Eric Rosenberg speaking, "Guest Voices" written above

While it may seem intimidating, investing well can be straightforward. The world of finance and investing might have complex words and concepts, but all you really need to know to get started are these three simple principles: Set goals, start small, and focus on the long term. And today, there are dozens of tools out there to help a novice investor get in the game.

With your short- and long-term financial goals set, it’s easier to chart out your investments and put your money to work. Here’s a look into my personal investment journey and some insights into building your portfolio from the ground up.

An Early Introduction to the Stock Market

I’m lucky to come from a family of investors. My first introduction to the stock market goes back to summer trips to visit my grandparents in Fayetteville, Arkansas. This was before Grandpa Joe had internet at home, so he would take me downtown to the bank where they had a computer with stock prices that updated throughout the day.

While updating handwritten spreadsheets tracking his stock prices, my grandpa would quiz me on the ticker symbols of companies in his portfolio and other stocks he found interesting or important. He explained to me that a share of stock represents a small fraction of ownership in a company. If the company performed well, the stock price would go up and investors would make a profit.

By the time I reached my teenage years, I picked up many valuable investment lessons from my grandpa. I also participated in the Stock Market Game at school, where groups of students invested play money to see who could pick the best stocks and get the highest performance during the school year. But it wasn’t until I had my first job after college that I put it all into action.

It’s okay to start small with investing.

The first investment account you’ll likely see is through your employer. My first account was an employer-provided 401(k). I funded this account automatically by contributing 3% of my paycheck, which was matched by my company.

If you have a 401(k) or similar account at work, be sure to take full advantage of any employer matching. This is essentially free money, which contributes towards investment in your retirement. It doesn’t matter what you take home every week, if you can save something, you’re better off than not saving at all.

I started contributing to my 401(k) right away and still contribute to my retirement account every Friday. Thanks to the time value of money and the effects of compounding, starting early and consistently contributing to investments typically yields great results.

Employer 401(k) accounts often limit you to a short list of investment funds picked by your company. This type of account is a great way to start investing, but these accounts typically offer limited investment choices and come with high fees. That’s why it’s important to have your own brokerage accounts outside of work as well.

Connect with the market with a Self-Directed Trading account.

Investing on Your Own

When I started investing outside of my 401(k), my brokerage account charged about $10 per stock or ETF (exchange-traded fund) trade and about $50 to buy or sell a mutual fund. These days, investing is a lot cheaper.

A few years back, I started with Ally Bank, enticed by great rates and features for savings accounts. And I added the investment account later on, after reading about the low costs and features of the platform. I haven’t been disappointed.

With Ally Invest, you can now buy and sell (eligible or specific stocks under $2 incur commissions) stocks and ETFs with no commissions. You can choose a traditional brokerage account, with no tax advantages, or a retirement account like an IRA or Roth IRA where you can save on taxes. In the days of high fees to buy and sell, starting small wasn’t an option. With no fees to buy or sell, you can start investing with just a few dollars.

Your investment account shouldn’t charge any recurring fees. There shouldn’t be inactivity charges or fees for going under a certain minimum balance. Once open and funded, you’ll have access to the entire range of stocks, ETFs, and other investments available in your brokerage account.

My First Stocks

I saved up about $500 to buy my first two stocks about a year after starting my first job. Inspired by my grandpa’s investing style (set goals, start small, and focus on the long-term) my first two stocks were big, old American companies: Walmart and General Electric. I bought about $250 of each stock. While I don’t have these stocks today, they were a great foundation for my new portfolio.

If I were starting over, however, I wouldn’t start with single stocks. I’d start with an investment fund. Funds can hold an assortment of stocks, bonds, and other assets. Buying and selling one fund can give you a portfolio of hundreds of stocks all at once.

Another great place to start today is a robo or managed portfolio, or automated or self-directed platforms. These low-cost investment accounts pick the ideal investments for you from a group of low-fee index funds. Your portfolio is based on answers to questions about your age, investment goals, and risk tolerance. From my personal experience, I’ve found you can start with Ally Invest Robo Portfolios with as little as $100.

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An index-fund is a type of mutual fund or ETF that mimics the performance of a specific index. For example, the S&P 500 is a group of 500 of the biggest public companies commonly used to track overall stock market performance. Buying a low-fee S&P 500 index fund is like buying a little bit of each of the 500 stocks in the S&P 500 with a cost of less than 0.10% per year.

Want long-term success? Keep it simple.

During grad school for an MBA in finance, I spent part of my time picking single stocks with a small team to invest a portion of my university’s endowment fund. While I learned the methods Wall Street pros use to pick stocks for actively managed funds, I’m personally invested in low-fee, passive index funds myself.

Even professional fund managers usually underperform the markets — and they spend their entire workday picking stocks. If they can’t beat the market, most of us who don’t have 40+ hours per week to dedicate to our portfolios probably can’t either. That’s why low-fee index funds are the best place to start and most of what I have today.

If you were to save $20 per month in a savings account that pays 1% interest for 10 years, you would have saved $2,400 and have a total of $2,523 with interest. But if you invest that and earn an average 7% annual return, you would have $3,462 after 10 years. That’s a big difference! If you were to save for 30 years instead of 10, you would have saved $7,200 but have a portfolio worth $24,399. The power of compound interest in your portfolio is huge!

I’m not investing to get rich quick. I’m looking to invest for the long-term. When your investment time horizon is decades, you don’t have to worry about the daily ups and downs of the market. Just add whatever you can afford every month or every payday. With a slow and steady approach to investing, you’re setting yourself up for long-term financial success.

Eric Rosenberg is a freelance writer and entrepreneur. He founded Personal Profitability, a finance blog dedicated to advising on spending mindfully and sharing resources to earn more. Eric also speaks at conferences, events, and schools.