One of the scariest things for many would-be investors is figuring out how to get started. Where do you put your money? What's the easiest way to begin?
These are questions that haunt the aspiring investor. There's this idea that investing is shrouded in mystery, and that you need special skills to get started. These are investing myths.
Happily, there are a few places you can start investing with relative ease. Here are four places where a beginner can start putting together an investment portfolio:
-- Your company's retirement plan.
-- A robo advisor.
-- Online discount brokers.
-- Full-service brokers or asset managers.
Your Company's Retirement Plan
If you're completely new to investing, your company's retirement plan can be one of the best places to get started. You might not think of what you put into your 401(k) as investing, but it is.
Many 401(k) plans offer access to a variety of mutual funds and exchange-traded funds, known as ETFs -- and a company retirement plan comes with tax advantages. You can use your company retirement plan as a solid place to begin building your long-term portfolio.
Among the biggest advantages to using a company retirement plan is that you might have access to matching contributions. Your employer might actually give you free money, up to a certain amount, when you invest.
Another bonus is that you often have the money taken automatically from your paycheck. You don't have to think about transferring money or making specific moves. You begin investing without even thinking about it.
Downsides to using your company retirement include limited access to some investing choices and the potential for higher fees. However, the fact that you can get started easily and grow your wealth without thinking about it can outweigh the disadvantages in some cases.
A Robo Advisor
A robo advisor can also offer you a simple way to start investing. With a robo advisor, you answer a few questions, decide how much you want to set aside each month, and the robo advisor takes care of the rest. Many robo advisors even offer tax-advantaged accounts like individual retirement accounts.
Robo advisors like Betterment, WealthFront and Wealthsimple offer the opportunity for you to start with a relatively small amount of money and grow your wealth without too much fuss.
Most robo advisors use low-cost ETFs to construct portfolios, so you don't have to worry about steep fees. It's common for robo advisors to charge one low management fee as well. A portfolio is created for you, based on your risk tolerance and principles of Modern Portfolio Theory.
For those who aren't sure how to go about stock picking and who want to set it and forget it, using a robo advisor might be a good fit. On the other hand, most robo advisors don't offer you much control over your portfolio, and they don't usually offer individual stocks. So, if you want access to more investment choices, and more control, this option might not work for you.
You can get started investing, do your research, and move away from robo advisors later as well. Use a robo advisor to start your portfolio, but later, when you learn more and gain confidence, you can move your assets elsewhere if you want.
Online Discount Brokers
There are a number of online discount brokers that can help you get started for a small amount of money. Brokers like Robinhood, Wise Banyan, Stockpile and others can help you begin learning the basics of investing by allowing you to use small amounts of money. Depending on the broker, you might be able to buy fractional shares, allowing you a piece of a company even if you can't afford the full share price.
Depending on the discount broker, though, you might not have access to advanced tools and resources to help you trade. You might be on your own when it comes to choosing stocks and adding them to your portfolio.
It helps to have some confidence and an ability to learn as you go when you're using online brokers.
However, even though you do more of the legwork yourself, an online discount broker often offers a wider variety of investment options and you have full control over your portfolio. You just need to understand that you'll probably pay a commission for each trade you make and be willing to absorb that cost.
Full-Service Brokers or Asset Managers
Another way to get started with some help behind you is to use a full-service broker. Depending on the broker and the services you use, you might pay some higher commissions or management fees.
You can usually choose from a menu of services and hire someone to manage your portfolio. However, with this option, you also have control over some of the purchases you make.
With a full-service broker, or a full-service asset manager, you might be able to access investments not available in other places. Some asset management companies can help you set up self-directed IRAs, where you can hold assets beyond stocks and bonds.
Additionally, depending on the size of your account, you might be able to access non-publicly-traded assets.
When working with full-service brokers or asset managers, it's important to understand what you're investing in, as well as understand whether it's worth the cost. Some investors find success with these types of services because the returns are high enough to justify the increased costs.
No matter how you do it, the important thing is to start investing.
Getting started can be a big hurdle, but there are ways to get over the hurdle and move forward. Look at your investing style, financial situation and preferences and see what works best for you.
More From US News & World Report