Americans are among the most enthusiastic investors worldwide. In fact, the U.S. leads global stock market participation with 55% of the population owning stocks, compared with 49% in Canada and much lower rates in France (15.1%) and Germany (14.2%). Many Americans also begin investing early: According to a 2025 Gallup survey, 39% of adults ages 18 to 29 already have a retirement account.
While investing might seem intimidating, millions of Americans are already doing it—and it isn't hard to get started after taking a few key steps to ensure you're ready.
Key Takeaways
- Americans lead the world in stock ownership, but many still find investing intimidating.
- Before investing, you’ll want to have an emergency fund that can cover three to six months’ worth of expenses.
- You should also pay off high-interest debt first using the “Rule of 6%”—if your debt has an interest rate above 6%, eliminating it typically provides better returns than investing.
Maximizing Your 401(k) Match
If your employer offers a 401(k) match—where they match what you contribute to your 401(k), up to a certain percentage—this should be your very first investing move. That’s because an employer match is free money that you’d be leaving on the table if you didn’t invest enough to get it.
“While I always recommend building an emergency fund and paying off high-interest debt before investing, you can start by contributing to your company’s 401(k) up to the employer match,” Chloe Moore, a certified financial planner and founder of Financial Staples, told Investopedia. “This is an easy way to pay yourself first and take advantage of free money.”
Setting Clear Investment Goals
Ask yourself: What am I saving for? Maybe it’s your wedding, a down payment on your first home, or a comfortable retirement. Once you’ve identified your goals, get specific about the numbers. How much will you need, and when do you need it? If you want to buy a $400,000 house and need a 20% down payment ($80,000) in five years, you’ll know exactly what you’re working toward. Break this down further by looking at how much you’ll need to save each month—$1,300 in a conservative investment like bonds could help you reach that goal.
Your timeline also determines how much growth you’ll need. For example, the S&P 500 index, a list of 500 of the largest publicly traded U.S. companies, has had an average annual return of 10.3% since 1957. If you had invested $500 a month in a portfolio consisting entirely of S&P 500 stocks 30 years ago, it would have grown to more than $1 million since then.
However, you'd also see more ups and downs in your account than if you owned only bonds. If you’re worried that the stock market is too risky, a portfolio that mixes about 60% in stocks and 40% in bonds could reach the same goal in about 38 years (using historical returns for both) while helping you stay calm when storms hit the markets.
Building an Emergency Fund
An emergency fund is money you keep separate from your investments, sitting safely in a savings account for when life throws its worst at you.
Emergencies fall into two categories—spending shocks (smaller) and income shocks (bigger). Spending shocks are unexpected expenses, such as a car repair, a medical bill, or a broken appliance. For these, financial experts recommend having at least half a month's worth of expenses saved up. Income shocks are more serious—like losing your job or getting your hours cut. For these situations, you should have enough set aside for three to six months' worth of living expenses.
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Paying Off High-Interest Debt
You'll also need to tackle any high-interest debt you have. Paying off this debt gives you a guaranteed return (the interest on the debt you'll no longer be paying) that's often better than what you can expect from the stock market. Many credit cards have interest rates three times as high as the average stock market returns over time, as measured by the S&P 500 index.
You can use the "Rule of 6%" as a guide: If your debt has an interest rate above 6%, focus on paying it off before investing. If it's below 6% (like many mortgages or student loans), you can often come out ahead by investing instead.
Tip
When investing, the potential for higher returns almost always comes with a higher risk of losing money in the short term. This is why stocks can deliver great long-term returns but might lose value in any given year, while savings accounts at your local bank don’t lose money but also don’t grow it very much.
The Bottom Line
Investing has been a powerful tool for building long-term wealth for millions of Americans. By setting clear goals and expectations, building an emergency fund, eliminating high-interest debt, and taking advantage of employer matches, you can confidently start your investing journey.