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Don't be afraid to seek advice

Unlike investing juggernauts Hart and Cuban, everyday investors don’t typically get tips from business leaders that could grow into millions of dollars.

But you can work with a professional financial adviser to get a leg up on the hottest deals.

Financial advisers can answer your questions, help you to understand complex investing terms and provide you with reliable information on the stock market and the wider economy. Their advice expands beyond investing to wider financial planning and money management.

If you don’t want to work directly with an adviser, there are lots of investing apps and online platforms that will do much of the work for you — and some only require a small investment to get started.

How to get a free $10 to invest in your future

An app called Acorns automatically rounds up purchases made on your credit or debit card to the nearest dollar and places the excess "change" into a smart investment portfolio. You get $10 immediately from your first investment.

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Diversify with index funds

One of the first things that many financial professionals tell beginner investors is to diversify your portfolio with different types of assets and exposure to different sectors.

One easy way to do this is to invest in index funds. An index fund is a mutual fund or exchange-traded fund that tracks the performance of a specific market index, such as the S&P 500 or the Dow Jones Industrial Average.

The fund includes a representative sample of stocks or bonds from the index it tracks rather than hand-selecting them. They’re typically less expensive to invest in than actively managed mutual funds.

A fund that tracks the S&P 500, for instance, is supposed to give you exposure to 500 different companies — but your investment will be skewed towards the firm with the largest market caps, meaning you could be more exposed to certain sectors, like technology, than you might realize.

Generally, index funds have performed well in the past. From 1957 through Dec. 31, 2022, the S&P 500 delivered an average annual growth rate of 10.15%, according to Official Data. This has been excellent for long-term investors — but as with all things investing, it’s important to remember that past performance is not an indication of future returns.

Maximize retirement accounts

When building your wealth and planning for your financial future, you should consider using tax-friendly investment vehicles like a 401(k) account if your employer offers one.

A 401(k) retirement savings plan will allow you to steer a portion of your pay into an account where you can invest and grow your money — and get a tax break.

If you don’t have access to a 401(k), you might consider opening a traditional individual retirement account (IRA), where you can contribute pretax income and grow it tax-free until you make withdrawals in retirement.

You’re allowed to contribute up to $7,500 in a 401(k) and up to $1,000 in an IRA in 2023.

Another option is a Roth IRA, where your contributions are taxed upfront so that your withdrawals are tax-free in retirement. Roth IRAs are popular for their advantages and flexibility, but they do have certain rules and limitations and you can face penalties if you withdraw your earnings too soon.

The good thing about all of these accounts is they allow you to grow your wealth and put your money to work by investing, giving you needed cash flow in your golden years.

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Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.