How to start investing to build wealth

March 04, 2022

Maybe you just landed your first full-time job. Or maybe you’re finally ready to cross it off your to-do list. Whatever your reason, here’s how to start investing to build wealth.

Investing is an essential part of any financial plan that aims to build your wealth. And if you haven’t begun investing yet, the best time to start exploring it is now.

An investment is a long-term strategy that will compound over time. It can help build your wealth and set you up for life’s major financial moments, such as buying a home or retiring.

Before you get started, it pays to reflect on what you’d like to get out of investing your money. Whatever your goal is, there are investment tools to help you.


What to consider before investing your money

Investing brings risks as well as potential rewards, so the first thing to do is check in on your financial situation. If you answer “no” to any of these questions, address them before you start investing.

  • Do you have an emergency fund in place? Your emergency fund should be enough to cover three to six months of your living expenses.
  • Have you paid down any high-interest debt? High-interest debt can include credit card debt and personal loans.
  • Do you have extra money after you pay your expenses each month? There’s risk to investing your money, and it’s a long-term strategy, so be sure you could live without the amount of money you plan to invest.

Build an investment strategy that works for you

Investing to build wealth isn’t a one-size-fits-all activity. How you approach investing depends on a variety of factors, including your risk tolerance, your investment goals and even your values. For example, if you’re investing to build a nest egg for retirement, your time horizon will be longer than if you’re investing your money to save for a down payment on a home.

How to determine your risk tolerance


Why you should start investing as early as you can

The earlier you start investing, the more time you’ll have to take advantage of the power of compounding growth to build wealth. Compound growth is when you earn money on the growth (or interest) you earned previously, and you don’t have to lift a finger. 

Compounding explained


Discover your investment options

Now let’s review your investment options, each with its own growth, risk and diversification considerations. We’ll also look at the different ways of investing your money, whether that’s mostly on your own or through a financial professional.

Retirement accounts vs. non-retirement accounts

Depending on your investment goals, you can choose from a range of investment account types. Diversifying your investment accounts may help reduce the amount of taxes you’ll have to pay over time. (Learn more about this here.)


The different types of investment vehicles

Depending on your investing strategy, there are several investment vehicles to choose from that can help you build wealth. A portfolio with a diversified asset allocation—one that invests in a range of investment vehicles—helps you spread out and manage overall portfolio risk.

Some commonly used investment vehicles include:

  • Stocks: A share of ownership in a company. These are also called equities.
  • Bonds: A loan that you make to an entity, such as a government or corporation. Types of bonds include corporate, high-yield, municipal and mortgage.
  • Mutual fund: A pool of money from many investors that is used to invest in securities. Types of mutual funds include equity funds, fixed-income funds and money market funds.
  • Exchange-traded fund (ETF): A type of security that tracks a stock market index, a specific sector or a commodity.
  • Real assets: An investment in something tangible, such as real estate, commodities, land and precious metals.

Why your portfolio should have diversified assets—and risks


Choose how to invest your money

Finally, how you invest will look different based on your investing aptitude and your comfort level with technology. Of the options listed below, each has different requirements as far as how much you need to invest to get started:

  • Self-directed investing using mobile apps.
  • A robo-advisor that uses algorithms and a degree of human direction.
  • Working directly with a financial professional.

How to start investing now with any amount


Learn how to maintain your investments to build long-term wealth

In most cases, investing isn’t a set-it-and-forget-it activity. Your portfolio may take some work to maintain, such as if it requires further diversification or if the market changes significantly. Or you may experience a major change in your lifestyle that justifies an adjustment to your portfolio.


Dealing with market volatility

You’ve probably seen these words before: Investments can go down as well as up. Market volatility is a fact of life, so keep in mind that you’re in it for the long haul. A financial professional can be a good sounding board in rocky situations. They can give you a clear perspective and help you understand your options.

How to handle market volatility


Understanding how inflation affects your investments

Most people understand that inflation increases the price of their groceries or decreases the value of the dollar in their wallet. But inflation affects all areas of the economy—and over time, it can eat into your investment returns.

The effects of inflation on investments


Adapting your investment strategy to life events

Even if you prefer to be a hands-off investor, there are times when you’ll need to play an active role in realigning your assets to build wealth. This is known as portfolio rebalancing. It can be triggered by life events such as:

  • Starting a family
  • Buying a house
  • Receiving an inheritance
  • Nearing retirement

When to rebalance your investment portfolio


Quiz: The best investing options for you

Feel ready to begin investing? This quiz, offered by U.S. Bancorp Investments, will give you actionable insights into what type of investing suits your financial goals and preferences.

Take the quiz

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Start of disclosure content

Investment and insurance products and services including annuities are:
Not a deposit • Not FDIC insured • May lose value • Not bank guaranteed • Not insured by any federal government agency.

U.S. Wealth Management – U.S. Bank is a marketing logo for U.S. Bank.

The information provided represents the opinion of U.S. Bank. This is not intended to be a forecast of future events or guarantee of future results.

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

U.S. Bank does not offer insurance products but may refer you to an affiliated or third party insurance provider.