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When to Start Investing

Updated: Apr 13, 2022

So you’ve decided you want to start investing, but when should you start? Here’s a quick guide:

Before you start investing, you should first focus on paying down high-interest debt (credit cards, high interest loans, etc.). Think of it this way: your debt has a guaranteed negative return equal to your interest rate, so if your credit card has an 18% interest rate, you are guaranteed to lose that amount as long as you have outstanding debt. Even if you earn average annual market returns of 7%, you’re still losing 11%. And there’s no guarantee you’ll make that 7% each year; market returns fluctuate significantly and are inherently out of your control. What is in your control? Putting together a strategy to pay down high-interest debt and limiting it in the future!

Now, it's not necessary to pay down all debt before you start investing (e.g. auto loan, mortgage) and in fact, some debt can be beneficial to your overall financial well-being! The focus here is paying down high-interest debt.

No outstanding high-interest debt? Great! Time to start investing. Sometimes people are concerned about entering the market at the wrong time, but during all that hesitation and waiting, they may be missing out on returns and more importantly, compounding interest (the idea that returns are derived from principal + prior period returns, leading to exponential growth). Timing the market is essentially impossible due to the inherent randomness of it, so it’s best to jump in as soon as you can. Plus, the earlier you enter the market, the more time your money has to grow and compound, improving the long term prospects of achieving your version of financial freedom.

It’s really as simple as that. Pay down debt, get into the market, and try to enjoy the ride.


You may be thinking, ok sounds great, but when do I reap the benefits of my investments and get out of the market? Remember, we’re investing for the long-term (think at least 5 - 10 years) and staying in the market is key. It can be tempting to start to sell investments to protect your money when the market takes a tumble, but that often is the time you want to buy to take advantage of discounted prices (i.e. Black Friday, stock market edition). Plus, you may be selling at lows, locking in losses. And, after that trauma, when will you decide it’s safe to re-enter the market? Likely when the stock market is rallying again and pricing has meaningfully increased, forcing you to buy at higher prices with a smaller pool of money as a result of the locked in losses. Sigh. So truly, just stay in and know you’re in it for the long haul.

Quick final tip: Try to avoid looking at your investment accounts too frequently. Daily returns fluctuate significantly and the more you look, the more you may be tempted to sell when things are looking down. We recommend checking your accounts somewhere between once per month and once per quarter. In a recession or bear market, you may want to halve the frequency you’re checking in, or simply take a vacation from checking at all.


Action Items:

  • If you don't have one already, open a brokerage account. Check out our blog post "How to Start Investing" for detail on how to do that and ideas for your first investment.

  • Download our free Investment Planning sheet to help you build and diversify your growing portfolio.


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