How to invest your money so it makes you even more money

CatLane/E+/Getty Images
ByNatalia Lusinski
Originally Published: 

The thought of investing money can be intimidating — raising questions of how to do so and where to do so, not to mention how much you should invest. However, it’s one primary way to save for retirement, and since April is Financial Literacy Month, it’s the perfect time to begin. “If you haven’t started investing your money, now is as good as time as ever,” Jacob Dayan, CEO and co-founder of Community Tax, said in an email. “You don’t need a lot of money to start either — there are many options for investors of all income levels.” He said that the more you learn along the way, the more you can fine-tune your investing strategies and gradually add more money.

According to Stash’s 2019 Financial Literacy Survey, wherein they surveyed 4,800 of their customers 18-to-55+ years old, many respondents didn’t completely understand how investing works. For example, some didn’t realize they can contribute to both a 401(k) and an Individual Retirement Account (IRA) — 26 percent of Gen Z, 14 percent of Gen Y and 15 percent overall. Meanwhile, 25 percent of respondents overall did not understand how inflation works, believing money is best saved in a savings account or emergency fund.

To clear up some of these misconceptions, we emailed finance experts to share how you can start investing money today, as well as why you should.

Dean Drobot/Shutterstock

1. Use an app

“In the old days, you actually had to drive down to an investment firm’s office to open up an investing account. Then, with the advent of the Internet, it got a little bit easier: you could open an account with just your computer and an Internet connection. Now, in 2019, it’s easier than ever to start investing: you can do so from your smartphone while you lie in bed or watch Netflix, thanks to investment apps like Acorns and Stash. And because these apps generally have no minimum balances, you can get started with as little as a few dollars. While that may not sound like much, it’s important to take a long-term view. For example, an extra three dollars invested every day for 30 years at a conservative seven percent rate of return will amount to over $100,000 over 30 years while an extra $10 a day under the same scenario will grow to over $300,000. Combined with other forms of retirement income, this could be the difference between you spending your golden years in ease rather than want.” —Logan Allec, CPA and owner of the personal finance site Money Done Right

2. Contribute to your company’s 401(k) plan

“If the company you work for offers a 401(k) plan, then you should contribute to your account; you can do this today and allocate a portion of your paycheck based on the investment choices offered. Some employers offer 401(k) matching programs, meaning they will match a portion of your contributions. This is essentially free money, so be sure to take advantage of it.” —Andrew Schrage, CEO of Money Crashers

3. Open up a high-yield savings account

“While the stock market can be an incredible wealth-building tool over the long run, maybe it’s not for you. In this case, you can still earn investment returns by opening up a high-yield savings account at online banks such as American Express, Discover or CIT Bank. Right now, you will likely be able to find a bank where you could earn two percent or more on your savings.” —Logan Allec

Monkey Business Images/Shutterstock

4. Open an IRA

“Rather than opening up a taxable brokerage account, it may make more sense for you to open a tax-advantaged account, like an IRA. You can put up to $6,000 in an IRA in 2019 ($7,000 if you’re age 50 or older), and you can set one up at most banks and online brokerages, such as Vanguard or Fidelity. When it comes to IRAs, you have two choices: Traditional or Roth, and they come with different benefits.

With a Traditional IRA, you may be able to take a tax deduction this year for money you put in, depending on how much money you make, as well as if you or your spouse is covered by a retirement plan at work. … After you reach retirement age and start taking distributions out of your Traditional IRA, you will be taxed on these distributions. With a Roth IRA, you don’t get any tax deduction now, but your earnings grow tax-free, and distributions taken in retirement are not taxed. The IRS doesn’t let income escape taxation very often, so opening a Roth IRA today is a great option, as well!” —Logan Allec

5. Get an Indexed Universal Life (IUL) policy

“The safest and most effective way to invest today is by getting an Indexed Universal Life policy. By providing a zero percent minimum rate lock on your principal, you’re guaranteed not to lose anything from your investment, yet you benefit from all gains in the market; along with that are disability benefits and the death benefit. Investing is important because we age and, over time, lose our ability to earn money by working. Plus, we don’t want to keep working; we want to retire and leave a legacy for our families, business, favorite charity, etc., and that’s before considering inflation, which ensures that if your money isn’t growing, it’s shrinking.” —Scott Schwarz, investment and insurance advisor, and founder of

SFIO CRACHO/Shutterstock

6. Open a brokerage account

“The first thing you need to do is open a brokerage account today; there are some that you open with $0, such as Robinhood. Once you have a brokerage account, you can deposit your initial investment and start investing. … Over the long run, investing offers the best opportunity to compound money and build wealth. It also gives you a chance for a better return than you would get from a savings account.” —Marshall Armond, CEO of

Once you have a brokerage account, you can:

1) Invest in stocks

“The evolution of the Internet has made investing ridiculously easy. ... Investing in stocks is my strategy of choice and is backed by historical evidence of consistent returns. As long as an investor is patient, waiting out short-term market fluctuations and, instead, holding solid companies for the long-term, it’s one of the best ways to build wealth. The best part? Brokerages like Interactive Brokers and Questrade have extremely low commissions; in some instances, it can be a penny a stock.” —Daniel Kent, CEO of Stocktrades Ltd

2) Invest in low-cost mutual funds or index funds

“I recommend investing in low-cost mutual funds or index funds. Both fund types include a basket of securities, such as stocks and bonds; the difference is, a mutual fund is actively overseen by a professional money manager while an index fund is not. (Index funds are designed to mirror a benchmark of the market, such as the Dow Jones.) The advantage of mutual funds and index funds is diversification: Don’t try to beat the market by picking individual stocks. Over the long-term, the economy will grow, and the key is to not get emotionally attached to the short-term fluctuations. Buy-and-hold is a good strategy for new investors because it incurs less trading costs and the stock market’s long-term trend is upward. You can get started by opening an investment account online through a brokerage company, such as Vanguard, Fidelity or TD Ameritrade. Research different brokers and look for one with a low account minimum requirement and no account fees.” —Andrew Schrage

3) Invest in an Exchange-Traded Fund (ETF)

“One option for novice investors is to invest in an Exchange-Traded Fund, which is basically a fund that consists of other diversified investments that you own a small percentage of. They are great since you do not need a large amount of money to invest in, are lower-risk, tend to perform well and have lower fees and tax advantages over other investments.” —Jacob Dayan, CEO and co-founder of Community Tax

Elizabeth A. Windisch, Certified Financial Planner (CFP), said that when it comes to investing, the easiest way to do so is to automate contributions. “However small they are, do so from your checking account to an investment institution — which can be a mutual fund company, a self-directed online brokerage or an app,” she said. “Of course, the best way to get started is to speak to an advisor who can guide you through the process and provide the necessary education that will keep you from freaking out when the market is volatile.” And, if you’re wondering why you should invest, it’s because time makes all the difference. “There is an old adage: ‘It’s time in the market, not timing the market,’” said Windisch. “Also, in my experience, starting is the hardest part, and even a little bit of investing gets the ball rolling.”