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Bottom Line Up Front

  • You don’t need a lot of money to start investing. Navy Federal Investment Services Digital Investor allows you to invest as little as $1 per stock or ETF.
  • The “Rule of 72” can help you estimate how long it could take to double your money if you continue to reinvest your earnings. 

Time to Read

4 minutes

October 21, 2021

Are you waiting to build up a large amount of money before you start investing in the stock market? It may not take as much money as you think! Using different types of investments can make even the smallest start toward your financial goals worthwhile. These 5 steps will help you understand the basics of how to start investing.

1. Decide How Much Money You’re Going to Invest 

If you have extra cash on hand after paying your bills, you can put it to good use by investing it for your future. Even if you only have an extra $500 to invest, that’s a great start! If you’re not quite there, though, there are ways to invest with smaller amounts. For example, Navy Federal Investment Services Digital Investor allows you to invest as little as $1 per individual stock or exchange traded fund (ETF). 

2. Set Clear Goals for Your Investment

Knowing where you want your finances to be when you retire can help you know where to start today. Consider how much you'll need to cover your living expenses in retirement to work backwards in figuring out what you need to save now. A great first step is to meet with a financial advisor to walk through everything you need to feel confident about setting and meeting your goals.

3. Consider Your Risk Tolerance 

Although investing money does involve some risk, not investing and keeping your money in a savings account could mean you'd miss out on opportunities to grow your money faster and keep up with inflation. If you have questions and are seeking investment advice, consider consulting a financial advisor. They can help you get started with the appropriate asset allocation, known as diversification, that matches your financial situation and risk tolerance. If you prefer managing your investment account on your own, you can always use our Digital Investor tool as a low-cost option.

4. Choose an Investment Account That Makes Sense For You 

When selecting an investment account, you want to choose one that makes sense with your goals and risk tolerance. 

If you’re investing for short-term goals, you might choose a short-term corporate bond fund. For long-term goals such as retirement, there are employer-sponsored retirement plans, but you can open your own traditional IRA or Roth IRA to add to your total investments. Check out our article on Understanding Retirement Savings Options for more details on how different types of retirement accounts work.

When it comes to long-term investments outside of retirement, brokerage accounts are another option. They include mutual funds, Exchange Traded Funds (EFTs), individual stocks, long-term bonds and annuities. They’re typically managed by industry professionals and have the same investment categories as retirement accounts.

Education accounts are a great way to cover education-related expenses, either for kindergarten through college or higher education.

5. Investments Take Time

One of the most important parts of investing is being patient and understanding that returns take time.

So when should you start investing? It’s never too late to start, but the sooner you begin, the better. With more time on your side, you’ll reap the rewards of dividends that can be reinvested for continued growth.

The “Rule of 72” is one method people use to estimate how long it will take their money to double if they continuously reinvest. Here is a simple way to explain how this method works.

  • If you’re using 6% as your sample rate of return, the formula would be: 72 / Rate of Return (6%) = Time to Double Your Money (12 years)1

The chart below shows more examples. Periodically monitoring interest rates will help you stay on track.

Rate of ReturnYears to Double Your Money

What If I Don’t Have Much Time to Spend on Investing?

Even if you don’t have much time to manage your portfolio, you can keep your investment plan growing all year long by setting up automatic investing. An employer retirement plan is designed to do this for you through payroll deductions. You can also set up recurring transfers to automate your IRA or brokerage accounts.

What If I Need Help?

Not sure what to do next? Don’t worry—that’s why we’re here! If you have questions, a financial advisor with Navy Federal Investment Services can answer your questions and help you get started. Or, if you’re interested in a more do-it-yourself option, our Digital Investor is a powerful, but simple online investing tool that allows you to research, buy and track your investments. Visit our investment page to learn more about various investment vehicles; investment options; what a diversified portfolio consists of; and the investment goals you need to set for your own personal financial plan. 

Key Takeaways Key Takeaways


1This is an example of how the “Rule of 72” concept works. It’s not intended to represent an investment and is not a guarantee of return. Actual investments will fluctuate with the rate of return.

Navy Federal Financial Group, LLC (NFFG) is a licensed insurance agency. Non-deposit investments, brokerage, and advisory products are only sold through Navy Federal Investment Services, LLC (NFIS), a member of FINRA/SIPC and an SEC registered investment advisory firm. NFIS is a wholly owned subsidiary of NFFG. Insurance products are offered through NFFG and NFIS. These products are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of Navy Federal Credit Union (NFCU), are not offered, recommended, sanctioned, or encouraged by the federal government, and may involve investment risk, including possible loss of principal. Deposit products and related services are provided by NFCU. Digital Investor offered through NFIS. Financial Advisors are employees of NFFG and they are employees and registered representatives of NFIS. NFIS and NFFG are affiliated companies under the common control of NFCU. Call 1-877-221-8108 for further information.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.