Financial Literacy for First-Time Investors: Where to Start

Have you wanted to start investing, but don’t know where to start? 

Investing, if done wrong, can result in long-lasting consequences. On the other hand, when done right, investing can help you achieve your goals and create a legacy for your loved ones. That’s why it is important to do your research before you invest a dollar in any stock, mutual fund, bond, or cryptocurrency. 

Before you learn how to start investing, let’s take a step back and look at some financial principles that you should have in place that will serve as the foundation of any successful investment.

The Big Picture of Personal Finance

Many aspects of personal finance can seem intimidating, especially when our dollars don’t stretch as far as they used to. The temptation for many people will be to jump into investing when they get a little bit of extra money. However, it is always important to have an emergency fund first, regardless of your income level. Having an emergency bucket to pull from is the real first step to the investment journey. There will always be emergencies that come up, and it is much easier to handle these life changes if the money is liquid, as compared to being locked up in a stock. 

Along the same lines, it’s important to have structured debt management. Having a few shares of stock will only last so long if the proper principles aren’t in place to manage debt for the long haul. A great starting point would be an assessment of how much income you receive vs how much you spend each month.

Saving vs. Investing

It is a common misconception that saving and investing are the same thing. While there are many similarities between the two, saving and investing serve a different purpose. Investing can be a form of saving, but you can save without investing. 

Here are some simplified definitions:

• Saving is the practice of setting aside money to reach a specific goal. 
• Investing is taking savings one step further. Investing is about building wealth for the future. 

If you have a short-term goal, investing that money may not be the best strategy. This differentiation is pivotal in determining what you are trying to accomplish. Most people should have a savings account and an investing account to meet their specific goals and objectives.

3 Core Concepts of Investing 

So now that we have a basic understanding of financial principles, let’s talk about some core concepts you should know to learn how to start investing:

1. The Principle of Risk: Not all investments are created equal. On one end, there are very conservative investments, while on the other, you have very aggressive investments.  Since every person’s goals are different, it is important to define the purpose of your investments and the best way to achieve your goals.
2. Return Potential: From there, you need to determine what level of risk you are comfortable with. Generally, the higher the risk, the greater potential for loss, but also the higher potential return. Conversely, lower-risk investments tend to offer more stability, but with lower potential returns.
3. Types of Investments: There are many types of investments, such as stocks, bonds, money markets, cryptocurrencies, real estate, and the list goes on. Within each of these categories are various types of investment options with their own level of risk. A well-diversified portfolio tends to include a mix of investment options to help manage risk and improve long-term outcomes.

The Role of Taxation in Investing

Taxation is an often-neglected but necessary consideration when learning how to start investing. Some investments generate taxable income that could result in unnecessary additional taxes. Other investments may help you towards your goal, but years down the road, they could result in a significant tax burden. That’s why it is essential to not only choose your investments wisely, but also understand there are different types of accounts or “vehicles” available.

Pre-tax, post-tax, and tax-exempt investments each offer different tax advantages and implications. While it is often good to have a balance of all of these, the right mix will vary depending on the individual. Each customized financial plan and investment portfolio at Evergreen is thoughtfully selected to meet this purpose.

Evaluate Information Sources

We are in an era of the world where information is readily available. What once required flipping through encyclopedias is now available at our fingertips. Unfortunately, this means a lot of the information we readily have can be easily manipulated into false information. With the emergence of AI, incorrect information is becoming more prominent. 

When it comes to your financial well-being, it’s crucial to have the right sources. Rather than believing the TV personalities or the social media influencers, a smart place to start is by looking for a Certified Financial Planner (CFP®). This designation signifies the advisor has gone through rigorous education and meets high ethical and professional standards. At Evergreen Financial Group, the CFP® standard of care is the foundation of how we guide our clients.

The Psychological Side of Investing

Once you have a good understanding of some financial principles, the next step comes down to understanding yourself and the psychological habits that make you who you are. As humans, we all have unique tendencies. Understanding how you operate when it comes to money is something even some of the most educated investors fail to understand. Knowing how you react to ups and downs in the markets will be a big factor in determining your readiness to learn how to start investing.

Fear is a word that is often used when it comes to market headlines. Will you get anxious and sell when there is one negative piece of information released? Or on the flip side, when you make a successful trade, will you be overconfident in your investment decisions, causing you to make rash decisions?  

When these moments happen, having a strong foundation of educational knowledge combined with awareness of your own psychological patterns will help set you up for success when it comes to investing.

Defining Your Investing Goals

Now comes the meaningful part — identifying what you truly want from your financial life. Don’t hold back or skip over any area. Picture your ideal life in full detail:

How does it compare to where you are right now? What’s missing? Most importantly, are your finances moving you toward that vision — or pulling you away from it? If there’s a gap, what steps will help you start bridging it?

Obtaining clarity about the life you want and writing it down matters for two big reasons. First, turning your thoughts into words gives your goals structure. Instead of ideas floating around in your head, you’ll have a concrete reference — whether that’s a journal, a note on your phone, or something pinned to your wall. Seeing your goals in writing makes it easier to spot what’s already in alignment and what needs to shift. 

Second, your written goals can act as an anchor during hard times. Life won’t always go smoothly, and when challenges come up, having that clear, documented vision can help you stay focused and keep moving forward — even when the path gets bumpy. 

How to Start Investing with the Right Mindset

At Evergreen Financial Group, we believe the right mindset is just as important as the right strategy. Life will always have its bumps in the road, but with a trusted partner by your side, you don’t have to navigate them alone. Reach out to us today with any questions — we’re here to guide you every step of the way.

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This content is developed from sources believed to be providing accurate information. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Evergreen Financial Group, LLC is a registered investment advisor offering advisory services in Montana, Utah, Wyoming and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. This communication is for informational purposes only and is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon as the sole factor in an investment making decision. All opinions and estimates constitute Evergreen Financial Group’s judgement as of the date of this communication and are subject to change without notice. Evergreen Financial Group does not warrant that the information will be free from error. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk.