Learn how to maximize your 2025 investment potential and start building personal wealth with these game-changing strategies, including automating investments, fractional shares, ETF’s, and diversification.
3 Investment Strategies for New Investors
Whether you’re investing with Robinhood or building wealth through SoFi, these three powerful strategies are perfect for Gen Z investors to start securing your bag for your future. With that in mind, let’s talk about how you can absolutely dominate your investment game in 2025.
🗓️ Automate Your Investing
There’s a well-known investing principle, popularized by Kenneth Fisher, founder of Fisher Investments, that goes: Time in the market beats timing the market. Today’s newer tech-savvy investors are letting new technologies, like automatic investing, handle the heavy-lifting of essential tasks, like make regular contributions, dividend reinvestment or portfolio rebalancing, to make their personal wealth journey more efficient. Some examples include:
- Automatic investing of index/mutual funds, ETFs and stocks, sometimes known as reoccurring investments at Fidelity. (Your bi-weekly work-sponsored pre-tax 401k contribution is a form of automatic investing).
- Roboadvisors that automatically invest into a pre-determined portfolio of index funds and bonds. These systems handle complex tasks, such as tax-loss harvesting, portfolio rebalancing, as well as make sophisticated investment strategies.
This “set it and forget it” methodology ensures your investment strategy stays on track without requiring constant monitoring or manual intervention. By removing the emotions that can stem from consuming daily financial news, the ability to automatically invest offers significant advantages for new investors, particularly through its hands-off approach and consistent investment strategy to maintain a disciplined approach. In addition, the cost-effectiveness and accessibility of automated investing make it appealing for newer investors. As a result, management fees are typically lower compared to the traditional financial advisors of brick-and-mortar brokerages, as these platforms rely on technology rather than human advisors. Finally, automated investing platforms often allow investors to start with smaller amounts of money, making investing more accessible while still providing professional-grade portfolio management and diversification benefits. 🧾 Receipts: Automated investors are 95% more likely to stay invested during market drama, while others panic sell at the worst times. 📚 Resources: Which brokerages allow automatic investing?
🍰 Invest with Fractional Shares
Gone are the days when you need hundreds (or even thousands) of dollars to start your investment journey. The advent of fractional share purchases has revolutionized the retail investing game because they represent the ability to own a piece of a stock. With fractional shares, there’s a very low minimum amount needed to start investing – as little as $5, sometimes less on certain brokerages – which make it more flexible and accessible for investors of all levels to allocate a specific dollar amount, regardless of the share price. One of the most significant advantages is the ability to invest in high-value stocks that might otherwise be out of reach.
For example, if a stock costs $1,000 per share, you can invest just $200 to own 20% of a single share. This democratization of accessibility means you can participate in premium investments without requiring large amounts of capital.
Additionally, instead having to purchase whole shares, investors can buy portions of a company’s stock, index fund or ETF. For instance, a $10,000 investment could be divided into twenty different companies at 5% each ($500), regardless of their individual share prices, allowing for more strategic portfolio construction and better risk management. The benefits of investing with fractional shares include:
- Start with small amounts – Start investing with as little as $5 to own pieces of expensive blue chip stocks like $NVDA at $125 or $AMZN at $225.
- Proportional exposure to gains and losses – You’ll receive proportional dividends (for example, if you own 0.5 shares and the dividend is $1.00 per share, you’ll get $0.50) Thus, both earnings and losses proportionally based on your ownership percentage.
- Proportional dividend participation – Enhances investment efficiency by allowing immediate reinvestment of dividends thru dividend reinvestment plans (DRIP), which is particularly valuable for and regular investment strategies, helping to maximize the potential for compound returns over time
- Portfolio diversification – Rather than being limited by whole share prices, you can spread your investments across multiple companies and industries, enabling superior diversification, even with modest investment amounts.
- Your money’s always at work – Instead of having idle cash waiting to accumulate enough for whole shares, you put every dollar to work immediately.
The key to start building personal wealth is just to begin investing, and fractional shares helps build the momentum. Your money needs time to compound and grow, that’s better to get started with the the best index funds, stocks and ETFs to get started. 💪 Pro Tip: Even if you can only invest $50 from each paycheck, that’s better than waiting until you “have more money.” 📚 Resources: What are the best brokerages to buy fractional shares?
📊 Leverage Exchange-Traded Funds (ETF’s)
As exchange-traded funds (ETFs) became all the rage in the post-pandemic years, so no surprise that the’ve become the go-to investment vehicle for younger investors. According to an annual report by NASDAQ, Gen Z and Millennials are the two most likely generational groups to have ETF holdings in their retirement accounts, at 81% and 75%, respectively.
ETFs are an single investment security fund that represent a basket of company stocks to provide broad diversification. In fact, many popular ETFs mirror indexes (benchmark indices, such as the NASDAQ, S&P 500 or Russell 2000), meaning they are so well-diversified, investors can achieve their personal wealth goals with just a few ETFs. Unlike mutual funds, ETFs trade like stocks throughout the day, allowing investors to see exactly what they own and trade at real-time prices. They’re also tax-efficient because they generally generate fewer capital gains than mutual funds, helping new investors keep more of their returns.
The average ETF expense ratio of 0.50% – significantly lower than the 1.01% typically charged by mutual funds. Additionally, many brokerages now offer commission-free ETF trading and the ability to purchase fractional shares, making it easier for newcomers to start investing with small amounts of money while maintaining a diversified portfolio Thus, with a single ETF purchase, investors gain exposure to hundreds of different securities across various sectors and and company sizes, thereby, eliminating the need to research and buy individual stocks.
Why ETFs are the perfect investment for Gen Z investors?
ETFs offer new investors an ideal entry point into the market by providing instant diversification and professional management at a low cost. ETFs are particularly beneficial for beginners due to their transparency and trading flexibility, making them a cost-effective choice for those just starting their investment journey in 2025. 📚 Resources: What is an exchange-traded fund (ETF)?
Putting It All Together to Thrive in 2025
Start by clearly defining your investment goals – whether you’re investing for long-term growth, income, or a specific financial goal like buying a home. Take a thoughtful and strategic approach to building your portfolio by selecting a mix of asset classes, choosing low-cost and liquid ETFs, and carefully allocating your assets.
- Set-up automatic investing through a brokerage with that featured-enabled, to regularly invest weekly, bi-weekly or monthly.
- Invest with fractional shares to diversify your exposure across the stock market by only purchasing a percentage of a stock.
- Alternatively, invest in index (or thematic) ETFs to have your portfolio diversified and actively-management with low-cost fees.
Remember, 2025 is your year to start building serious wealth. By combining these three powerful strategies – investing early, using fractional shares, and diversifying with ETFs – you’re setting yourself up for long-term success. The best part? You can start with whatever amount you’re comfortable with today. Photo credit to Priscilla Du Preez 🇨🇦 on Unsplash
