In this module we’re going to talk about investing. And I want to start with a question: only about half of Americans are invested in the stock market. Why do you think that is?

Our best guesses are three things. First, people find it intimidating, daunting, and opaque. They don’t understand how it works and it feels like something that’s not for them. Second, they don’t know where to start. The number of options, accounts, and products feels overwhelming. And third, a lot of people have a negative perception of the stock market. They feel like it’s rigged against the little guy, that it’s a game for Wall Street insiders and wealthy people.

Here is the truth: the stock market is not what most people think it is. It is not a casino. It is not rigged. And there has never been a better time in history for the average person to invest. The cost of trading has dropped to essentially zero. Management fees have plummeted. Diversification is easier than ever. The tools that were once available only to the wealthy are now in the palm of your hands.

Is the Stock Market Rigged?

I hear people ask all the time-Is the stock market rigged? Let me address this one head on. No. Absolutely not. In fact, it has never been a better time to be a retail investor. Let me explain why.

Think about what investing looked like in the nineteen seventies. If you wanted to buy a stock, you had to call a broker on the phone. That broker would charge you hundreds of dollars in commissions per trade. Management fees on mutual funds were high. And the ability to diversify—to spread your money across many different companies to reduce risk—was difficult and expensive for an ordinary person.

By the year 2000, things had improved. Online brokerages brought trading costs down to around thirty dollars per trade. Mutual fund fees came down somewhat. Diversification became easier.

Today? The cost of trading is zero. You can buy and sell stocks on your phone without paying a penny in commissions. Management fees on index funds are nearly zero—we’re talking fractions of a percent. You can buy a single share of an ETF that gives you instant ownership of five hundred of the largest companies in America. You can even buy fractional shares, meaning you can invest with as little as one dollar.

When it comes to investing, the playing field has never been more level. The tools have never been more accessible. The excuses have never been fewer. If you’re not investing, it’s not because you can’t. It’s because no one ever taught you how. That’s what we’re going to fix right now.

What is a Stock?

Let’s start with the basics. A stock, also called an equity, is a piece of ownership in a company. When you buy a share of stock, you literally own a small piece of that business. If the company does well and grows, the value of your ownership goes up. If the company does poorly, the value goes down.

There are two ways to make money with a stock. The first is price appreciation—the stock price goes up and you sell for more than you paid. The second is dividends—some companies distribute a portion of their profits to shareholders as regular cash payments. Not all stocks pay dividends, but many established companies do.

What causes a stock price to move? At the most fundamental level, it’s supply and demand. If more people want to buy a stock than sell it, the price goes up. If more people want to sell than buy, the price goes down. And what drives that supply and demand? Things like the company’s earnings, its growth prospects, the launch of a new product, changes in management, broader economic conditions, and investor sentiment. In the short term, stock prices can be volatile and unpredictable. In the long term, they tend to reflect the actual value and growth of the underlying businesses.

What is a Bond?

A bond is fundamentally different from a stock. When you buy a bond, you’re not buying ownership. You’re lending money. You’re lending money to a company or a government, and in return, they promise to pay you back with interest over a set period of time.

Bonds are generally considered less risky than stocks because you have a contractual right to get your money back plus interest, whereas with a stock, there’s no guarantee the price will go up. The trade-off is that bonds typically offer lower returns over time..

Most financial advisors recommend having some mix of both in your portfolio. When you’re young and have decades until retirement, you can afford to be more heavily weighted toward stocks because you have time to ride out the ups and downs. As you get older and closer to needing the money, you gradually shift more toward bonds for stability. This concept is called asset allocation, and it’s one of the most important decisions in investing.

What is an Etf?

An ETF, or exchange-traded fund, is one of the most important innovations in modern investing, and it’s the vehicle I recommend for most people.

Think of an ETF as a basket. Instead of buying one stock in one company, an ETF lets you buy a small piece of many companies all at once. For example, an S&P 500 index ETF holds shares of the five hundred largest publicly traded companies in America—Apple, Microsoft, Amazon, Johnson & Johnson, JPMorgan, and so on. When you buy one share of that ETF, you instantly own a tiny piece of all five hundred of those companies.

That’s diversification in a single purchase. Instead of betting on one company to do well, you’re betting on the American economy as a whole. And historically, that has been a very good bet. The S&P 500 has returned roughly ten percent per year on average over the long term.

There are ETFs for almost everything. There are total stock market ETFs that hold thousands of companies, not just the top five hundred. There are international ETFs that give you exposure to companies outside the United States. There are bond ETFs for the fixed-income portion of your portfolio. The key advantages of ETFs are low fees, instant diversification, and simplicity. You can build a well-diversified portfolio with just two or three ETFs.

Types of Investment Accounts

Where you invest matters almost as much as what you invest in, because different account types have very different tax implications. There are three main types you should understand.

First, retirement accounts. The two most common are the 401(k) and the Roth IRA. A 401(k) is offered through your employer. You contribute pre-tax dollars, which reduces your taxable income today. The money grows tax-deferred, and you pay taxes when you withdraw it in retirement. Many employers offer a match—meaning they’ll contribute additional money to your account based on how much you put in. If your employer offers a match, take it. It’s free money. Not taking the full match is one of the biggest financial mistakes people make.

A Roth IRA works differently. You contribute after-tax dollars, so there’s no tax break today. But the money grows tax-free, and when you withdraw it in retirement, you pay no taxes on the gains. For young people especially, the Roth IRA is incredibly powerful because you have decades of tax-free growth ahead of you.

Second, taxable brokerage accounts. These have no contribution limits and no restrictions on when you can access the money. But you pay taxes on your gains—short-term capital gains if you sell within a year, long-term capital gains if you hold for more than a year. Long-term rates are significantly lower, which is another reason to invest with a long time horizon.

The order of operations for most people should be: first, contribute enough to your 401(k) to get the full employer match. Second, max out your Roth IRA. Third, go back and contribute more to your 401(k) if you can. And fourth, invest in a taxable brokerage account with whatever is left.

The Devastating Impact of Fees

We touched on fees in the compounding module, but I want to drive this point home with a different example because it is that important.

Let’s take a look at Alice and Brittany. They’re neighbors. Both are thirty-five years old. Both invest a hundred thousand dollars in savings at an average return of eight percent. The only difference is fees. Alice pays half a percent in annual fees. Brittany pays two percent.

At age sixty-five, they both retire and begin withdrawing sixty thousand dollars a year from their investment accounts. Here’s what happens. Alice’s account grew to approximately eight hundred and sixty-five thousand dollars. Brittany’s grew to approximately five hundred and forty-eight thousand. Brittany paid an additional three hundred and seventeen thousand dollars in fees over those thirty years. That’s not a typo. Three hundred and seventeen thousand dollars—gone to fees.

Now think about what that means in retirement. Alice can withdraw sixty thousand a year and her money lasts significantly longer. Brittany is withdrawing the same sixty thousand from a much smaller account. That difference in fees didn’t just cost Brittany money. It materially changed her retirement lifestyle.

This is why I keep coming back to low-cost index funds. The average actively managed mutual fund charges about ninety basis points in annual fees. That sounds small. But a low-cost index ETF charges as little as three basis points. And here’s the kicker: oftentimes the actively managed fund underperforms the benchmark index over a long period of time. So you’re paying more for worse results. The fund manager is getting rich. You’re not.

Financial Advisors vs. Robo-advisors

This brings up an important question: do you need a financial advisor?

Traditional financial advisors typically charge one percent of your assets under management per year. On a five hundred thousand dollar portfolio, that’s five thousand dollars a year. On a million dollar portfolio, ten thousand. Every year. And as we’ve seen, that one percent compounds into enormous amounts over time. Some advisors provide genuinely valuable services—tax planning, estate planning, complex financial situations. But for the average person who just needs to invest consistently in a diversified portfolio, a traditional advisor is an expensive way to get something you can do yourself.

Robo-advisors are a newer alternative. These are automated platforms that build and manage a diversified portfolio for you based on your age, risk tolerance, and goals. They typically charge a quarter of a percent or less in annual fees—a fraction of what a traditional advisor charges. They automatically rebalance your portfolio, reinvest dividends, and in some cases do tax-loss harvesting. For most people, a robo-advisor is a perfectly good option if you want some guidance without paying the premium of a human advisor.

But honestly, for many people the simplest and cheapest approach is to do it yourself. Open an account at a major low-cost brokerage. Buy two or three low-cost index ETFs—a broad U.S. stock market ETF, an international stock market ETF, and a bond ETF. Set up automatic monthly contributions. And leave it alone. That’s a perfectly solid investment strategy that will outperform most actively managed funds and most human advisors over the long term, and it costs you almost nothing in fees.

The Simple Action Plan

I know I’ve covered a lot so let me boil it down to what you should actually do.

Step one: open an investment account. If your employer offers a 401(k) with a match, start there and contribute at least enough to get the full match. Then open a Roth IRA. If you’re self-employed or your employer doesn’t offer a retirement plan, start with the Roth IRA.

Step two: choose low-cost index ETFs. A broad U.S. stock market ETF gives you exposure to the entire American economy. Add an international ETF for diversification beyond U.S. borders. And add a bond ETF if you want some stability, especially as you get older. That’s it. Three funds. Keep it simple.

Step three: automate your investment. Set up a fixed amount—whether it’s fifty dollars, a hundred dollars, five hundred dollars a month—to be invested automatically on the same day every month. This is called dollar-cost averaging, and it takes emotion completely out of the equation. You invest the same amount whether the market is up or down. Over time, this smooths out the bumps and you benefit from the long-term upward trend.

Step four: start TODAY. Not tomorrow. Not next month. Not when you have more money. Not when the market “looks right.” Today. Remember what we learned in the compounding module. The earlier you start, the more time your money has to compound. There’s a saying we use in finance: it’s not about timing the market, it’s about time in the market. If it’s a dollar, ten dollars, a hundred dollars—do whatever you can. Start now, because your future self will thank you greatly for it.

Lastly: step 5- leave it alone. Do not check your portfolio every day. Do not panic when the market drops. Do not try to time the highs and lows. The market will go up and the market will go down. Over any given year, anything can happen. Over decades, the trend has been consistently upward. The people who build real wealth are the ones who invest consistently and patiently, not the ones who react to every headline.

If you think you can never become a millionaire, that it’s a different type of person, that you’ll never get there—I’m here to tell you that just putting away a hundred, two hundred, or a thousand dollars a month over time, the math of compounding will get you there. We can all become millionaires if we just start saving enough today.

The Bottom Line

Investing is not complicated. The financial industry has spent decades making it seem complicated because complexity is how they justify their fees. But the truth is simple. Buy low-cost index funds. Diversify across U.S. stocks, international stocks, and bonds. Automate your contributions. Start as early as you can. And leave it alone.

The same compounding force that we’ve talked about throughout this course is the same force that will build your wealth if you give it time and stay out of its way.

I beg you to think about opportunity cost. That cup of coffee that costs eight dollars. That slightly more expensive piece of clothing. Think about how much that hundred dollars or thousand dollars today will be worth in the future. Think about your future self, because your future self will greatly thank you for having been very conscious of your spending today.

The best time to start investing was ten years ago. The second best time is today. So start today.