Investing can be an effective way to reach your short- and long-term financial goals. But it’s important to make sure you have a solid plan in place and understand your risk tolerance and investment time frame before you begin.

When you’re ready to invest, start small and increase your contributions as you can. The Investors Centre consistency over time may help your investments grow through the power of compound interest. But before you invest, take care of other more pressing financial obligations, like paying off debt and building an emergency or rainy day fund.

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Before you invest, it’s important to figure out how much money you need to save for your goal. Then you’ll need to consider what kind of account you should open to hold your investments, such as a brokerage or retirement account (e.g., an IRA or Roth IRA). And you’ll need to consider how taxes will impact your investment decisions.

One way to reduce risk is to diversify your portfolio across different asset classes, such as stocks, bonds and cash. That can help you avoid the risk of losing a lot of money if any one class performs poorly. A popular option is to use an index fund, which automatically divvies up your money across a broad collection of stocks.

Whether you’re a Do-It-Yourself (DIY) investor or would prefer to have your money managed by a professional, there are many options to consider. And, no matter which route you choose, you should seek out guidance that can help you develop your plan and strategy.