New to Investing? 4 Steps to Get You Started

By Heather Castle

Learn more about Heather on NerdWallet’s Ask An Advisor

Investing allows you to put your money to work for you, growing your assets over time. And for many people, it plays a significant role in their ability to build enough wealth for major life events such as buying a homehaving a family, and providing for themselves and their family during retirement.

If you are new to investing, understanding the basic building blocks of developing and implementing a strategy can help you get started on a sound financial plan. The four steps below will introduce you to the basics of investing, but I recommend working with a financial advisor who can help you match your investment strategy with your financial goals.

1. Take time to figure out your financial goals

You may want to save for a down payment on a house or for starting your dream business. Maybe you need to plan how to care for aging parents or make sure you have enough to maintain your lifestyle through retirement. And if you are like most individuals, your ability to achieve such goals will depend on your ability to save and grow your money.

To begin investing, you need to be able to set money aside for that purpose. Review your resources, budget and savings. You will need to know your spending habits in order to honestly and accurately assess them. Once you have identified how much and where you are spending, you can evaluate whether there are any ways you could cut back, put more money away, or redirect your spending to better align with your financial goals. If you need help figuring out how much to save, where to cut back or how to prioritize saving and investing goals, work with a financial advisor.

2. Develop an asset-allocation strategy

Once you are ready, you’ll need to determine how to invest your money. An asset-allocation strategy is a plan for how your investments should be divided among cash, stocks and bonds. Your risk tolerance, time frame and goals, as well as other factors, should be considered when determining an appropriate asset allocation.

The more risk you are able to withstand, the more stocks you can hold in your portfolio. If you are risk-averse, you may want to decrease your allocation in stocks or choose safer investments, such as fixed-income ones or those that are not closely correlated to movement in the market. But understand that no investment is entirely safe and that all of them carry some type of risk. You can consult with a knowledgeable advisor about these risks.

Your time horizon is the amount of time you have before you will need the assets for a certain goal or purpose. The longer the time horizon, the more equity exposure you could have in your portfolio because you would have a longer time to regain losses during market volatility. The shorter your time horizon, the less risk you would want to take on.

Depending on what purpose you want your funds for and when, you may need to be more conservative with your investing strategy. An advisor can help you evaluate these considerations and select an appropriate allocation.

3. Identify specific investments that fit into your strategy

Once you have chosen how to split up your assets, you will need to pick the specific stocks and bonds to invest in among hundreds of thousands of potential options. You can do this on your own, but for many people it’s preferable to have an advisor’s help.

Going it alone could be time-consuming, and you could potentially make other investing mistakes that could have a negative effect on your portfolio. Be sure you have the necessary time and knowledge to evaluate the investments you are considering. This also includes determining criteria for when to add or remove investments from your portfolio.

If you work with an advisor, he or she already will have thoroughly researched these investment choices. But remember, these are yourassets, and if you don’t understand something, ask. Good advisors want you to understand your strategy and feel confident in your investments.

4. Schedule regular check-ins

Life happens and things change — and so will your goals. You may be single now, but maybe two years from now you’ll be planning to get married. Maybe in five years you’ll be going through a divorce. As your goals and needs change, you’ll want to review your investments to make sure your strategy is still aligned with your life plan. These check-ins could just be between you and your portfolio or with your advisor if you are working with one.

To stay on track with your goals, you also should regularly review your financial plan, which includes other important areas such as insurance and taxes. Your advisor can help you track your progress and make any necessary changes to your investing strategy or other parts of your financial plan.

By using these four simple steps, you can feel more confident about how your investments match up with your goals. Getting these basics down will allow you to focus on other areas of your financial picture, such as making sure you are investing in the most tax-efficient way, analyzing your future retirement needs, or planning the best way to pass along your estate.

Heather Castle

I am originally from Virginia and grew up in Tuscaloosa, Al.  I completed both of my degrees at the University of Alabama.  My undergrad degree in Finance and then later my MBA from the Manderson Business School through their Executive MBA program. 

I started Castle Wealth Advisors, LLC because I wanted to provide ethical and approachable financial planning and investment management to individuals and business owners, concerned with their financial futures, regardless of age, sex, race, or net worth.

I've always believed clients should work with reputable, qualified, and experienced advisors.  So it was important to me to gain industry experience as well as pursuing additional industry specific designations.  I have passed the following licensing exams:

     Series 7, General Securities Representative

     Series 66, Investment Advisor Representative 

     Series 9 & 10, General Securities Sales Supervisor

     California Life, Health, and Variable Insurance (License #0K01554)

I have been in the financial services industry since 2006 and have work with many differing type of clients over the years.  One thing I know to be true, everyone wants to feel heard and cared about.  Meaning everyone I have ever worked with wants to feel like their desires, wants and needs have been heard and taken into consideration when speaking about their personal financial matters.

Many people have the same goals, they just express them differently, and then there are a few who’s view and desires are completely different.  This is one of the aspects I love about my job.  The PEOPLE!  I get to meet some many interesting people and they challenge me daily.  No day in my line of work is the same.  Today I could be planning for a family who owns a small business and tomorrow working with a women going through a painful divorce.  Listening and building financial plans and strategies around personal needs is why many of my clients have said they do business with me and have stayed with me. 

Another reason I love my job… I get to truly HELP people.  I get to make a living and provide for my family while helping others.  Over my career I have felt a need to dive deeper into financial planning and working with high net worth individuals who have greater planning and investing needs.  Listed below I have highlighted a few of the areas I specialize in:

·      Women in transition (divorce/ death)

·      Corporate Executives

·      Young Entrepreneurs

·      Small Business Owners

·      Family with Special Needs Members

·      Complex Retirement and Estate Planning Needs

Currently I live in Brentwood and really enjoy the West Side of Los Angeles.  I am actively involved with the Junior League of Los Angeles.  I have a passion for trying new things and new experiences.  So, in my free time I love traveling and scuba diving.  I also am interested in learning French, taking pilot’s lessons and dancing the tango!