When Should I Start Investing? Today, in This Order

What You Will Learn From This Article

• Why a credit card balance comes before any investing beyond your 401(k) match, and what the minimum payment really costs.
• Why you should take your 401(k) match even while you pay the card down.
• How much cash to hold first, and where it earns the most.
• What one year of waiting costs, and why buying at a record high has done fine.

When should you start investing? The best time to start investing was yesterday. And since you can’t do anything about that, you need to start doing it today.

There’s one exception, and it’s credit card debt. Credit card debt is like investing against yourself. If you carry a balance, your first job is to stop investing against yourself. Start paying it off today, and invest nothing beyond your 401(k) match until it’s gone.

The advice you hear is pay off your debt, build an emergency fund, take the match and start early. All good advice, but no one ever tells you the order. Here’s the right order, and what a year of waiting costs you, with the math behind each step. Let the charts do the talking.

Credit Card Debt Is Investing Against Yourself

A credit card charges you 12%, 15%, 18%, often 20% or more a year. Think of that as a return, only it’s working against you, and it compounds incredibly against you. Every month you carry a balance, you pay interest on things you bought months ago, and you can get so deep it feels like you can’t breathe.

So treat it as an emergency, like you’re on fire and covered with bees. Stop overspending and pay it down now. The only investing that starts now is your 401(k) match, and I’ll show you why below.

I know how it feels. Like a yoke around your neck dragging you down. In college I got a credit card and put way too much fun on it. Going skiing with friends. Impulse buying something instead of waiting a few paychecks to save up for it. Then my car broke down, I had no savings, and the repair went on the card too. Small issues that just happen to everybody in life can really cause credit card debt to spiral out of control.

Here’s how long that hole lasts. Take a $5,000 balance at 20% and pay only the minimum.

The minimum payment keeps you paying for almost 19 years. The time hurts, but the bigger number is the interest.

You spent $5,000, and on the minimum you pay $7,317 in interest to buy those things. That’s more than the stuff cost. $12,317 for $5,000 of stuff. Pay a flat $250 a month and you’re done in about two years, with $1,133 of interest.

Remember Sisyphus, the king in the Greek myth who had to roll a boulder up a hill forever? Every time he got close to the top, it rolled back down and he had to start all over again. That’s carrying a balance on a credit card. Your first minimum payment is $133, and $83 of it is interest. You push $133 up the hill, and $83 of it rolls right back down.

Getting out took tough decisions. I lived in a much smaller place, a studio apartment that I could touch my stove from the bathroom! I kept driving a car that had a major issue, and I had to repair it myself in a buddy’s garage at night, buying a manual and walking through how to fix it. I ended up with a box of parts that I couldn’t figure out how to put back onto the car, but the car still ran after I got done. Not well, but it ran. I drove it until the card was paid off, and then I could afford another car. That was 18 months into my first real job.

You are where you are. Get a roommate, live in your parents’ basement, get a cheaper rental, whatever it is, ride the bus, sell your car. It’s not fun. It’s going to suck. Do it anyway, because no investment you can count on earns 20% a year. You can do it. You are tougher than you think.

A low-rate loan is a different story. A student loan at 3% or 4% doesn’t have to come first. Pay it on schedule and follow the rest of these steps. Any other high-rate debt, like a personal loan, gets the same treatment as the card.

Take the Match Anyway

Even with a card balance, I’d put enough into your 401(k) to get your employer’s full match, starting with your next paycheck. That match is part of your salary. Skip it and you’re basically giving up part of that salary. Nobody says, “I’m going to voluntarily take a pay cut.”

It also costs less than it looks. If you pick the pre-tax option, called traditional, your 401(k) contribution comes out before income tax, so a 5% contribution doesn’t shrink your take-home pay by 5%.

On an $80,000 salary, 5% is $4,000 a year. In the 22% tax bracket, that only takes $3,120 out of your take-home pay, about 3.9% of your salary. The other $880 is income tax you skip, and your employer adds another $4,000. You give up $3,120 and get $8,000 invested, 2.6 times what left your paycheck. Contribute up to the match and stop there, then send everything else at the card.

Then Save One Month of Salary

Once the card is paid off, build a cushion before you invest beyond the match. Not having one is how my car repair landed on a credit card in the first place.

Get at least 1 month’s salary saved up in cash. Once you have that, start splitting what you save each paycheck. Say you can save $100 a paycheck: $50 goes to your cash and $50 goes to investing. Keep splitting until you have 3 months’ salary in cash.

Don’t put your money in a high yield savings account. Open a brokerage account at Fidelity, Schwab or wherever you like, and buy a Treasury floating-rate fund such as WisdomTree’s USFR or iShares’ TFLO. It basically moves with the Fed funds rate, the short-term rate the Federal Reserve sets. Because it holds Treasuries, you don’t pay state income tax on what it pays you, so if your state has an income tax, it often pays more than a high-yield savings account. It isn’t FDIC insured and its price can move a few cents, but it holds short-term treasuries from the U.S. government.

What Waiting Costs You

Every year you wait has a price. Here’s $500 a month invested until 65, by the age you start.

Start at 25 and you have about $1.31 million at 65. Start at 26 and you have about $1.22 million. That one year of waiting kept $6,000 out of the market and cost you about $94,000 at the end, because the first dollars you invest compound the longest.

Wait until 35 and you put in $180,000 to end at about $610,000. Start at 25 and you put in $240,000, only $60,000 more, to end at more than twice as much. If you’re already 35 or 45, you still have moves, and catching up on retirement savings shows you where to start. If you want to see how much you’ll need, the free Retirement Number Calculator gives you your target.

Waiting for a Crash? Buying at a Record High Has Done Fine

The other reason people wait is the market itself. When it’s at a record high, you tell yourself you’ll start after it pulls back a little. It doesn’t matter. Just start the contributions.

There’s some good research on this. In 2021 J.P. Morgan looked at every record close for the S&P 500 since 1988, and found that buying at a record high has, on average, done better than buying on a random day. I reran it on the S&P 500 with dividends reinvested, from January 1993 to October 2026.

Since 1993, buying on a record-high day returned 13.8% a year on average over the next year, against 12.1% for buying on any day. Three and five years out, the record-high days still came out ahead. That’s an average, and it promises nothing about the next one. Someone who bought at the top in 2000 waited years to get back to even. Across every record high since 1993, though, a high on its own hasn’t been a reason to wait.

When a real storm does come, you want a plan you set up when the skies were clear and the seas were calm. Start by keeping your 401(k) contributions going through a downturn, and I covered the rest in should I get out of the stock market.

Invest Inside Your 401(k), HSA or IRA

If you can, invest inside a tax-advantaged account: your 401(k), an HSA, a traditional IRA or a Roth IRA. Don’t do it in a brokerage account, where every dividend and every sale can mean a tax bill. Your brokerage account is for your cash cushion.

If you have a 401(k) at work, that’s a good place to start. An HSA is even better, if your health plan qualifies, because the money can go in, grow and come out for medical bills without tax. After your match, the free HSA vs 401(k) Calculator shows which one to fund next, and how to invest HSA funds walks you through setting it up.

Once you have 3 months’ salary in cash and your debt is paid off, it’s time to start optimizing your sequence. First you want to get the flywheel going by just saving and paying down debt, so you’re not trying to swim with a boat anchor tied to you. Once you’re able to do that, you want to start being more efficient with not only what accounts you’re funding, but also where you’re putting your money and what investments you’re putting it into.

The best order for every dollar depends on which accounts you have. It’s really hard to figure that out if you don’t have a model that will calculate that for you. Don’t let that stop you from starting. HSA vs Roth IRA compares two of those accounts side by side.

The key thing I want you to take from this is to not stress so much about the where and the how much or even the when. Just start. That’s the most important thing. Get time on your side, and let the compounding start.

What to Do Now

1. Take your full 401(k) match, starting with this paycheck. Don’t throw away your salary. Contribute up to the match and no more until the card is gone. Inside your 401(k), find the low-cost S&P 500 index fund on your list.
2. Pay down your credit card balance. Treat it as an emergency, cut costs hard and send every spare dollar at it.
3. Save one month of salary in a Treasury floating-rate fund, such as USFR or TFLO, in a brokerage account at Fidelity or Schwab.
4. Then split every paycheck’s savings, half to your cash and half to your 401(k), HSA or IRA, until you have 3 months’ salary in cash.
5. Then optimize. With 3 months’ salary in cash and your debt paid off, get more efficient about which accounts you fund, where your money goes and what you invest in.

Quick FAQ

Is it worth investing $100 a month?

Yes. $100 a month at 7% a year grows to about $262,000 in 40 years, and about $122,000 in 30. Most of that is growth, not money you put in. Start with $100 and raise it every time your pay goes up.

Is it a bad time to start investing?

A record high is not a bad time. Since 1993, buying the S&P 500 on a record-high day returned 13.8% a year on average over the next year, against 12.1% for any day. Waiting for a pullback costs you the time your money would have spent growing.

What age should I start investing?

As soon as you have a paycheck. Take your 401(k) match right away. Once any credit card balance is gone and you have one month’s salary in cash, split what you save between cash and investing until you have 3 months’ salary in cash. Each year you wait costs more than the money you didn’t invest: $500 a month started at 25 instead of 26 is worth about $94,000 more at 65, at 7% a year.

Should I pay off debt or invest first?

Pay off credit card debt first, but keep taking your employer’s 401(k) match while you do. A card charging 20% costs more than any investment you can count on. Even at 12%, you’re sure to pay it, and you’re never sure to earn it. A low-rate loan, such as a student loan at 3% or 4%, can be paid on schedule while you invest.

Know which account gets each dollar, and where your cash earns the most.

Gold+ includes a tool called Your Retirement Plan. See which accounts to fund first, how much goes in each, and how many years sooner you retire. For your cash, Cash Savings shows the short-term Treasury funds that pay the most after state tax, updated each weekday.

See how Gold+ works →

Educational only, not investment advice. Historical indicators and returns do not predict future results.