A few investment decisions are no-brainers, but others feel like you need an advanced degree before you can make the right move. And it’s no wonder; with a dizzying amount of brokers, assets and investment vehicles to choose from, it’s hard to know where to begin. If you’re ready to start investing, these five questions can help you decide where and how to invest your money.

5 questions to help you decide how to invest money

1. What are my investing goals?

Investing with a goal in mind may help keep you focused and can potentially grow your savings more quickly. It can also help you plan where to invest, which may depend on how soon you plan to use the money you invest.

For example, if you want to keep cash on hand for emergencies or another non-specific goal, you may want to stash it in a relatively risk-free, short-term option such as an online savings account or money market account. The interest rate you earn may be small, but it’s money you can count on.

If you have a few years and are saving for something significant, such as a new car or home down payment, you may attempt to increase returns slightly by investing in Certificates of Deposit and short-term bonds. These investments are less liquid, meaning you don’t have immediate access to the cash, but both can offer incremental yield without significantly increasing risk.

When you have a long time horizon to reach your goals, such as college tuition for the kids and your retirement, you can go for growth. This is when you might consider more aggressive investments, such as stock ETFs, index funds and actively managed mutual funds.

As you build wealth and grow more comfortable as an investor, how you invest for long-term goals may become more specific. For example, annuities or investment real estate could help you create income in retirement.

2. What is my risk tolerance?

When it comes to your risk tolerance concerning your investments, it’s easy to tell yourself it’s a measure of the thrill you seek as an investor. Frame it instead as how much you can stand to lose.

Would a 10% or even 20% dip in value send you running from the market? If your time horizon is long, your investments should be able to tolerate the occasional loss because the average return over time tends to trend positive. But timing is both critical and impossible to control. Stocks in the U.S. were experiencing a record bull market in 2018 before ending the year with dramatic volatility and negative returns. The closer you are to needing your investment dollars, the more you will feel the impact.

Once you understand your tolerance for risk, you can select an investment that’s in line. Sophisticated investors balance risk and return through strategies such as diversification. Stocks are expected to have higher returns but also more volatility than other types of investments. The more stocks you own, the less risk you assume, since you’re not betting on any single company’s future growth. Stock mutual funds and ETFs allow you to invest in a selection of many stocks, which is an easy way to add diversity with a single investment.

Still, even a broad index like the Standard & Poor’s 500 can be volatile, which is why some people carve out a portion of their investment dollars for more conservative assets, such as bonds or cash investments. It’s all about balance: Find the right mix of assets to keep you from worrying about what the market might do next.

3. What is this investment going to cost me?

One of the factors on which you should judge an investment is how much it costs. In general, it’s important to minimize fees, because every dollar paid in fees is a dollar lost in your investment returns. You don’t want to select investments solely because they’re cheap, but if you’re doing a comparison between two investments, the cost may be the deciding factor. Here are a few costs to consider, and ideas for minimizing them.

Brokerage account fees

To buy and sell investments, you start with a brokerage account. There are full-service brokerages offering a lot of guidance and handholding for a price, or discount brokerages that let you do most of the work online for little to no cost. Some large brokerages, like Fidelity and Schwab, offer both types of services.

Brokers will compete on platform capabilities, research and information, product selection and access to customer service when you need it. Discount brokers have become so competitive on price, it is easy to find one these days with little to no annual account fees. You should also pay attention to any account minimums, inactivity fees and transfer or closing fees.

Trading commissions

Think of these as transaction fees you pay each time you buy or sell an investment. TD Ameritrade offers flat-rate trades for $6.95, and you can trade equities at Schwab and Fidelity for $4.95. Mutual fund transactions may be more costly, but most brokers have a list of no-transaction-fee (NTF) funds they sell without commissions.

Expense ratios

If you invest in mutual funds, you pay for it on an ongoing basis with a percentage of your investment dollars. This is known as the expense ratio, and it covers things like administration, accounting, paying the portfolio manager, marketing, distribution and so on. Index funds and index ETFs typically have lower average expense ratios than actively managed funds because there is no manager to pay.

4. How much time and effort can I give to investing?

Becoming a skilled stock trader takes practice, experience, focus and strategic emotional detachment. It’s not easy, and luckily it’s not required to be a successful investor. There are various ways you can engage in the market, according to your desired level of participation.

Set and forget

If you prefer to pay little or no attention to your investments, you can easily achieve an investment portfolio that’s diversified, balanced for risk and in-line with your goals. A target-date fund, for example, is one that is managed with an end-date in mind, shifting the asset allocation from aggressive to conservative over time so you don’t have to think about it. There are also balanced mutual funds and ETFs combining combine stocks and bonds in a single investment; you can find one with an allocation you like and stick with it. If you want to keep it simple, a stock index ETF, one that tracks a broad market like the Russell 3000, offers stock diversification at a low cost.

DIY + advice

Willing to put in a little effort? You can manage your portfolio or enlist the help of a robo-advisor, an algorithm-based service that can automatically rebalance your portfolio on an ongoing basis, for as little as 0.25% to 0.45% per year. There are many robo-advisors to choose from, including Betterment, which has no account minimums, Ellevest, which has a socially responsible focus and mission to help women, and others.

Even venerable low-cost fund company Vanguard offers robo-advisor services, along with the option to chat with a human advisor, to help plan for things like education, retirement and other goals.

Active trader

With the advanced trading platforms offered by online discount brokers, these days it’s easy for the average person to be a self-directed investor. But it pays to understand how stock trading works before jumping in.

5. Which investment account do I use?

Perhaps the most important decision is whether to invest in a taxable or tax-deferred account. A taxable account — basically a default investment account with few rules or restrictions — offers the flexibility to withdraw your money at any time and use it how you like. However, for those who can bear a few restrictions, there are tax-advantaged ways to save and invest for specific long-term goals, including:

529 college savings accounts

These accounts are designed to help families pay for college tuition, room and board and other costs. You can invest through a 529 plan in different ways, depending on the plan — many include target-date fund options, managed to invest more conservatively as freshman year approaches, but others offer self-directed investing. Earnings in a 529 plan grow tax-free, and will not be taxed upon withdrawal if the proceeds are used to pay for qualifying education expenses. If the funds are not used to pay for college, they will typically be taxed upon withdrawal and you’ll also incur a 10% penalty fee.

Traditional Individual Retirement Accounts (IRAs)

There are a few potential tax advantages for investors using an IRA. If you don’t have another retirement plan through an employer, you may be able to deduct a portion or all of your contributions from your annual income taxes, and earnings in an IRA grow tax-deferred until retirement. You will pay taxes when the funds are distributed, but in retirement, your tax bracket may be lower than it is today. On the downside, if you need the funds before age 59 and a half, you may trigger a 10% penalty on top of that tax bill.

Roth IRAs

A Roth IRA works differently — there are no upfront tax deductions on contributions, but investment earnings are generally not taxed again if withdrawn after age 59½. Additionally, a Roth allows you to access your contributions before retirement, without penalty, if you use the money to pay for certain qualified expenses. There are income limits for Roth IRA investors, so high earners may not be eligible to contribute.

Bottom line

If you have don’t yet have answers to all five investment questions above, they should at least get you thinking. Each question is a bedrock to help you build a strong foundation for your investing future. Once you understand what you want from an investment and have a clear sense of what’s available, a bit of smart shopping is all that’s required to get started.

Need some help getting started? Consider consulting a financial professional to point you in the right direction.

Selecting a stock is not unlike shopping for most big purchases. You research the product, compare it to others for fit, quality, relative value and so on — perhaps compromising in some areas but not in others. Over time, you may become savvy enough to spot value or a prized possession easily.

You can approach stocks by looking to “buy what you know,” but you should also know what you’re buying from an investment standpoint. There are many lenses through which to view stocks, strategies to compare them and ways to hold them. Your goals as an investor can help determine how you analyze and hold stocks.

Here are some essential strategies to help you learn how to pick stocks.

1. Investment styles: Growth, income and value

For some investors, stock picking is all about finding stocks that fit a certain investment style.

Growth investors are looking for the next big thing, and are usually willing to pay a high price for a stock with future potential value. Companies in growth mode are reinvesting earnings and expanding quickly through hiring, new products, acquisitions and capital appreciation. Growth stocks tend to be more aggressive — as more investors drive up the price, it amplifies the risk that they won’t meet growth expectations for their valuation.

Income investors seek companies paying regular income to shareholders in the form of dividends. Even if you don’t need the income now, reinvested dividends function like regular returns that can help grow your investment. Income stocks tend to be found in older, more established firms, which may already be past peak growth years but are profitable and generally well run.

Value investors attempt to find underpriced bargains; that is, companies with underlying value not reflected in the share price. Specifically, they look for stocks with lower price-to-earnings ratios than the overall market, hoping the price will rebound. These are shares of companies that may no longer be in growth mode or may just have fallen out of favor. Value stocks are also more likely to pay dividends.

2. For long-term investors: Fundamental analysis

If you are looking for companies to invest in for an extended period of time, digging into the fundamentals can be a good way to understand its financial health and get to know the stock. Even if you’re not a business whiz, understanding these concepts and tracking them over time can help you compare the stocks of similar companies against one another.

Many publicly traded companies file annual audited 10-K financials with the Securities and Exchange Commission (SEC), along with quarterly 10-Q updates. In these documents, investors can see a company’s revenue, debt, cash flow management and other metrics. Many financial websites and online brokerage platforms will provide fundamentals as part of their basic stock quote information, as well as access to analyst research and recommendations. Analyst reports often help add qualitative information to your research, such as competition, new products or brand equity.

3. For active investors: Technical analysis

Short-term investors and active traders making bets on what will happen shortly rely on something called technical analysis, which ignores the fundamental value of a stock and instead pays attention to moves in stock price or other types of trading data.

Technical analysis assumes that all information to be known about the stock is built into its price, and prices tend to follow certain repetitive patterns or trends due to investor psychology. These trends may come in the form of tides lasting a year or more, waves lasting one to three months or ripples lasting less than a month.

Investors chart a stock’s trading activity in different ways to uncover certain trend lines and that may be predictors of future moves:

• Line charts track a stock’s closing price over longer periods, providing a broad view of the stock’s performance.
• Bar charts give a sense of a stock’s daily movements, or opening price, high price, low price and closing price (OHLC). This view can provide a sense of a stock’s volatility.
• Candlestick charts are similar to bar charts, with clear illustrations of the stock’s opening and closing prices. If the stock price closes higher than it opens, the difference or “wick” is positive.

A stock experiencing increasingly higher highs and higher lows over time is considered to be on an upward trend, and descending highs and lower lows would signal a downward trend. A sideways trend means that prices have been moving in the same general range. Looking at these charts, investors attempt to find levels of resistance, meaning points at which the stock may stop trending higher, or levels of support, meaning there’s strong enough demand to keep a stock from trending further downward.

Technical analysis can be complicated, which is why many active investors rely on tools offered by online brokers to help spot technical trends.

4. Broad stock picking: Diversified stock portfolios

An easy way to pick stocks is to buy many at once through an exchange-traded fund (ETF). These investments offer mutual fund-like diversification, but they trade like stocks. That means you can buy shares of the Standard & Poor’s 500 or NASDAQ 100 in the same way you might buy shares of Coca-Cola or Apple.

But ETFs come in many other shapes and sizes: You could use a handful of sector ETFs to build a full stock portfolio or balance stock holdings with a bond ETF. Interested in dabbling in commodities, currencies or hedge funds? There are ETFs covering alternative investments as well.

You can purchase ETFs through a broker, which means you might pay a transaction fee when you buy and sell them. Otherwise, ETFs tend to be very low-cost for investors who buy and hold.

Bottom line

Figuring out how to pick stocks seems to be as much about talent as skill, and even the most brilliant stock analysts can’t see around every corner. For the average person, investing in an ETF or mutual fund allows you to own stocks without having to select individual shares. You may not get the same shopper’s high, but there’s also less of a chance you’ll regret your purchase.

If you are determined to own individual stocks, it makes sense to start small and build slowly as your confidence in stock investing grows. You can even start with no money and a completely hypothetical portfolio. There are many stock market simulators online to help you experience stock trading without the risk. Either way, until you understand your appetite for volatility, individual stock investors should only risk excess or “fun money” you can afford to lose.