How to start investing in 2023

How to start investing in 2023

bernardbodo/Getty Images/iStockphoto

bernardbodo/Getty Images/iStockphoto

With the New Year comes a flood of resolutions – and improving finances will be high on the list like every year. Although we often set ourselves the goal of saving more or spending less, we can forget to invest. This is crucial if you are planning to retire, as well as if you are looking to grow your wealth in general.

Looking back: 2022 in review
Getting Started: 5 Things to Do When Your Savings Hit $50,000

According to Gallup, 58% of Americans say they own stocks in 2022, which is a pretty low number considering that every personal finance expert worth their salt will advise their clients to have a diversified investment portfolio.

Resolving to start investing in 2023 is a good idea. Here’s how to start.

Recognize the difference between saving and investing

“If you don’t know how to start investing, understanding how it differs from saving is a great place to start,” said Laura Adams, MBA, personal finance expert at “It depends on your risk tolerance and when you think you’ll need to spend the money.

“For example, savings are for short-term emergencies and major purchases you plan to make in a year or two, like a new car or a new house,” Adams said. “Keeping your money in a bank account means you won’t earn much interest, but you won’t lose a dime either. A good rule of thumb is to keep at least three to six months of your living expenses in FDIC-insured bank savings.

“Investing is for long-term goals, like retirement, getting young kids into college, or making a major purchase years from now. Although investing always involves risk, historically a diversified stock portfolio has returned an average of 10%. But, even if you only earned 7%, by investing $400 a month for 40 years, you would have over a million dollars to spend in retirement.

Targeted investment for retirement

“For those just starting out, the best approach is to invest by maximizing retirement plan contributions each year,” said Andrew Griffith, DBA, EA, CPA (NY), CMA, CIA, CFE, CRMA, associate professor of accounting at the LaPenta School of Business at Iona University.

“This approach has two key immediate benefits: (1) taxes on earnings and retirement account income avoid taxation until they are withdrawn from the retirement account, and (2) funds invested in ERISA-covered retirement accounts are protected from most litigation scenarios.”

Griffith added: “For beginners, I recommend investing in either a no-load mutual fund with a target retirement date or a low-cost no-load mutual fund that tracks the S&P 500 Index and a guaranteed fixed rate lifetime annuity.

“Option 1 is meant to follow traditional investing theory by periodically adjusting the proportions of bonds and equities in an effort to balance risk with income and growth opportunities as an investor ages. Option 2 is my preferred approach as it balances income and growth opportunities while providing some level of risk management and increasing the chance that a portion of one’s retirement funds will not be lost due to mismanagement by a pension fund administrator.

If you don’t have the time or inclination to actively manage investments, Griffith recommends a no-cost S&P 500 index tracking mutual fund.

List your goals

“Everyone’s financial situation is different, so your financial strategy should be built around your personal goals and priorities,” said Annemarie von der Goltz, wealth advisor at JP Morgan Wealth Management. “A good starting point is to make a list of these goals.

“Perhaps you would like to buy a house in a few years, or are thinking of starting a family, or have children and want to save for your education. Also, be sure to consider retirement as a key long-term goal. It may be helpful to outline what you are investing in and the timeline for your goals.


“If an investor wants to pursue other investment opportunities,” von der Goltz said, “I recommend that investor spend at least two years actively researching and learning about their target investment opportunity before starting to invest in. This will minimize the heartache and risk of being financially devastated due to a lack of understanding of an investment vehicle and its associated risks.

“It should be mentioned here that every investor only needs a good investment idea once every two years to be a successful financial investor. Also, if you can’t afford to lose it, you shouldn’t invest it in anything other than FDIC and NCUA insured CDs.

don’t be intimidated

“Ask questions and feel empowered to take control of your financial situation,” von der Goltz said. “If you want to work with a professional, find someone you feel comfortable with and can trust. Our personal goals and our financial goals are so often intertwined, and you need to be comfortable having these discussions. This goes for anyone who touches your financial life, whether they are advisers, lawyers or tax specialists.

start small

“You don’t need a lot of money or investment experience to plan for your future,” von der Goltz said. “You can start investing a little each month and work to increase your contributions over time. The sooner you can start investing, the better. Investing early can help you leverage the power of compounding. The earlier you invest, the more time your money has to potentially grow.

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This article originally appeared on How to Start Investing in 2023

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