5 Simple Principles to Invest Your Money Wisely No Matter Your Age

Many people mistakenly believe that investing money and building wealth is a complicated game that’s completely out of their reach. While you can make investing complex, I don’t recommend it because using a simple strategy works just as well.

No matter if you’re starting to invest for the first time or have been at it for decades, you can grow your net worth over time using simple principles and habits. In this article, I’ll cover tips to achieve your long-term financial goals no matter your age—even if you don’t have much to invest.

Use these 7 simple principles to save and invest money wisely:

1. Start investing as soon as you begin earning.

One of the most important factors in how much wealth you can accumulate depends on when you start investing. There’s no better example of how the proverbial early bird gets them worm than with investing.

Starting early allows your money to compound and grow exponentially over time — even if you don’t have much to invest.

Compare these 2 investors, Jessica and Brad, who set aside the same amount of money each month and get the same average annual return on their investments:


  • Begins investing at age 35 and stops at age 65
  • Invests $200 a month
  • Gets an average return of 8%
  • Ends up with just under $300,000


  • Begins investing at age 25 and stops at age 65
  • Invests $200 a month
  • Gets an average return of 8%
  • Ends up with just under $700,000

Because Brad got a 10-year head start, he has $400,000 more to spend in retirement than Jessica! But the difference in the amount Brad contributed was only $24,000 ($200 x 12 months x 10 years).

So never forget to start investing as early as possible. It’s a huge mistake to believe that you don’t earn enough to invest now and will catch up later. If you wait for a someday raise, bonus, or windfall, you’re burning precious time.

Neglecting to invest even small amounts today will cost you in the long run. The earlier you start saving and investing, the more financial security and wealth you’ll have. Please remember that you’re never too young to begin planning for your future.

But what if you didn’t get a head start on investing and now you’re worried about running out of time? You’ve got to just dive in and get started. Most retirement accounts allow for additional catch-up contributions to help you save more in the years leading up to retirement, which I’ll cover in a moment.

2. Use automation to stay disciplined.

Because it’s so easy to procrastinate saving and investing, the best strategy is to automate it. This is a simple, but tried and tested, way to build wealth. It’s why workplace plans like a 401k work; the contributions come from automatic payroll deductions.

Automation works because it anticipates that you could easily go off the financial rails and be tempted to spend money that you shouldn’t. To be successful, you must be realistic about ways you could slip up and then create solutions that force you to maintain good habits.

Have money automatically transferred from your paycheck or bank account into a savings or investment account every single month. When you set up consistent, automatic deposits, you put money aside before you see it or get tempted to spend it. It’s a barrier you set up that allows you to outsmart yourself so you manage money wisely.

Putting your financial future on autopilot is truly the best way to simplify your life and slowly get rich.

3. Build savings for short-term goals and emergencies.

Though we tend to use the terms saving and investing interchangeably, they’re not the same thing. Savings is cash you keep on hand for short-term planned purchases and unexpected emergencies.

For instance, if you’re saving money for a car that you plan to buy within the next year or two, keep it 100% safe in a high-yield bank account. You might save for annual holiday gift-giving or unexpected medical expenses.

4. Invest money to accomplish long-term goals.

Investments are the opposite of savings because they’re meant to grow money that you spend in the distant future, namely in retirement. Investing is also best for smaller goals you want to achieve in at least 5 years, such as buying a home or taking a dream vacation.

Historically, a diversified stock portfolio has earned an average of 10%. But even if you only get a 7% average return on your investments, you’ll have over $1 million to spend during retirement if you put aside $400 a month for 40 years.

So, start investing a minimum of 10% to 15% of your gross income for retirement. Yes, that’s in addition to the 10% for emergency savings that I previously mentioned. Consider these amounts monthly obligations to yourself, just like a bill with a due date you receive from a merchant.

If saving and investing a minimum of 20% of your gross income seems like more than you can afford, start tracking your spending carefully and categorizing it. I promise that when you see exactly how you’re spending money, you’ll find opportunities to save more.

After you build up a healthy emergency fund, continue putting aside 20% of your income. You could invest the full amount or invest 15% and save 5% for something else, like a new car or a vacation.

5. Leverage tax-advantaged accounts for faster results.

One of the best ways to invest money is under the umbrella of a tax-advantaged account, like a workplace 401k or 403b. If you’re self-employed, you have options too, such as an IRA, SEP-IRA, SIMPLE IRA or a Solo 401k.

Retirement accounts help you accumulate a nest egg and cut your tax bill at the same time. When you invest in “traditional” accounts, you contribute on a pre-tax basis. That means you defer paying tax on both contributions and earnings until you make withdrawals in the future.

Another option is to contribute to a Roth 401k or Roth IRA, where you pay tax on contributions upfront, but get to take withdrawals completely tax-free later on.

If your employer offers a retirement plan, start participating as soon as possible—especially if they match some amount of your contributions. Here’s why matching is such a big deal:

Let’s say you get a full match on the first 3% of your salary that you contribute to a 401(k). If you earn $40,000 a year and contribute 10% of your salary, that comes out to $4,000 (10% of $40,000) a year or $333 a month. If that’s all you invested over 40 years with a 7% average return, you’d have a nest egg over $875,000.

But now consider what happens when your matching funds kick in: If your employer matches contributions up to 3% of your salary, they’ll add an additional $1,200 (3% of $40,000) a year or $100 a month into your account.

Now you’re socking away $5,200 ($4,000 plus $1,200) a year instead of $4,000, which means you’ll have over $1.1 million after 40 years. That’s about $260,000 more thanks to those additional matching funds!

Even if your employer doesn’t match contributions, I’m still a big fan of using workplace retirement accounts because they give you multiple benefits. Not only do they automate investing by deducting contributions straight out of your paycheck before you can spend them, but retirement plans also cut your taxes. And you can take all your money with you—including your vested matching funds—if you leave the company.

In addition to retirement plans, there are other types of tax-advantaged accounts that help you save money for different purposes. One is a 529 savings plan, which allows earnings to grow tax-free if you use the funds to pay for qualified education expenses.

Another account that offers huge tax savings is a health savings account or HSA. It’s available to pay for qualified medical expenses completely tax-free when you have a high deductible health plan.

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