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 (video)

 

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 compound interest to build wealth. Compound interest means that the return on your investment dollars generates its own return, and you don’t have to lift a finger.

Compound interest 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 (video)

 

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.

4 strategies for coping with 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

Why and when you may need 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

Related content

How grandparents can contribute to college funds instead of buying gifts

Retirement planning strategies for dual-income families

6 common money mistakes to avoid

5 times you may need a financial advisor

How do interest rates affect investments?

Effects of inflation on investments

How to use debt to build wealth

4 benefits of independent loan agents

7 year-end tax planning tips

The connection between your health and financial well-being

The unsung heroes of exchange-traded funds

What type of investor are you?

Retirement expectations quiz

Year-end financial checklist

Key considerations for launching an ILP

How to open and invest in a 529 plan

How to build wealth at any age

Do your investments match your financial goals?

Understanding yield vs. return

Should rising interest rates change your financial priorities?

Saving vs. investing: What's the difference?

What types of agency accounts are available for investors?

Retirement income planning: 4 steps to take

LGBTQ+ retirement planning: What you need to know

Your 4-step guide to financial planning

How to start investing to build wealth

How much money do I need to start investing?

Can fantasy football make you a better investor?

Investment strategies by age

Investing for beginners

Bull and bear markets: What do they mean for you?

A guide to tax diversification in investing

7 diversification strategies for your investment portfolio

How to manage your money: 6 steps to take

How to discuss money with your family

Avoid these 6 common mistakes investors make

4 strategies for coping with market volatility

5 questions to help you determine your investment risk tolerance

How to establish your business credit score

Key components of a financial plan

4 tips to help you save for retirement in your 20s

4 times to consider rebalancing your portfolio

4 major asset classes explained

What are alternative investments?

8 Ways for small business owners to manage their cash flow

4 ways to free up your budget (and your life) with a smaller home

Get more home for your money with these tips

How you can take advantage of low mortgage rates

4 questions to ask before you buy an investment property

How you can prevent identity theft

Employee benefit plan management: Trustee vs. custodian

Renewing your custody contracts? Negotiate the fees.

Private equity and the full-service administrator

Capitalizing on growth in the private equity space

How liquid asset secured financing helps with cash flow

Rule 18f-4: An in-depth look at the derivative risk management program and value-at-risk

Rule 18f-4: The limited use exception

Rule 18f-4 overview: Regulatory framework changes for derivatives

Can you take advantage of the dead equity in your home?

How to get started creating your business plan

How to test new business ideas

How to redefine challenges with business collaboration

How to sell your business without emotions getting in the way

10 tips on how to run a successful family business

How to accept credit cards online

How to build a content team

Investing in capital expenditures: What to discuss with key partners

Interval funds find growing popularity

ESG-focused investing: A closer look at the disclosure regulation

4 questions you should ask about your custodian

OCIO: An expanding trend in the investment industry

At your service: Outsourcing loan agency work

3 questions to ask your equity, quant and CTA fund administrator

A first look at the new fund of funds rule

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 | U.S. Bancorp Investments is the marketing logo for U.S. Bank and its affiliate U.S. Bancorp Investments.

The information provided represents the opinion of U.S. Bank and U.S. Bancorp Investments and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific investment advice and should not be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation.

U.S. Bank, U.S. Bancorp Investments and their representatives do not provide tax or legal advice. Each individual's tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

For U.S. Bank:

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

U.S. Bank is not responsible for and does not guarantee the products, services or performance of U.S. Bancorp Investments, Inc.

For U.S. Bancorp Investments:

Investment and insurance products and services including annuities are available through U.S. Bancorp Investments, the marketing name for U.S. Bancorp Investments, Inc., member FINRA and SIPC, an investment adviser and a brokerage subsidiary of U.S. Bancorp and affiliate of U.S. Bank.

U.S. Bancorp Investments is registered with the Securities and Exchange Commission as both a broker-dealer and an investment adviser. To understand how brokerage and investment advisory services and fees differ, the Client Relationship Summary and Regulation Best Interest Disclosure are available for you to review.

Insurance products are available through various affiliated non-bank insurance agencies, which are U.S. Bancorp subsidiaries. Products may not be available in all states. CA Insurance License #0E24641.

Pursuant to the Securities Exchange Act of 1934, U.S. Bancorp Investments must provide clients with certain financial information. The U.S. Bancorp Investments Statement of Financial Condition is available for you to review, print and download.

The Financial Industry Regulatory Authority (FINRA) Rule 2267 provides for BrokerCheck to allow investors to learn about the professional background, business practices, and conduct of FINRA member firms or their brokers. To request such information, contact FINRA toll-free at 1-800‐289‐9999 or via https://brokercheck.finra.org. An investor brochure describing BrokerCheck is also available through FINRA.

U.S. Bancorp Investments Order Processing Information.