; this small experiment isn't a plan for all your savings.

And a nice little detail: shares aren't an all-or-nothing purchase. Fidelity lets you buy fractional shares of eligible stocks and ETFs. Want to invest $500? Buy $500 worth. You don't need to round up to a whole share or do share-price math at the kitchen table.

Now look at what you own

Once you've made the purchase, the screen might greet you with shares, prices, percentages, and a lot of red and green numbers. Don't let that undo the progress you just made. You don't have to understand every label today; start with how much you spent on the investment and what it's worth now.

One label worth noticing: today's change isn't the same as your total gain or loss. An investment can be up today and still be worth less than you paid for it.

A few days of movement won't tell you whether you made a good investment. You're learning how to read what you own, not grading your performance.

And how does it feel? Does a dip bother you? Do you feel the urge to sell? When it goes up, do you suddenly want to put in more? Or does it feel less dramatic than you expected?

Pay attention without feeling you need to act on it. If the amount is small enough that you barely react, that's fine, too. You've still learned how the process works. This won't tell you exactly how you'd feel with much more money invested, but it gives you somewhere to begin and actual questions to ask. Check in occasionally; you don't need to refresh the app all afternoon.

You've broken the barrier. Now build on it.

You now have an account, you've put money into it, and you own an investment you can actually look at. The thing you were putting off is something you've done.

From here, you can start figuring out how you want to organize the rest of your finances: what to keep in cash, what to invest for the long term, and how to divide that money in a way that fits your life. Those decisions still deserve thought, but now you're building on something familiar instead of trying to understand everything from the outside.

For a lot of people, getting started is the hardest hurdle. Each thing you learn after that gives you a little more to work with. That's what this first purchase is for.

So open the account. Fund it. Make a purchase you understand at a basic level, then write down what felt confusing, what felt easy, and what you want to learn next.

Whether your $500 is worth $505 or $495 afterward, you can still have accomplished exactly what you came to do.

You started.

What questions came up as you got started? Was anything unclear, or is there something you'd like to learn more about? Leave a comment below. I'm looking forward to hearing from you.