Many young Americans are looking for ways to help their savings grow through strategic investments, but many are not sure where to begin. The good news is that making smart investments is often simpler than it appears. Individuals do not need to be wealthy or have deep market expertise to start building a solid portfolio.

Younger generations, in particular, are showing strong interest in investing. Recent surveys indicate that nearly half of Gen Z is actively putting money into the stock market and exchange-traded funds.

While the enthusiasm is there, the knowledge gap remains. For beginners, the challenge is not just knowing where to invest but how to approach the process with confidence. 

Start With Clear Financial Goals

When creating an investment plan, the first step is to identify both short- and long-term goals. Whether the aim is saving for retirement, purchasing a home, or simply building wealth, different objectives call for different investment approaches.

It is also important to weigh the level of risk tied to each goal. For example, someone investing toward a general wealth-building goal may be more comfortable taking on slightly higher-risk investments than someone saving for a near-term expense such as a down payment on a home.

Strong investment strategies also include checkpoints to make sure plans are progressing as expected.

Setting time horizons of five, 10 and even 30 years can provide structure. For long-term goals like retirement, a patient, consistent approach is especially critical.

Jennifer Garcia, a certified financial planner at Wells Fargo Advisors, emphasizes the importance of goal-setting: “Prioritizing your goals will help you determine which goals you should focus on first and then, once achieved, allows you to move on to the next.”

With goals clearly defined, the next step is building a strong financial foundation that supports those ambitions.

Build a Solid Financial Foundation

It is important to begin investing with as strong a foundation as possible. The first step is to pay down high-interest debt. Large amounts of credit card or personal loan debt can undermine even the best investment strategy by draining resources through compounding interest.

Equally important is building an emergency fund that covers at least three to six months of living expenses.

This financial safety net provides stability in the event of sudden job loss, medical expenses or major home or car repairs. Having money set aside for emergencies allows investors to move forward with greater peace of mind.

Once the basics are in place, beginners can start investing in the market.

A smart starting point is a diversified portfolio built around low-cost options such as index funds or exchange-traded funds. Diversification spreads risk across sectors and companies, so losses in one area can be balanced out by gains in another.

Historically, this approach has been effective: since 1957, the S&P 500 has delivered an average annual return of about 10.4%, or 6.5% after adjusting for inflation.

With a stable financial foundation, investors are better positioned to think about how their money can grow over the long term.

Think Long-Term

One of the most common mistakes new investors make is trying to outsmart the market. Short-term ups and downs can be unsettling, but reacting to every dip by buying and selling often leads to unnecessary losses.

Instead, successful investing comes from patience and consistency.

The power of compounding returns is one of the best reasons to think long-term. Compounding means your investments earn returns on both the original amount you put in and the growth it generates over time.

For example, someone who invests $200 a month starting at age 25 could accumulate several hundred thousand dollars by retirement, thanks to compounding alone.

Experts often remind investors that time spent in the market matters more than timing the market. As Fred Kooij, chief investment officer at Tribe Impact Capital, explains: “Staying invested in well-diversified, risk-aware portfolios is the best way to navigate uncertain market performance … time in the market beats timing the market.”

The longer money stays invested, the more opportunity it has to grow and recover from downturns. This is why long-term investors typically see stronger results than those who chase quick wins.

Use Technology and Automation

While financial advisors can be extremely helpful, they are often busy managing many clients and can come at a high cost.

A growing alternative is the use of robo-advisors. These automated platforms are easy to navigate, create tailored portfolios, and typically charge far lower fees than traditional advisors.

In the United States, about 19.4% of investors now use robo-advisors to manage their money, underscoring how mainstream these tools have become.

Another advantage of technology is the ability to set up automatic contributions. This “set it and forget it” approach allows investors to schedule recurring withdrawals from a bank account or paycheck, ensuring consistent investment without the need for constant oversight.

Steady investing is also called dollar-cost-averaging, and one of the easiest and most common ways investors save is through a company-sponsored 401(k) retirement savings plan. These can be set up to contribute a certain dollar amount or percentage of your salary every paycheck.

For those working with smaller budgets, investment apps provide additional opportunities. Platforms such as Fidelity, Charles Schwab and Robinhood allow users to buy fractional shares, making high-priced stocks more accessible.

Many of these apps also include educational features to help investors build knowledge as they grow their portfolios.

Keep Learning and Rebalancing

Investing is not a one-time decision but an ongoing process. Markets shift, personal goals evolve, and new opportunities arise, which means portfolios should never be set on autopilot forever.

For beginners, committing to continued education can make the difference between simply investing and investing wisely. Books, podcasts and financial news outlets can all provide useful insights, while advice from trusted professionals can add perspective.

Regular check-ins are also important. Over time, some investments may grow faster than others, which can shift the balance of a portfolio. Rebalancing—adjusting allocations so the mix of assets stays aligned with your goals—helps keep risk in check. Many investors review their portfolios once or twice a year to make these adjustments.

With strategies in place for continuous learning and rebalancing, new investors can stay confident that their approach will adapt to both personal changes and the broader market landscape.