How to Start Investing When You’re Young, Dumb & Broke (But Ambitious)

<div class="user-question">I don't exactly understand how to invest my money. Where do I start?</div>

So, you want to start investing, but you’re staring at your bank account like, “Yeah… I don’t think I have enough to spare.” Maybe you’re scared of losing money, or you’re worried you’ll need it for emergencies. I get it. The idea of putting your hard-earned cash into something that isn’t a guaranteed win can be nerve-wracking.

But here’s the thing: the sooner you start, the more time your money has to grow. That’s just facts. And good news - you don’t need thousands to get in the game. With the right mindset and strategy, you can start investing even if you’re working with limited funds.

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Why Investing Early Matters

Time is your biggest asset when it comes to investing. Let’s break it down:

The earlier you start, the longer your money has to compound - meaning your returns start generating their own returns. That’s how the wealthy build wealth:

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‍First Things First: Are You Ready to Invest?

1️⃣ Do you have 1-3 months of emergency savings?

You don’t want to be that person selling stocks at a loss just because your car broke down or you had an unexpected bill pop up. If you’re single, aim for 1-3 months of expenses saved up. If you have a family, go for 6 months. This buffer keeps you from making panic-driven financial decisions.

<div class="frich-tip">Frich tip: Make sure to store your emergency fund in a HYSA. Here are some HYSA accounts we like. </div>

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2️⃣ Are you in it for the long haul or quick wins?

Most new investors start with a long-term mindset - meaning, you invest your money and let it sit so it can grow over time. Think: set it and forget it.

But maybe you’re more of a short-term investor, looking for quicker returns. Just know that short-term gains get hit with higher taxes, and timing the market isn’t easy. Long-term investing is generally more tax-efficient and, let’s be real, less stressful.

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3️⃣ Do you want growth or passive income?

When investing, you’re usually after one of two things:

• Capital Appreciation – You buy something and hope it increases in value over time (ex: buying Amazon stock at $100 and selling it for $200).
• Dividend Income – You invest in companies that pay you just for holding their stock. This money can be reinvested to take advantage of compounding growth.

Knowing which one you prefer will help shape your investment strategy.

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4️⃣ Are you risk-averse or down to gamble?

Not all stocks are created equal. Some are slow and steady, while others move like a rollercoaster.

• Large-cap stocks (ex: Apple, Microsoft, Amazon) – More stable but lower growth.
• Mid-cap stocks (ex: Ambarella, Stitch Fix) – More risk, but higher potential.
• Small-cap stocks (ex: GameStop, Cassava Sciences) – High risk, high reward.

Oh, and if you’re eyeing crypto - just know it can swing 20% in a day. If that would give you a heart attack, maybe stick to something safer.

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Now, Let’s Get to the Fun Part: Actually Investing

Once your finances are in check, it’s time to make your money work for you. Here’s how to start:

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1️⃣ Open a Brokerage Account

This is your gateway to the stock market. Think of it as your investment wallet. Some of the top platforms include:

• Public.com (easy for beginners)
• Fidelity (great for long-term investing)

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2️⃣ Transfer Some Money

Most brokers don’t require a minimum deposit, meaning you can start with as little as $1. If you’re investing in crypto, you can even buy fractional shares. Apps like Acorns help by rounding up your everyday purchases and investing the spare change.

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3️⃣ Know What You’re Buying

There are a lot of investment options, so let’s break them down:

• Stocks – Shares of a company.
• Bonds – You lend money to a company/government, and they pay you interest.
• Index Funds – A mix of stocks that track the market (ex: S&P 500).
• Mutual Funds – Like index funds, but actively managed (higher fees).
• ETFs – Traded like stocks but offer diversification.
• Options – High-risk contracts to buy/sell stocks at a set price.

<div class="frich-tip">Frich tip: If you’re not sure where to start, index funds are an easy, low-maintenance way to invest.</div>

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Building Your Portfolio

Your portfolio is your collection of investments. The goal? Diversification - spreading your money across different assets so you’re not overly dependent on one thing.

Steps to Build a Solid Portfolio:

• Determine Your Risk Tolerance – How much risk are you comfortable with?
• Choose Your Investments – Stocks? Index funds? Crypto? A mix?
• Diversify – Don’t put all your money in one place.
• Stay Consistent - You don’t have to invest a huge amount up front but investing little by little every month is key to growth!

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Btw - here's how others are doing👀

Do you invest money?

✅64% Yes

❌36% No

Starting your investing journey might feel overwhelming, but trust me - it’s one of the best things you can do for your future. Even if you’re starting small, consistency is key. The earlier you start, the more time your money has to grow.

Follow @FemmeFinanceOfficial for more personal finance, tech, and Web3 investing tips!

Kristina