Investing doesn't have to be complicated

With high inflation and economic uncertainty afoot, many people are looking for ways to not only save money but also invest.

However, those just beginning their investment journey may find themselves intimidated by industry jargon and seemingly endless investment possibilities in addition to shoring up enough money to start saving and investing in the first place.

Scott Steiner, a financial advisor with Money Concepts and affiliate of The Peoples Bank, said investing doesn't have to be complicated.

How can people start investing?

Between myriad saving and investment choices and the fact that numerous investment options require a lump sum to get started, beginning investors might find themselves overwhelmed or unable to act.

"To start investing with any amount is better than not investing at all," Steiner said. "There is an old Chinese proverb that the best time to plant a tree is 20 years ago, but the next best time is today. It's really never too late to invest. The younger you are, the more time you have to let these investments grow, but anyone (and everyone) can invest in their future with funding their retirement."

Beginning investors can start by opening a savings account, Steiner said. Savings accounts typically earn a little bit of interest and are also federally insured up to $250,000, according to personal finance company NerdWallet.

Using a savings account creates some separation between an individual's everyday spending money and money intended for a later date, such as an emergency or vacation.

The process of opening a savings account is usually straightforward and not cost-prohibitive, although investors may need to make an initial deposit between $25-$100 to open an account, according to the Consumer Financial Protection Bureau.

Is an emergency fund necessary?

Beginning investors may have heard that an emergency fund equal to three to six months of expenses is necessary.

While ideal, it can take years to save up that much money and can lead investors to put off other priorities, such as saving for retirement.

At the same time, Steiner said an emergency fund is essential.

"My suggestion would be to have emergency savings available. Life is uncertain and with uncertainty comes the need to be prepared," he said. "Again, starting with something small is better than having no plan at all."

Investors can start with a smaller emergency fund goal and build it up while simultaneously investing in other endeavors, he said.

Steiner also suggested saving by dollar-cost averaging. Dollar-cost averaging is adding money periodically, usually monthly, to an account and letting the account grow over time, he said.

Dollar-cost averaging also applies to purchasing a fixed amount of an investment on a regular basis, regardless of the current price.

"This allows an investor to approach a market in flux with better certainty by adding the same amount each period regardless of price per share," he said. "This sounds fancy, but many of us already do this by systematically adding to our 401ks, IRA's, etc."

What are some attainable financial goals individuals can have, regardless of income?

"It's important to remember the concept of 'paying yourself first.' That means with every paycheck, make sure you are putting something away," Steiner said.

While some financial advisors suggest stowing away 10% of each paycheck, Steiner said people could start by setting aside 5% of each paycheck and work their way up.

"It is human nature to plan, plan, plan for vacations and fun things, but not so much for retirement (or future expenses). That is why it is so important to systematically invest," he said. "Don't count on yourself to 'mail a check in.' Set it up to where the contribution is automatic. Treat the contribution like any other bill you have."

What are some investment options available when looking to build wealth?

Steiner said there are many strategies available to building wealth over time. It all depends on the investor's opinion on risk versus reward.

"I usually allocate investments in a portfolio by the amount of market risk a client is looking to absorb," he said. "There is no magic number when it comes to risk, because every investor has a different approach to risk vs reward."

For accounts that are currently used or will be used for income, Steiner suggests low risk investment options.

"You don't want to pull out monthly draws from an account that is likely to encounter a lot of highs and lows on a regular basis," he said.

For longer-term investment strategies, the advisor suggested stocks, bonds, mutual funds, annuities and similar investments.

"One way to look at these types of investments is that you, as the investor, need to mitigate inflationary effects on your portfolio," he said. "Variable type investments tend to help (over time) with the rising costs of products."

What can investors do to combat high inflation?

Before deciding how to invest, it's important to understand what inflation is.

"In a nutshell, inflation is the increasing costs of goods and services over time," Steiner explained. "You need to have a portion of your long-term investments in products that help offset the impact of inflation."

The financial advisor said he usually tries to focus on companies that perform well in a market in flux, which he said is called recession-resistant investing.

He also suggested investing in companies that pay consistent dividends, such as "dividend aristocrats."

A dividend aristocrat is an S&P 500 stock that has increased its dividend every year for at least 25 years. However, the shares of some dividend aristocrats can have a combined market price of thousands of dollars - a steep purchase for most investors.

Those looking to gain exposure to the dividend aristocrats but don't want to spend the time and money to buy the individual stocks could consider buying exchange-traded funds, or ETFs, that contain dividend-raising stocks instead, according to NerdWallet.