Investing in the stock market can feel like standing at the edge of a vast, uncharted ocean—exciting, but also a little intimidating.

You’ve likely heard stories of people earning impressive returns, alongside cautionary tales of those who lost it all. So how do you dip your toes into the tides of fortune without getting swept away?

The truth is, investing in stocks doesn’t have to be a high-stakes gamble. With a little knowledge and a smart, long-term approach, you may actually be able to turn a small amount of money into more substantial wealth. Here’s a simple, step-by-step guide to get you started on your investing journey.

Step 1: Define your “why”

Before you even think about which stocks to buy, ask yourself: Why am I investing? Are you saving for a down payment on a house in five years, planning for a comfortable retirement decades from now, or just eager to create passive income? Your goals will help shape your investment strategy. A short-term objective might require a more cautious approach to protect your principal, while a long-term one gives you the flexibility to take on more risk for potentially higher returns. Knowing your why keeps you grounded and focused, especially should the market become volatile.

Step 2: Get your finances in order

You should never invest money you might need in the near future. Before you start, make sure you have a solid financial foundation. This means:

• Create an emergency fund: Aim to have at least three to six months of essential living expenses saved in a high-yield savings account. Don’t play with this safety net; keep it secure in such an account or other virtually risk-free fund.
• Pay down high-interest debt: If you carry credit card balances or personal loans, tackle these first. The interest you’re paying likely outweighs the returns you’d make from investing.
• Establish a budget: Understand your income, expenses, and how much you can comfortably invest—either in one sum or through regular contributions. Even a small amount invested consistently over time can grow exponentially thanks to the power of compounding.

Step 3: Choose your investment vehicle

You can’t just buy stocks on a whim; you need an account to hold your investments. For most new investors, this means opening an online brokerage account. Think of this like a bank account for your investments.

When choosing a brokerage, consider a few key factors:

• Fees and commissions: Look for platforms that offer $0 commission on stock and ETF trades.
• Ease of use: Is the platform user-friendly? Does it offer the educational resources and tools you need to feel confident?
• Investment options: Do they offer the types of investments you’re interested in, such as stocks, ETFs, and mutual funds?

This step alone can trip up many investors due to the time-intensive and possibly convoluted research involved, so don’t hesitate to reach out to a financial professional for guidance.

Step 4: Start investing

Investing isn’t just about picking a single stock. Diversification, which means spreading your money across various types of investments, is key to reducing risk. So from here, you may want to research various options, including individual stocks and mutual funds, which bundle stocks from multiple companies with other securities like bonds. For most beginners, starting with a low-cost, broad-market index fund ETF is the best approach. These provide instant diversification, require minimal effort, and are professionally managed.

Once your account is set up and funded, you can make your first investment. You can trade shares directly through your brokerage by entering the company’s info and how many shares you wish to buy. Decide how much you want to invest in a stock or fund, then divide that amount by the current share price to determine how many shares to buy. (Prices fluctuate, so be sure to check an up-to-date source.)

Step 5: Stay consistent

Once you begin investing, it’s natural to feel anxious about market ups and downs. But remember, volatility is normal. Instead of reacting to every shift, keep your focus on long-term goals. Monitor your investments periodically and avoid emotional decisions during downturns. And if you want added peace of mind, consider working with a financial professional. They can help tailor your investment strategy to your goals and provide valuable insights along the way.