How to Start Investing: A Six-Step Order of Operations
The account comes before the fund, and the emergency fund comes before both.
At a glance
Figures checked 1 Sep 2026
Minimum investment
A few dollars with fractional shares
Risk level
Set by your allocation choice
What to take away
- Cover a starter emergency fund and any high-interest debt first.
- Capture the full employer match before anything else.
- Pick the account, then the allocation, then the fund — in that order.
- Build a starter emergency fund of about one month of essentials in a high-yield savings account.
- Clear high-interest debt. Paying off a 23% card is a guaranteed 23% return.
- Contribute enough to your 401(k) to collect the entire employer match.
- Fund an IRA — Roth if you are in a low bracket, traditional if the deduction is worth more.
- Finish the emergency fund to three to six months of essentials.
- Return to the 401(k) and increase contributions, then use a taxable account beyond that.
Then pick the fund
A low-cost target-date fund or a broad total-market index fund is a perfectly good first and permanent holding. The choice between them will matter far less than whether you keep contributing through the next downturn.
Starting at 25 instead of 35 with $400 a month at 7% is roughly double the balance at 65. Time in the market is the one input you cannot buy back later.
Common questions
Whatever is consistent. Many people target 15% of gross income including the employer match, but starting at 5% and increasing with each raise works better than waiting until 15% is affordable.