How to Invest for the First Time!

How do you invest for the first time?

As someone who has never really looked into investing I will be the first to say – I really don't know where to start. I have learned this:

  • When I listened to a co-worker about Bitcoin I lost $100
  • When I listened to a friend about GERN stock I lost $200

So I quickly recognized I wasn't so good at taking investing advice. That is when I decided to let my man Jimmy over at The Compounding Dollar help me out.

Related: How To Invest For The 1st Time To Earn Passive Income

How to invest your first $500

Hey Money Life Wax readers, how’s it going?

Like Josh, I hope to provide you with some really useful information on investing. Josh here focuses a lot on paying off consumer debt, student loans, credit card debt, and overall liabilities. But what do you do when you have everything paid off? You invest your money, of course! Focus on your future.

Quick introduction as to who I am. My name is Jimmy and I run

I am a novice investor who has studied numerous successful investors, have spent many hours reading well-known books on investing, read balance sheets and financial statements from a lot of publicly traded companies, and have had experience investing firsthand.

I have high hopes that I can achieve amazing returns year after year and continue beating the S&P 500 benchmark for the decades that follow.

The only reason I completely evaded student loans is that I didn’t enroll in college in the first place and started working out of high school! I understood how to use credit cards as an asset and build a strong credit score at age 18.

But enough about myself, so, you got out of debt? First and foremost congratulations, no matter how big or small your debt burden was, be proud of yourself for tackling debt head-on.

Now you have money to invest with, but where should you start?

Related: 5 Rules to Stop Making Money Complicated

Invest in yourself

Probably the best investment you can EVER make in your life is an investment in yourself.

I’m not saying to go out and buy yourself a pair of Gucci sunglasses. No, but rather invest in your *knocks on head* noggin.

Use that money to buy books, attend a seminar, read more blogs or go to your community college and take a 1 – 5 credit hour course. Learning a new skill can result in earning more money, becoming more knowledgeable in your area of expertise and saving more money.

Additionally, you can enhance your health and strengthen your relationships with everyone in your life! As long as you are constantly growing and expanding your mind to better your life then you should see a massive ROI (Return On Investment) in no time!

Start your first business

Ever wanted to be self-employed or own a business?

The answer is probably yes, as 48% of Americans want to be entrepreneurs and 61% want to be their own boss.

Prior to owning, you must take care of the legal documentation and taxation (The boring stuff). Filing for an LLC and an EIN or tax ID for your business is necessary, you can do it on Legal Zoom.

The LLC protects your personal assets and you’re not held responsible for the companies’ debts or liabilities. The EIN is for you to file your taxes on a yearly or quarterly basis. The LLC and EIN filing prices all vary in different states. It can range from $50 – $800. The pros of owning vs being owned are always nice!

Invest in a low-cost index fund

Want to invest your money?

I preach this now and I will continue to preach this again, low-cost index funds are the best investment vehicle for any retirement fund.

There is no money manager behind the fund that allocates your money, potentially resulting in a loss of money, but rather a machine that tracks any indices/index.

Plus, it’s cheap. Invest $500 – $1000 and the index will most likely charge you $1.60 a year. Compared to $10 if you were to have that same money “professionally” managed. It might not seem like a lot, but in the long haul, it bites you in the butt. Especially since your portfolio's value grows over time.

Invest in individual stocks

Do you want to invest in individual stocks?

If you refuse to have your money managed (like I did), you also didn’t want to invest in an index fund and get average returns (like I did), so you took the risk and invested in individual stocks.

Granted, you’ll probably lose a majority of your money due to commission costs from your brokerage, it’s in your best interest to start off taking baby steps and invest only in one or two companies for now.

Place $500 in each company if individual stocks is your option. As an added bonus – Forbes and Business Insider just wrote about using M1 Finance to cut down on the commission costs and transactions.

Read how Millennial Money invested his way to 1.25 million in 5 years here.

Not ready to invest? Then just save the money.

Place your cash in an online savings account, online banks have impressive interest rates and having the interest compound over time can mean more money in the future.

Plus, the account is completely liquid, so if you ever have an emergency expense of some sort, then you’ll be covered by the money you have in the account. If time is on your side you can look into certified deposits as well.

Best online savings plan right now – Ally Bank!

That’s all I have MLW fans, thanks for giving this a read, and thank you, Josh, for allowing me to post on your site. Feel free to visit my site if you have any questions or if you would like to learn more about investing/ my investing philosophy.

-Jimmy F. 

Awesome Jimmy! Great stuff and thanks for contributing. Jimmy has some great stuff on his site with regards to simple investing so make sure you check out

Q: What is the best way to start investing?