Editor’s Notes: this post is meant to help answer the age old question, “How do I get started investing?” It’s not investment advice. It’s a playbook expressing just one way to start investing in public company stocks.
Target Audience
This playbook is not for everyone. Here are a few items to make sure you’ve checked off before signing up:
☑️ History of savings, with AT LEAST ~20% of gross income saved over a multi-year period — 20% is a minimum. It’s great to work towards a higher percentage. This first item leads directly to the next…
☑️ Have an emergency fund you are very comfortable with — that means having enough saved to easily cover living expenses for 3-12 months.
☑️ Less than ~$10,000 of debt, with $0 of high interest debt (e.g., credit card debit) — someone with five figures of debt or any high interest debt should focus all personal finance energy on reducing those liabilities.
☑️ For those without a pension, if available, you should first be taking full advantage of a employer match associated with a 401(k) / 403(b) or other savings vehicle is a must.
☑️ Comfort with risk, including the potential of losing all of your principal investment. While the investments suggested below are unlikely to lose the full amount of money you invest, it is however common to see the overall stock market decline by ~16% on average at some point in a given year. In an extreme example like the 2007 financial crisis, the market declined 49% intra-year. Buckle up.
It you have not checked these off your personal finance list, and really checked your gut as it pertains to risk tolerance, investing in stocks is not advisable at this time.
If you have, first of all, nicely done! Now, take a look at the playbook below for a low barrier way to start investing in the stock market while making strides to learn about investing. Note, the FAQ after the playbook is highly recommended supplemental reading.
The Playbook
1️⃣ Open a brokerage account.
✳️ I suggest Fidelity for a few reasons:
▫️ No fees to purchase stocks1
▫️ Ability to purchase partial/fractional shares of exchange-traded funds — the other quality brokerages that I would otherwise recommend as good for a beginner are still not allowing fractional share purchases or are limiting them. Fractional share purchasing is a great tool for a new investor that might not have a large pile of cash.
▫️ Lastly, a slight additional benefit to Fidelity is the added detail provided in this article since it is a good option for many people.
2️⃣ Deposit ~5% of your annual pay into your brokerage account.
✳️ This money is gone now. As of today, although we have not invested it yet, it belongs to the market. When it is returned to you, if we have done well, it will be worth more than when you last saw it.
Example: annual pay of $50,000 x 5% = $2,500
3️⃣(a) Set a monthly purchase reminder — each month log into your account and use 10% of the funds deposited in step 2 to purchase:
✅ Ticker symbol: SPY
✅ Ticker symbol: QQQ
Example: if you deposited $2,500 x 10% = $250. $250 / 2 = $125 for SPY and $125 for QQQ.
SPY and QQQ are exchange-traded funds (ETFs). The fund owns shares of a bundle of large, established companies. SPY = the S&P 500 and QQQ = the NASDAQ 100.
I suggest taking the time to actively log into your account to purchase these two ETFs each month as that will be conducive to learning. If this is too high a barrier to entry, you might not be ready to invest in the stock market.
3️⃣(b) Fidelity customers only — set-up a recurring investment.
Fidelity now offers recurring investment feature with the ability to purchase ETF’s like SPY and QQQ while allowing a fractional share to be purchased. This means you can set-up an automatic, recurring investment of as little as $1.2 The recurring investment set-up looks like this:
Either way, active or automated, that’s actually it for now!
Now for the final step.
4️⃣ 10 months after completing STEP 2 but before you make your 11th monthly purchase … Repeat STEP 2.
Since you are deploying 10% of your total pool of capital (e.g., $2,500 in the example) each month , after 10 months your funds will be depleted. Time to re-deposit the amount you allocated from of your annual pay (e.g., ~5%) to continue monthly purchases.
The FAQ below is highly recommended.
Frequently Asked Questions
What type of return should I anticipate?
Over a longer-term period, say 10 years or more, the return on an index like the S&P 500 has historically been around 10% annually, on average. To temper expectations, let’s knock that down to ~7%. The Nasdaq 100 is likely to be riskier and more volatile, but this provides the possibility for even more upside than the S&P 500 (but also more downside).
So, 7%. Maybe. On average. Per year. Is that good?
You’re right, it’s a big maybe. Here’s how I think about it. What are your alternatives? The main alternative for most folks is a savings account. As of 2025, a high yield savings account will get you close to 4% per year.3 The great benefit of the savings account is that it should be FDIC insured and thus there is limited risk. Stocks provide the potential for upside which makes a big difference over longer periods.
What companies are in the SPY and QQQ ETFs?
The top 10 holdings in these ETFs are very similar. The cool thing is there are many companies you know well.
SPY ETF — the S&P 500
Note: a more up-to-date composition can be found here.
QQQ EFT — the Nasdaq 100
Note: a more up-to-date composition can be found here.
If the top holdings of SPY and QQQ are so similar, why purchase both?
While the top holdings are similar, there are several fundamental differences that result in differences beyond the top 10 holdings. QQQ is more weighted to technology companies and contains no financial services companies, historically. SPY reflects all industries from technology, financial services, industrials, consumer goods, health care, etc.
QQQ and SPY? Did you pick these letters randomly out of a hat? Why these ETFs?
Both QQQ and SPY are index funds. By investing in them, you’ve placed your money in the market. There is no reason to put undo pressure on a newbie investor to beat the market. Simply participating in the market allows for diversification and the potential for much higher potential returns than parking all cash in a savings account.
Tactical speaking, how do I actually purchase these ETFs?
You will need three pieces of information — (a) the ticker symbol such as SPY or QQQ, (b) the dollar value you wish your brokerage to use to make the purchase, e.g., $125 in our example, and (c) you will need to provide some instruction on the per share price you are comfortable with for your purchase. For this you can choose a market order and your brokerage will fill the order at the “best available price” or a limit order in which you can specific the max price you are willing to pay.
If you do chose to use Fidelity, here is what their new simplified trade ticket looks like online:
Note: for the “limit” field set the dollar value you select equal to the “ask” displayed above at the time of your order. Or you can set it slightly higher (by say a dollar) to ensure your order goes through if the market price ticks up slightly. Fidelity will still execute the purchase at the “best available price” but will not exceed the dollar value you choose.
Why don’t I just invest the full 5% of my annual income (in step 2) in the market immediately?
While you could do that, you would loose the benefits of dollar cost averaging such as the potential to decrease risk.
When do I sell?
You don’t. At least not until you need the money for an emergency, a home purchase, or retirement.
That’s not very fun.
Firstly, that isn’t a question. Secondly, once you have the desire to place additional capital into the market, then you might choose to purchase additional ETFs or even individual company stocks.
I’m loving this investing stuff. How can I learn more?
For one, you can bang it over to our blog and Substack.