5 mindsets for when you're first investing

New to investing? Here are 5 mindsets to help set you up for success.

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Key takeaways

  • Don't worry about starting small: Investing small amounts frequently can really add up over time.
  • Think long term: Investing over long periods of time allows your money more opportunity to grow, and potentially have compounding growth. 
  • Don't try to time the market: It's very hard to do, and in waiting for the next big downturn, you could be missing growth opportunities. 
  • Keep your financial goals in mind: They can help you keep in mind the horizon over which you are investing, and give you a sense of purpose while investing.
  • Don't be afraid to ask for help: Many investors use a financial professional to help them define goals, understand their current situation, and identify key steps to move forward in their financial journey. 

At first, investing can seem intimidating because it comes with all sorts of decisions and choices you may not have encountered before. On top of that, your money is at stake.

It's completely normal to feel stressed when you are making your first trades. But consider this: You are giving your money the potential to grow—possibly substantially.

Of course, investing means you are risking losing money too. But if you keep that money diversified and invested over decades, it can help you withstand market ups and downs. And growing your money could be enough for you to reach many of your personal goals, like buying a house, sending children through college, and eventually retiring on your terms.

Want to get started? Here are 5 mindsets that can help set you up for success, and provide inspiration for some of your first investing decisions.

1. Don't worry about starting small

When you hear about businesses and funds investing millions of dollars, it can seem like investing a couple hundred or thousand is a drop in the bucket. That couldn't be further from the truth!

Just as a leaky faucet can fill an entire sink drip by drip, investing a small amount of money frequently, say monthly, can add up to a large sum over years.

Regardless of the amount you are investing, putting your money in a position where it can grow can not only increase your wealth, but also help establish financial habits that can benefit you all throughout your life.

2. Think long term

Time is one of the most important aspects of investing. The more time that your money is invested, the greater the potential it has to compound. That's when you continue to invest your earnings as well as your initial investment. Over time, this can result in exponential growth.

There's a simple formula, called the Rule of 72, that can help you figure out how long it would take to double your money at a specific interest rate. The formula is 72/Interest Rate = Years. For example: Let's say that an investment is yielding 7% a year. You take 72 and divide it by 7 and it estimates that the money would double in 10.28 years. But remember, every year in the market is different. In some years, growth has been higher, and in other years lower.

Compound growth can be a powerful tool in your investing arsenal if you start investing early and keep that money invested for the long term.

3. Don't try to time the market

When first investing, it can be tempting to try to “time the market” or wait to invest until the next big downturn. Timing the market is very hard to do, and in waiting for the next big downturn to invest, you could be missing growth opportunities along the way.

If you sell when the markets are down and are still on the sidelines during a recovery, or if you sell when the markets are up and miss further gains, it can be difficult to catch up. Missing even a few of the best days in the market can significantly undermine the performance of your investments.

4. Keep your financial goals in mind

A great first step when you start investing is to establish financial goals. Knowing your destination can help you map the best path to get there.

Goals can be short term (the next few years) or long term (the next 10+ years). Consider using some of Fidelity's tools to help jump-start your goal setting. Also consider physically writing down your goals using our money goals worksheet (PDF), so you have a tangible reminder of what you're working toward.

Identifying your goals can give you a sense of purpose for all the hard work you put into your finances, and a feeling of accomplishment when you reach those milestones you've set. After all, you can't cross the finish line if there is no finish line. When you have a clear goal, you'll have a way of knowing when you've arrived.

To learn more about setting investment goals, read Viewpoints at Fidelity.com: The power of having savings goals.

5. Don't be afraid to ask for help

With investing comes important decisions that may seem beyond your expertise. Don't be afraid to ask for help. Many investors use a financial professional to help with defining goals, understanding their current situation, and identifying key steps to move forward.

Financial professionals/planners aren't just for long-term goals like retirement, but also shorter-term ones like paying off debt, saving for education, travel, or buying a house. Working with a financial professional can help you get started building an investment plan that can reach your goals.

For most investors who choose to work with a professional, it is not just about numbers and investments. It's a process that can help you identify your values and goals, make a plan, chart your progress, and hopefully achieve your personal and financial goals—while feeling more confident along the way.

Next steps to consider

Set up a savings goal

Create a plan of action in the Planning & Guidance Center.

Get investing support

Consider how a managed account could help you make progress.

Fidelity Spire®

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