5 Expert Tips for 20-Somethings Who Want to Invest But Don't Know Where to Start

+ If you're new to investing, it can be hard to know where to start.

+ Financial planners recommend starting with some research, then automating your investments to make things easy.

+ They recommend starting as soon as possible, and keeping things simple.

+ Read more stories from Personal Finance Insider.

Over the last year and a half, the topic of investing has made headlines and capitalized conversations between friends, colleagues, and family members. During the pandemic, we watched an uptick in the economy, a rise in people caring about cryptocurrency, and more than 15% of people investing for the first time.

However, one group of people, the Gen-Zers (those born between 1997 and 2012) didn't rush into investing. According to a GOBankingRates survey, 34% of Gen-Z participants have not invested their money at all and 62% of participants in the survey say their financial situation warrants advice from a professional. 

So if you're new to investing, here's what five financial advisors say is a good place to start. 

1. Automate your investing 

One key point to consider with investing, according to financial planner Adam Scherer, is consistency. That's why he recommends setting up an automated recurring deposit regimen. It's not as hard as it sounds: Most online banking and investing portals let you set up a recurring payment to your investment account, just like you would for a bill payment.

This strategy has the added bonus of building an investing strategy called dollar-cost averaging, which regularly puts the same amount of money in the market regardless of market patterns, therefore resisting the impulse to "time the market," or pull money out as it drops and put money in as it rises. Only professionals have any business trying to time the market — and it's still extremely hard for them. 

"Whether you direct a portion of your paycheck to an investment account or establish recurring periodic investments into an app, making saving easy is key," says Scherer. 

2. Keep it simple 

When you're first diving into the world of investing, financial planner Joseph Favorito says it's best to keep your strategy simple.

"Build your portfolio around low-cost passive index funds to the extent you can. Wall Street is constantly trying to play on investor fears and emotions with new products like annuities, ESG funds, and equity linked CD's," says Favorito. "These are all ways to just charge you more to buy the same investments and make you feel better with a mirage. You're better off sticking to traditional index funds that provide consistent performance and broad diverse market exposure."

3. Take time to learn 

Even if it seems tempting to rush and get started, financial planner Jay Zigmont recommends only investing in things you understand.  "Take the time to learn about investing before you start," says Zigmont. "You can work with a CFP® professional to learn about investing or learn on your own. Either way, you need to understand what you are investing in before you buy."

Scherer also recommends taking time to research the costs associated with your investment platforms, accounts, and funds. "These have the potential to create a 'drag' on your overall investment gains which, in turn, impact the probability of success with your financial planning goals," says Scherer.

4. Start as soon as you can

When you feel you've done enough research and are ready to get going, financial planner Jay Karamourtopoulos recommends starting as soon as you can, because delaying your start can have a long-term impact. This is thanks to compound interest, in which interest earns interest on itself. The longer your money is in the market, the more it can earn — and even a few years makes a big difference.

"Investing and saving early in your life and career will have a massive impact on your long term and retirement savings," says Karamourtopoulos. "Starting now will keep you from having to play catch up later on in life."

5. Diversify your investments

One final tip that financial planner Jason Field believes is important for beginners to know is the art of having variety in your investment portfolio. This is called diversification.

Just like you wouldn't keep all your proverbial eggs in one basket (what if you drop the basket?), you shouldn't plan on keeping all of your money in the same stock, or same market. By investing your money in different ways, you protect against losing everything should one equity or market plunge.

"Diversification plays an important part in risk management. Many people use mutual funds or ETF's to gain broad exposure to different markets and diversify their portfolio away from a single stock," says Field.

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