What Age Should You Start Investing In The Stock Market?

Wondering when you should start investing in stocks? The answer is pretty straightforward: as soon as possible, provided all your high-interest debt (read: credit card balances) have been paid off, you’ve built an emergency fund that can pay for at least three months of your basic expenses in case you happen to lose your job.

If you’ve met these two requirements, you should start investing in stocks immediately, regardless of whether you are 20 years of age or 50. Here are some guidelines for people who are new to the world of investing.

Start With Whatever Retirement Plan Is Offered by Your Employer

If you are working at an organization that offers you a 403(b) or 401(k) retirement plan, that’s the best place to start. Many companies that offer these options offer something called an employer match. What this means is that if you, for instance, contributed 3% of your salary to a 403(b), the employer would match this and contribute 3% from their side, increasing your investment.

Look for Tax-Advantaged Options

Just because you are making use of your company’s plan does not mean you are out of tax-advantaged options. Most employees are also eligible to open their own Roth IRA or Traditional IRA. The benefit of a Traditional IRA is that any money you put in is tax-deductible at the moment. But any growth you experience will be tax-free. In the case of a Roth IRA, money that you take out once you turn 59 ½ years old will be tax-free; any growth in your investment will also be tax-free.

Investing for Children

If you’ve already maxed out your IRA contributions and are receiving the maximum employer match on your 401(k) or 403(b), you may be considering investing for your children. Fortunately, you have some great options if you are considering investing to protect your children’s financial future. Some of the best options are 529 Plans (which are administered by individual states), Coverdell Education Savings Accounts (which work like 529 Plans but have lower limits), and Roth IRAs.