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Your complete guide to long-term, low-cost investing. Learn how to grow your wealth through tax-advantaged retirement accounts and diversified ETF portfolios—no complex strategies required.
Master the foundational concepts that will guide your investment journey for decades to come.
Einstein called it the "eighth wonder of the world." Compounding is when your investment earnings generate their own earnings over time.
Your personal comfort level with investment volatility. Understanding this helps you build a portfolio you can stick with.
The length of time you plan to hold your investments before needing the money. Longer horizons allow for more risk.
Time in the market beats timing the market
Every dollar in fees is a dollar not growing
Don't put all your eggs in one basket
Ignore short-term noise and stick to your plan
Understanding why compound interest is the most powerful force in wealth building.
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which only earns on the original amount, compound interest allows your money to grow exponentially over time.
A = Final amount
P = Principal (initial investment)
r = Annual interest rate
n = Number of times compounded per year
t = Time in years
Investor A: Starts at 25
Invests $5,000/year for 10 years (ages 25-35)
Total invested: $50,000
Value at 65: ~$602,070
Investor B: Starts at 35
Invests $5,000/year for 30 years (ages 35-65)
Total invested: $150,000
Value at 65: ~$566,416
*Assuming 7% average annual return
Divide 72 by your expected annual return to estimate how long it takes to double your money.
Example: At 7% return, 72 ÷ 7 = ~10.3 years to double
Starting early with less money often beats starting late with more money due to compound growth.
Key insight: You can't make up for lost time
Compounding works best uninterrupted. Withdrawing funds resets your compounding timeline.
Remember: Patience is a virtue in investing
Tax-advantaged retirement accounts are your most powerful wealth-building tools. Learn the differences and choose wisely.
Contributions may be tax-deductible now, but you'll pay taxes when you withdraw in retirement.
Contributions are made with after-tax dollars, but qualified withdrawals in retirement are completely tax-free.
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Tax Deduction Now | Yes (if eligible) | No |
| Tax-Free Withdrawals | No | Yes (if qualified) |
| Income Limits | For deductibility only | Yes, for contributions |
| RMDs Required | Yes, at 73 | No |
| Early Withdrawal Penalty | 10% + taxes | Only on earnings |
Where you invest matters almost as much as how you invest. Choose a platform that supports your long-term success.
Traditional brokerages offer the stability, educational resources, and customer support that long-term investors need. Here's what to look for:
Commission-free trading and no account minimums
Robust learning resources and research tools
24/7 customer service with human representatives
SIPC insurance and strong account protection
Best for: Most beginners—excellent all-around platform with the lowest costs
Best for: Those who want in-person support and integrated banking
Best for: Vanguard fund loyalists and long-term retirement investors
Exchange-Traded Funds are the perfect building blocks for beginner investors. Learn why they're superior to picking individual stocks.
An Exchange-Traded Fund (ETF) is a basket of securities—stocks, bonds, or other assets—that trades on an exchange like a single stock. When you buy one share of an ETF, you're buying a small piece of hundreds or thousands of different investments.
Own hundreds of companies with a single purchase
Expense ratios as low as 0.03% annually
Buy and sell anytime during market hours
One company's performance affects your entire investment. Requires research and timing.
Similar diversification but often higher expense ratios. Can only trade once daily.
Low costs, broad diversification, tax-efficient, trades like stocks. Perfect for beginners.
Entire US stock market in one fund
Examples: VTI, ITOT, SWTSX
Non-US developed & emerging markets
Examples: VXUS, IXUS, SWISX
Fixed income for stability
Examples: BND, AGG, SCHZ
Global stocks in a single fund
Examples: VT, ACWI, SPGM
Simple, diversified, low-cost portfolios that can serve you for a lifetime. Choose based on your preference for simplicity vs. control.
Maximum simplicity with global diversification
The gold standard for DIY investors
Automatic rebalancing as you age
Choose the fund closest to your expected retirement year. The fund automatically shifts from stocks to bonds as you age.
Example: Retiring around 2055
Target Date 2055 Fund
All three portfolios are excellent choices. The "best" one is the one you'll stick with through market ups and downs. Start simple—you can always adjust later as you learn more.
See the power of compound growth and plan your financial future with our interactive calculators.
Expand your knowledge with these curated video resources from trusted financial educators.
How to Invest for Beginners Guide
Visualize how compound interest can grow your wealth exponentially.
Understand the key differences to choose the right IRA for you.
Type Of Brokerage Account
Learn the simple strategy that removes emotion from investing.
See how small fees can cost you hundreds of thousands over time.
These videos are from third-party educational sources. Plain & Simple Investing is not affiliated with these content creators.
Follow this simple guide to open your first brokerage account and buy your first ETF.
Select a traditional brokerage like Fidelity, Schwab, or Vanguard. All offer $0 commissions and no account minimums.
Recommendation: Fidelity is often the best choice for beginners due to its combination of low costs, excellent education, and user-friendly interface.
Decide between a Roth IRA (recommended for most beginners) or a taxable brokerage account. You'll need:
Link your bank account and transfer money. Consider setting up automatic monthly contributions.
Tip: Start with whatever you can afford—even $50/month makes a difference over time.
Search for your chosen ETF by its ticker symbol and place a market order during trading hours.
Example: Buying VT (Vanguard Total World Stock ETF)
Configure automatic monthly purchases to invest consistently without thinking about it (Dollar-Cost Averaging).
Success! You're now a long-term investor. Check your portfolio quarterly at most—avoid the temptation to watch daily.
Invest a fixed amount at regular intervals regardless of market conditions. This strategy removes emotion from investing and can lower your average cost per share over time.
Periodically adjust your portfolio back to your target allocation. As some investments grow faster than others, your portfolio drifts from its intended balance.