A new year brings new goals and a fresh start. If your resolutions include investing for the future, congratulations! You’re taking the first step toward building wealth and achieving financial independence. Here are six tips to help you begin in 2025.
1. Start simple.
One of the easiest ways to start investing is through a retirement plan. If you have access to a workplace plan, such as a 401(k) or 403(b), make sure you’re contributing enough to take full advantage of any company matching contributions. If you don’t have access to a workplace plan, consider opening a traditional or Roth IRA.
Once you have an account in place, commit to making regular contributions. Automatic payroll deferrals are a great way to effortlessly build an account balance. Each year, have a goal of increasing your contributions by 1 percent to 2 percent. Even a small increase can have a big impact on your retirement savings over time, and you’re unlikely to even notice the impact on your take-home pay.
2. Find a fiduciary advisor.
A great way to start investing is by working with a qualified fiduciary advisor to establish an investment strategy that makes sense for you, given your current financial situation and goals for the future. Fiduciary advisors are held to fiduciary duty standards, which means they’re legally obligated to act in clients’ best interests at all times.
In contrast, some advisors are incentivized by investment managers and/or insurance companies to sell clients certain products that may or may not be in the client’s best interest. This practice can lead to high fees and the long-term erosion of your assets.
Look for an advisor who provides 100 percent of their services as a fiduciary advisor; offers low-cost, tax-efficient strategies; and uses an approach based on rational, science-driven, academic research. There’s a lot of misleading financial data out there. Your advisor should have the knowledge, background, and experience to get to the facts and develop well-researched solutions to the challenges you face.
3. Establish clear investing goals.
Everyone has different goals for the future, so there is no one-size-fits-all strategy. A great way to begin your investing journey is by establishing an overall financial plan. A solid financial plan can serve as a blueprint to guide all aspects of your financial life and can help ensure your investment decisions make sense, given your overall financial situation.
Consider working with an advisory team with experience navigating a range of financial challenges, including debt management, insurance planning, retirement planning, budgeting, estate planning, tax planning, and preparation, etc.
4. Diversify.
Regardless of where you are in your investing journey, it’s important to maintain a diversified portfolio. Investing in different types of assets can help spread out your risk because when one sector or investment type is performing poorly, another investment type that’s performing better can help smooth out overall portfolio volatility. While diversification won’t prevent losses, it can reduce your risk of being too heavily invested in the worst performing part of the market.
5. Don’t neglect your emergency savings.
While investing in a diversified mix of stocks and bonds is a great way to build your wealth over time, it’s also important to have access to a liquid emergency fund to help cover unexpected expenses. Consider saving three to six months of living expenses in a short-term account separate from your invested assets.
6. Protect your nest egg.
As you build your investment portfolio, be sure to implement a variety of risk-management strategies. These include things like life insurance, umbrella liability insurance, long-term-care insurance, disability/income replacement insurance, and more. Work with your wealth manager to determine which strategies make sense for your particular situation.
Gene Gard, CFA, CFP, CFT-I, is a Private Wealth Manager and Partner with Creative Planning. Creative Planning is one of the nation’s largest registered investment advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.