8 Common Sense Investing Tips Everyone Should Follow


Don’t look for specific investment advice in this article; I leave that to the experts. However, these commonsense strategies will give you a solid foundation for long-term – and successful – investing.

1. Get out of debt.

If you understand that time is money, you may be highly motivated to start investing immediately so those investments will have more time to work for you. Good!

If your anxiety level spikes at the thought of taking precious time to pay off your debts before starting to invest, good again. Use that anxiety as a motivator to pay off your debts quickly. Why? So you can free up some money to invest.

The amount you are currently sending your creditors is the amount you can invest once your debts are gone. It helps to think of paying off debt as getting a great return on your money, because paying off a 15% annual rate credit card is tantamount to earning 15% on your investments.

Make a budget and set a time goal of two years or less to pay off everything except your house. Reality check: If you don’t attack it now, you will wake up 10 years from now with minimal investments and the same amount of debt.

2. Build an emergency fund.

Again, I know you are getting antsy about starting your investments but you need an emergency fund first. Why? So you won’t be cashing out your retirement nest egg when you get injured or lose your job.

Think of your emergency fund as an integral part of your overall investment strategy, much like an insurance policy to ensure that those investments will never be touched.

3. Diversify.

Your wise grandmother knew not to put all of her eggs in one basket. When you put all of your investments in one company, you are not only risking your financial future on that one company, but you will become, in an unhealthy way, overly concerned about that company’s performance.

Remember: You are in this for the long haul. Spread money around and relax.

4. Keep it slow and steady.

It is still true that the tortoise wins the race with the hare, so take a deep breath, brace for the long haul, and keep those investments slow and steady. “Get-rich-quick” is a formula for losing your shirt, so don’t even think about it.

When you invest every single month, you will, over time, balance out the ups and downs of the market. I realize this is boring, but lifetime investing is not supposed to be exciting. Keep it slow and steady.

5. Automate.

When your investments are automated, there is no emotion, willpower or discipline involved. And guess what? You will learn to live on what you have left. Make it automatic.

6. Increase over time.

Do you know what you did with your last pay raise? Most people don’t, so here is a thought: increase your investments by one half of each pay raise.

Your take home pay will still bump upward, and you will eventually discover yourself investing more than you ever thought possible.

7. Take advantage of free money.

Does your employer offer you a match for your 401(k) or 403(b)? This is free money, so make sure you contribute enough to your retirement plan to receive all available match funds.

8. Take advantage of tax-free growth.

I am speaking, of course, of the Roth IRA. Instead of getting a tax deferment as with a Traditional IRA, you pay your taxes upfront with the Roth, but get this: you will never owe one penny of taxes when you retire. Not on your investment and not on the growth.

If, for example, you invest $400 a month into a Roth for 30 years and earn an 8% return, you will have invested $144,000 and earned over $440,000, all tax-free!

Investing can be intimidating, but these tips will remove much of the confusion. Get started, use common sense, and you will be amazed at how well you do.

What other investing tips would you add? How are you doing with your investing? How could you improve? Leave a comment!

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  1. William @ Drop Dead Money

    Great advice! The only thing I’d add is “keep at it.” We’re not too far from the next recession, and it’s always tempting to stop investing when that happens. But that’s the BEST time to invest… if you’re prepared. Think Joseph and Pharaoh…

    • Joe Plemon

      Great point, William. The old adage “buy low and sell high” is especially apt when the market drops. And yes, the story of Joseph and Pharaoh is a great one. Although Joseph had “inside knowledge”., he had the wisdom to know what to do with that knowledge.

  2. Lisha

    I like the idea of investing half of your pay raise. Such a good idea. If you are making an extra $100 a month, then an extra $50 a month to go toward improving your lifestyle is better than $0! And the $50 more you’re investing will definitely help your future. Great top Bob 🙂

    • Lisha

      Sorry, I should say, Thanks JOE for your tips! 😉

    • Joe Plemon

      No problem Lisha. I consider it an honor to be confused with Bob.

  3. Dennis Botz


    I was curious about tip #4, ” keep it slow and steady”… Did you happen to hear that term from either Dave or Joyce Meyer? That’s one thing they said they were shown about managing their money and it’s paid off handsomely for them and their ministry. There touching millions of people on a daily basis.

    Thank you,
    Dennis Botz

    • Joe Plemon


      Yes, slow and steady (along with the tortoise winning the race with the hare) is something Dave Ramsey says quite frequently.

  4. Kip

    I’d like point out that benefits one receives from work is not free, including a company match to a retirement account – as stated in tip #7. Everyone who has this benefit works very hard for it. I sometimes wonder why people don’t understand this. It’s unfortunate, but I believe that those who do not take advantage of this benefit are giving part of their time to their employers for free. I do not plan on giving free work to my employer! I can’t afford to because I’ve got bills to pay and retirement to save for.

    • Joe Plemon

      Great point Kip,

      All work benefits, of course, are worked for and therefore not truly free. Maybe I need to urge readers that when they don’t take advantage of optional benefits, they are giving away free work to their employers.

  5. Dan

    Great post, we are from Canada but have found that solid advice like the content above is universal. It seems like our society is addicted to debt which always results in a sacrifice of retirement savings

  6. Jon

    Regarding #6. I work for a non-profit. We don’t see raises often. Raises usually come in the form of benefits. For example, this year being spared from having to pay a boat load on health care. (Our costs did go up, but not as high as they could have.) I appreciate those type of raises, but you need cash to invest. I’ve found for people like me it is important to find a “tent making job” on the side in order to increase investing. I have a series of financial/investing goals once I make X, I will invest X.

    I guess what I’m saying is some people have to create their own raises.

  7. Katheine

    I relate to not having much to invest with. The last 5 years we have seen NO raises yet I am grateful for having a JOB! Also, they did not take away our health care which is a great asset. I do save, and have an emergency fund but not 6 months worth. maybe 3 months. I am not in debt. But I am reminded to not worry, as the Lord is Jehovah Jireh and owns a 1,000 cattle on the hills..He provides in ways we can’t imagine or even think of.

  8. [email protected]

    Great article Joe. My husband always says ‘common sense isn’t common’ and so I appreciate this breakdown, especially the first few which basically says ‘be financially responsible’. I admit I know close to nothing about investing, and never really showed an interest, but I see the need to change that. As we work to pay off our debt, we will have to decide on what to do with the funds that are freed up. It’s important for me to be able to help us make a wise decision and not just be a yes-man in the equation.

  9. Rob

    Great tips. I think the most important one for me and my wife was to create an emergency fund…..and then DON”T TOUCH IT—until you need it that is. Without that emergency fund in place, you’re really not in a good place to start seriously investing. Do whatever it takes to get that started.