How to start investing

Step 3: Open the account and put money in it

The nuts and bolts of this step aren’t too complicated, but you do still have some decisions to make.

Decision: Where to open your account? If you’re opening a 401(k) then this part’s easy: You’ll open it through work, with whatever company is handling your employer’s 401(k). With an IRA or brokerage account, you’ll need to choose a financial institution to open your account with. (Here’s how to open an account if you choose to go with Fidelity.)

Decision: How much money to invest? With a 401(k), you contribute through payroll deductions, meaning the money is taken out of your paycheck automatically. You decide how much of your pay to contribute. If your employer offers matching contributions, consider investing at least enough to capture the full amount of the match. For example, if your employer offers a dollar-for-dollar match up to 3%, you would contribute 3% to take full advantage.

If you’re opening an IRA or brokerage account, you can start by depositing a chunk of money, and then add to that when you’re ready. If it’s possible to make regular, recurring contributions, you can take advantage of dollar cost averaging. That’s a strategy where you invest your money in equal portions, at regular intervals. Your investments occur regardless of the changes in price for the stock or other investment, potentially helping reduce the impact of volatility on the overall purchase. There are no minimums to open an IRA or brokerage account with Fidelity.1

There’s no one magic number for how much you need to start investing, or how much you should add each month, because the right number varies depending on your income, budget, and what other financial priorities you’re juggling. But if you’re getting stuck on this step, remember that starting small is better than not starting at all. 

Investing a little bit every month and gradually increasing that amount over time, as you get more comfortable, is a fine way to go. Fidelity suggests eventually aiming to save an amount equal to 15% of your income toward retirement each year (including any employer match). If you decide to invest in a brokerage account or IRA, consider setting up automatic contributions so you keep investing every month.