Know Before You Grow: Investing Essentials for Starters
Sep 18, 2025Financial Coaching
From the outside, investing can feel intimidating. There is endless conflicting advice, complicated jargon, and news of the highs and lows of the stock market. But the basis of investing is simple: Put your money to work so it can grow over time so that you achieve your financial goals.
The best part about investing? You don’t need to be an expert to start. With the right mindset and few simple strategies, you can begin building an investment portfolio to achieve your goals. Keep reading to gain insights on when you should start, the types of investments available, how to manage the risks, and why patience is the bedrock to success.
When Should You Start?
The best time to start investing is as soon as you can. Even small contributions grow meaningfully over time through compounding, and starting early helps establish healthy financial habits. Investing isn’t about short-term gains; it’s about steady growth over the long haul.
An employer-sponsored 401(k) is often the easiest way to begin. If your employer offers a match, most financial experts would advise taking it. It is essentially free money added to your retirement savings. Even modest contributions paired with a match can provide a strong foundation.
Whether through a workplace plan or another account, the sooner you begin, the more time your money has to work for you.
Types of Investments
There are several types of investments available, but for first-time investors, we will focus on four types: stocks, bonds, mutual funds, and exchange-traded funds (ETFs).
Stocks represent an ownership stake in a company. Individual stocks present a higher level of volatility and risk than some of the other investments we will discuss, as their value can rise and fall on a daily basis, even minute-to-minute in some cases. However, stocks have provided the strongest growth potential as well.
Bonds function more like a loan to a company or government, which pay you interest over a set amount of time. At the end of that term, you receive your initial investment plus interest. Many people consider bonds to be a safer investment than stocks, offering a more stable income.
Mutual funds and ETFs are pooled investment vehicles that spread your investment across a variety of stocks or bonds, and they can be actively or passively managed. Mutual funds and ETFs are a great first step to diversifying your portfolio.
Mitigating Risk
With any investment, there is always going to be some form of risk. However, the risk and odds of a negative outcome vary based on the type of investments you make.
Individual stocks carry the highest level of risk, as the stock price is at the mercy of both the condition of a single company and the market as a whole.
Mutual funds and ETFs carry less risk as they are a combination of investments; though the stocks within them may fluctuate, you are insulated from the losses of a singular stock inside the fund by the value of the other investments in the fund.
Bonds carry the lowest level of risk, but their returns are capped by the amount of interest earned.
These risks can be mitigated though. Professionals often recommend navigating investment risk through portfolio diversification with a mixture of stocks, bonds, mutual funds, and ETFs. Beyond a mixture of those investments, you can also diversify between domestic and international investments to help insulate your portfolio from regional economic trends.
Time in the Market & Compounding Returns
One of the most important principles in investing is that time in the market is far more important than timing the market. Prices deviate day to day and year to year, and that volatility can be unsettling, especially for inexperienced investors. However, history shows us that remaining invested through the peaks and valleys is rewarded in the long run.
The power behind this approach is compounding when the returns you earn begin to generate returns of their own. The earlier you start investing and longer you continue to be invested, the more compounding accelerates your wealth. Even modest, consistent contributions can grow into significant sums over time.
Trying to time the market also comes with its own perils. For example, the S&P 500 has had an average annual return of just above 10% over the last 20 years, but an investor who pulled out of the market for the best 10 trading days over that time would be missing out on over half of the returns. Staying invested ensures that you capture those crucial gains, which often come during unpredictable times.
Though the world of investing can feel daunting, starting as soon as you can, building a well-diversified portfolio, and remaining invested through the good times and the bad will have you on a path to achieving your financial goals.
If you want to get a better understanding of your financial picture, from building a budget to setting savings goals, schedule an appointment to meet with a Financial Coach from HAPO.
To learn more about investing from Financial Advisors, check out this episode of Dollars & Sense, HAPO Community Credit Unions Financial Literacy Podcast, where Scott is joined by Nick Haberling, CFP®, and Tyler Pearson, CFP®, Financial Advisors from HFG Trust.
Matt Ward
Marketing Specialist |
matt.ward@hapo.org