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Putting your emergency fund in a high-yield savings account is a wise decision. Keeping that money "liquid" (meaning it's easily accessible and not invested) ensures that you can access it immediately when the need arises.

(This is Day 12 of the 31-day Wealth Challenge. You can start from the beginning by signing up for our daily email newsletters), or see the challenge here.)

Once you've established an emergency fund that covers 3 to 6 months of essential expenses, it's time to think about investing. Generally speaking, the stock market tends to yield better returns than even the most lucrative savings account interest rates. In simpler terms, your money can grow more effectively when invested rather than just saved.

Currently, the United States essentially operates under two distinct economic systems: one for individuals whose wealth is generating more wealth, and another for those who are incurring debt to finance their expenses. 

The first category, the asset holders, have been having a great run. They refinanced mortgages or bought homes when rates were low, their investments have benefited from the stock market’s historic repeated highs, and their savings are raking in solid interest.  For the second, interest rates on debt keep climbing, rent keeps going up, and inflation has brought bills sky-high. 

Aspiring to be part of the asset holder group is a worthy goal. Many individuals in that category have achieved their status through strategic investing.

If you're new to investing or have only put money into retirement accounts, it may seem intimidating, almost like you're throwing your money away. Every type of investment carries some level of risk. This is precisely why it's important not to use your emergency fund for investments — you could need that cash when the market takes a downturn.

You don't need to be a financial guru to profit from the stock market. Consider investing in index funds, which consist of a diverse range of stocks rather than being tied to a single company. This approach helps to distribute both the risks and potential gains across multiple investments.

Starting with a small investment is a great idea. Even if your budget is limited to just $25 or $50 at the moment, setting up an account and putting that money into the market is beneficial. You'll witness the growth potential firsthand, and when you do come into some extra funds, your account will be primed for action to maximize those opportunities.

The majority of investors aren't engaged in day trading or constantly selecting stocks. Adopting a "set it and forget it" strategy can effectively help you build your savings without the anxiety of tracking every corporate earnings report. If you're interested in diving deeper into your investments, that's fantastic, as there's plenty of knowledge to acquire. However, this guide is designed to help you take your initial steps into the market.

You don't necessarily have to hire a financial adviser to begin your investment journey. Any platform you choose will likely attempt to promote their advisory services. While advisers do select stocks, which can sometimes lead to slightly better performance, it can also lead to poorer outcomes. Additionally, these advisers usually charge an annual fee based on a percentage of your total investment or a fixed rate. If you're starting with a modest investment, it may be wise to forgo an adviser at this stage.

Here’s a straightforward guide to help you kick off your investment journey quickly and effortlessly.

Select an investment platform and create an account.

Choose the brokerage that suits your needs best. This is the company that facilitates transactions, acting as an intermediary between buyers and sellers in the stock market. 

Your bank might offer one (mine does, and that’s what I use). If you already have a 401(k) or IRA, it’s likely through one of the major financial players, and they will be more than happy to let you create another account for regular investing. That’s probably the fastest and simplest way to get going. But there are many other options on the Internet — NerdWallet has a good rundown of your options. 

Check the fees and minimum investment requirements; many platforms allow you to open an account with $0. If you’re beginning with a small amount of money, seek out a brokerage that offers “fractional shares” — this means you can purchase a portion of a stock if the full price is beyond your budget. Most brokerages provide this option.

Determine your investment budget.

Starting with even a modest investment can set a solid foundation. Along with your initial deposit, consider how much you can allocate regularly—whether it's every paycheck or monthly. Remember, building wealth takes time and effort, similar to saving; it’s a gradual process. If you're feeling motivated, think about setting up automatic transfers from your main bank account to your investment account on a monthly or bimonthly basis.

Choose your schedule.

In general, it's advisable to keep your investments in the market for an extended period. Many individuals have faced losses by attempting to select stocks they believe will surge in value. However, your investment choices may vary depending on your timeline. For example, if you intend to access the funds in a few years, you might opt for different assets compared to money you plan to leave untouched until retirement.

Keep in mind that when you liquidate your investments, you will be liable for the taxes incurred.

Choose your investments.

If this is your first stock purchase ever, I’d go with a low-cost index fund. Index funds are made with a blend of stocks and other investments intended to mimic how the overall stock market is doing. Search for “low-cost index funds” – here’s NerdWallet’s overviews of the most popular ones – and pick one. You won’t go far wrong. There! You’re investing!

Here are a few points to keep in mind when making more specific investment choices: If you're looking to sell certain assets in the next few years to finance a significant expense, such as buying a home, it may be wise to select stocks that have the potential for greater returns. Conversely, if these investments are part of your retirement strategy, consider exploring "target date funds," which are designed for investors to choose a specific year when they plan to retire.