Gather your friends and family for today's Rule Breaker Investing episode as David Gardner walks through the basics of how to become an investor. From opening and funding a brokerage account to picking your first stocks, David and his all-star cast will lead the way through the steps that seasoned investors may take for granted.

A full transcript follows the video.

This video was recorded on Oct. 3, 2018.

David Gardner: Welcome back to Rule Breaker Investing! Well, I decided since it's kind of the start of a new season [I think it's fair to say summer's over, as of somewhere around September 21st, and fall has begun], and when I think about fresh starts I think about getting started investing.

I had some adult friends approach me recently at a cocktail party saying, "Hey, you're one of The Motley Fool guys. I keep meaning to get started investing, so how do I get started investing?" And on the one hand I was thinking, "Well, we've dedicated our whole lives at The Motley Fool to that for 25 years. We've had a book called The Motley Fool Investment Guide that's in its multiple editions. We have a website with something like '13 Steps to Investing Foolishly,' which is free there. And we have a brokerage center where you can find brokers."

I thought it was already out there, but when pressed by these friends I had to admit I'm not sure we have it all distilled down into, let's say, a box, like investing in a box for $14.95 from The Motley Fool. It probably should be a product, but rather than charge anybody anything here at the start of October, I thought why not have some all-stars, here, from Fool HQ. People who every day help others get started investing. Investors themselves. And why not have a fun discussion to kick off October on this podcast about how to get started investing?

I've got my friends Jason Moser, Matt Trogdon, and David Kretzmann, and I. Gentlemen, welcome!

Jason Moser: Hey!

David Kretzmann: Hey!

Matt Trogdon: Hey, David!

Gardner: I am very excited to have you! Now, since I'm picturing a lot of my fellow Fools listening to this podcast on a weekly basis around a hearth, around a fire, I just have this warm, homey feeling. I want to make sure that you bring a specific person to the fire for this particular week, and that would be somebody in your life that you think should get started investing but for whatever reason has not yet. Often they just don't know what to do. So this podcast, in particular, is meant to be shared. Share it out online or word of mouth and let's get as many of our friends and family members invested as possible. That's why we're here this week.

We talked about this ahead of time. Our main goal of this podcast is to think about somebody with $1,000 and that person comes up to you at a party and says, "I've got $1,000 saved. How do I get started investing? Help me!" That is the primary question we're going to answer over the course of this podcast. And I know toward the end we're going to talk about, "Well, what if you have $100 and not $1,000?" Or, "What if you have $10,000 and not $1,000?" So we're going to cover all of those on this podcast.

And I want to mention, before we get started, that this is the first in a two-part series of "Get Started Investing" with Rule Breaker Investing. Yup! The first week of this month; well, you're hearing us. That's what we're going to do. But the first week of next month I'm going to gather any questions, reactions, stories that you have. is our email address. I'd love to hear whether we helped you get started investing this month and what questions you might still have that we didn't do a good job covering this podcast. So one month from this week, we'll have our two-parter, our second part, to make sure we close all loops on getting started investing.

OK, with such a talented group here I've already talked too much, so I'm going to start going silent. In fact, I'd love for Jason, and then Matt, and then David, because you guys each got started investing back in the day so first of all just briefly introduce yourself and then how you got started investing. Let's start with Jason Moser.

Moser: Hi, Jason Moser. I'm a senior analyst with The Motley Fool. Been at The Fool for now eight-and-a-half years. I can't believe it! I feel like it's still maybe year one, stealing a little line from Bezos, there.

I was very lucky to just be introduced to investing by my father. He's a physician by practice, but he enjoys investing. Always has. We would spend mornings driving to school when I was 12, 13, 14 years old and he would just talk to me about the stock market. It was fascinating to me. It just caught my interest -- money working for me and turning into more money. So from there the interest just grew. He would gift me some stocks every once in a while for Christmas or birthdays, and then eventually I became old enough to just take it over. The interest just grew from there.

Gardner: Outstanding, Jason! Before we go to Matt, just one follow-up question. It sounds like you already had an account opened for you; maybe by your dad.

Moser: I did and this is back in the day of having to phone your trades in and pay the $50 commission which, in hindsight, now seems like such a total rip-off. So a lifetime ago I had a brokerage account that was opened up with a brokerage that will remain nameless, but since then I closed that account down, transferred my money to an online brokerage where most people do their business, now, and so I've been managing it that way for some time.

Gardner: Great! Matt?

Trogdon: Matt Trogdon. I've been at The Fool for 11 years, which is hard to believe. I work down in our Motley Fool Asset Management Group. That's a sister company. My story is a lot like Jason's. My family was a family that talked about the stock market a lot and it was often a point of conversation at the dinner table. And I bought my first stock -- it was 2002. We had a family broker that we had been using forever. I called him up on the phone and said I wanted to buy shares of J.P. Morgan, which at the time seemed like as good a stock as any. He let me know that the actual name was JPMorgan Chase and then he charged me -- I don't know -- a couple of hundred dollars to place the trade.

Over the years as I got to learn...

Gardner: That's full service, Matt, right?

Trogdon: That is great stuff. Over the years as I got to learn more about stocks and about investing, it was actually around the time that I joined The Fool in 2007 that I'd moved my money over to a brokerage account online and started doing it on my own.

Gardner: And just one follow-up before we go to David, Matt. I mean, 2002 was a pretty brutal time because 2001 was such a bad year for the markets. Did that show some courage on your part or some initiative? What motivated you in 2002 to start?

Trogdon: I'm really not sure. I was in college and I needed something to procrastinate from my studies with, and so I got into stocks and did it that way. And I remember it was as simple as thinking, "Well, I've heard of J.P. Morgan. They're probably good. Their stock price looks like it's dropped really far. It has to go up again, right?" And that's where I started.

Gardner: Awesome! David?

Kretzmann: Well, 2002 happened to also be the year that my father became a member of The Fool. He subscribed to Stock Advisor and then Hidden Gems fairly early on. And a couple of years into his membership at The Fool, I was looking over his shoulder. We still had the print newsletters at that point and I just started asking him questions like, "Hey, what's a stock? How does this work?" For whatever reason it just really fascinated me; the idea that you could own a piece of a company.

So by the time I was 12 years old I had saved up about $700 just doing different odd jobs around where I grew up. I had that money saved up. I was naturally a saver, not a spender. My dad just said, "Hey, you're so interested in this. Why don't we open up a custodial brokerage account for you and you can invest your own money?"

I deployed that $700 into 10 or 12 Fool recommendations, so right away going straight into individual stocks. I think I still own maybe one or two of those original companies. I think Netflix was in that initial basket thanks to you, David!

So I have you to thank for that! But that's how I started and I've been here at Fool HQ as an official Fool for over four years. I Work with Motley Fool Canada today.

Gardner: And David, one follow-up for you. I'm just curious. You're the youngest at the table. How old are you? Are you willing to put that out in public?

Kretzmann: I'll be almost 26 by the time this airs.

Gardner: Awesome! So almost 26. I'm curious. Did you have peers who were also interested in the stock market or were you like an odd duck as a tween -- not even a teenager -- having interest in the market?

Kretzmann: Are you asking if I was the cool kid in school, David?

Gardner: Because we all know the cool kid is the one who cares about the stock market.

Kretzmann: Absolutely!

Gardner: There's so many YouTube videos. Instagram. So much of our social media for young people is just based on the stock market today, isn't it?

Kretzmann: Absolutely! It just dominates culture.

Moser: It takes me back to high school. There were a couple of kids that just every day would sell those Blow Pop lollipops for a quarter a piece. I mean, you could buy them at 7-Eleven for a nickel. They were just selling them hand over fist. I mean, there was something there.

Gardner: So I'm not sure that these are the cool kids in school, David, but I'm curious. Did you feel lonely? Were you an odd duck? Or was this something that was just how kids rolled?

Kretzmann: I did my best to intrigue some of my peers, and there were a couple of my friends who did get interested. I don't know if they necessarily started investing their own money, but they would at least indulge me by talking about stocks for a bit.

Gardner: I'm going to open this up. Thank you, each, for your introduction! I probably have talked ad nauseum in the past about how I got started investing, but it sounds a lot like a number of you around the table where my parents got me started. It's a wonderful way to get started.

Many people don't have that in this world. Even if their parents have money, often the parents don't think to teach their kids or get their kids talking about the stock market in the car at the age of 12, but it's such a wonderful thing for those of us who did have that or can do that for our kids. It's fun to see the consonance there.

Of course, many people get started investing on their own and they realize, in many cases, I just need to finally do this. And when I was thinking about my friends at the cocktail party, recently, I think that that's how they were thinking. They are almost middle-aged saying, "I really should get on top of this," and that's why we're dedicating this podcast to getting started investing. It's for my friends.

Now guys, I think we've got it down to three steps; three steps of how to get started investing, and we're going to go to those in a little bit. But I feel like before we go right into our steps -- that kinetic energy around actually doing the investing part -- it does feel like I want to open it up and just have a general discussion about the things that you feel that somebody needs to know prior to getting started investing.

Again, we're thinking about somebody who's almost middle-aged, has $1,000, but what you would want him or her to know before they start this lifetime odyssey. And I'll just arbitrarily start with Matt. Matt, what are you thinking when this person comes up to you and says, "Hey, which stock should I buy?"

Trogdon: Someone in that position; the first thing I would tell them that the most important thing is just to get started. I don't know what age we want to go with...

Gardner: How old are you, Matt?

Trogdon: I'm 36.

Gardner: Let's go with 36!

Trogdon: That sounds great!

Moser: Is that middle age now?

Gardner: It's almost middle age!

Trogdon: That's a good question!

Gardner: I think you made it clear it's almost middle age. I keep hearing that 30's the new 20 and 70's the new 60; so probably almost middle age might even be 46 but, Matt, you're 36. Start with you!

Trogdon: Actually, that's a funny question. I recently took the CFP exam this summer and I was fortunate enough to pass, and the day after I passed I had a friend that came up to me and said, "Oh, so which stock should I buy?" And I started to say, "Well, that's not really my thing." He looked at me with his eyes glazed over and didn't understand.

But I would tell him it's just important to get started. And at this point it's less about what individual security you go with or less about what tactic you take, and it's more about just getting going. He can learn more and as he or she continues to learn, he can make adjustments and build off of what they've started with, but you have to get going. That's the most important thing.

Kretzmann: To follow up on that, I think in addition to getting started as soon as you can, you can start with really any amount of money. Whether it's $50, $100, $1,000 or $10,000, just get started. So I totally agree with Matt, there.

And then just remember that anything you invest into the stock market, whether it's individual stocks, or a fund, or an ETF, that should be money that you don't need for a minimum of three years. Ideally this is money that you can hold for multiple years and decades. So whether you're 36 or 56 or 20, you're going to have multiple decades ahead of you to invest, because that's really where you reap the rewards of compounding. So anything you can do to be patient with that money; that should be money that you know you won't need anytime in the near to medium term.

Moser: I'll piggyback off of what Matt was saying earlier because I get that question a lot, too. "Hey, what stock should I buy?" And that's what I do for a living so I love to be able to answer that question. I could talk this stuff all day every day, but I also try to make sure that when I get that question, they understand the context of the answer.

And what I mean by that is approach investing as a business owner. Look at these companies, look at these stocks that you might purchase, and think of this as a business that you might want to own as opposed to a headline for the day that gives you the opportunity to double your money in the next six months.

I think a lot of people are geared toward that mentality initially. Given the state of financial media today, we see a lot of it pushing the flavor of the day and the next big thing, and I think people want to get rich quickly. Obviously, that's just not the way it works. If it did work then everybody would be doing it and then we probably wouldn't even be here.

So I really try to make sure they understand that business owner's mentality, and as long as they can look at investing through that lens, I think it gives them a better idea of the timeline that we're talking about. Why we think it works. And it makes it more exciting.

Gardner: I love how we have a mix of a certified financial planner. Congratulations, Matt Trogdon, with your CFP! Jason, who's taking about acting as a business owner. And David who, with Jason, has taught a lot of kids, because through Fool's School, our Fool's School initiative, we've welcomed kids into Fool HQ and we sometimes go out into the Greater Washington, D.C. area, if invited, and teach kids.

So you guys have a lot of experience talking to other people. I want you each to think briefly about a single term that you would want to make sure somebody knows what that word is, what it means, before they get started investing.

Kretzmann: I'll go with "equities." That's a term you hear thrown out a lot. Equity or equities. That's really just a fancy [or I might even say snobby] way to say "stocks." It's the same thing. Those terms are interchangeable. It can be a fancy term that's thrown out there in the media, but when you hear equities, that's the same thing as a stock.

Gardner: And I know for you and me, David, both of us love stocks. We're not the only ones at the table, but a little later you're going to specifically be thinking about people who want to start investing with a "stock," and you're going to present a little bit more on that.

Because you guys all know that there are multiple ways to get started investing what you're investing in, and I think Matt, you'll be speaking to funds a little bit later and, Jason, you'll be speaking to getting kids going. So yes, appreciate that. Coming from a fellow stock guy to another stock guy, you've just given one of the key terms that confuses people and makes a lot of people feel like they don't understand enough to really know what they're doing. But equities -- it's pretty easy to look up in the dictionary, and we might even use it sometimes in this podcast, but it's synonymous with stocks.

Kretzmann: Yes. It's just good to know. It's a simple term, but you've got to start with the basics.

Moser: I think I'll just jump in there and say "returns." It's probably pretty easy to think that you're just telling me to just go back from where I started, and that is not the case, obviously. When we talk about returns, we're talking about what is happening to your money. It's either growing or it's diminishing. Ideally we like to talk about the growing part but over any given period of time, hopefully your money is increasing in value [your investment is increasing in value], and that would be your returns.

One of the more fun parts of our Fool's School class is we get to go over a 10-year time period where we talk about the market's returns and how that would affect you if you were invested in the market for that 10-year stretch and we reveal the returns for the stock market each year. I think we also compare it to a basic savings account and the returns that you would get with that. But the returns -- that's the money that you're making.

Gardner: Yes. And Jason, rule of thumb, here. What is typically the stat that we quote as an annual return for the stock market measured over long periods of time?

Moser: Typically we quote anywhere between 6-8%. I've heard all three, so let's just go with 7%. Let's cut it down the middle.

Gardner: All right. I've often said 10% but that's not factoring in things like inflation. So if you take out 2% inflation money, since it tends to get printed more and more over time, it tends to be devalued when we print a lot of it. That's what creates inflation. And so if you're looking at historic returns for the market of 8-10%, but you deduct 2% every year for that, the real return is somewhere closer to that 6-7%. Good. Matt, what term comes to mind for you?

Trogdon: I'm going to go with "time horizon." I think it's such an important term for investors. So much is dependent on what you consider your time horizon to be. Going back to our example of someone at the ripe, young age of 36, he or she would be investing, in theory, with a time horizon of maybe 30 years or more.

Gardner: Let's hope 50 or more. Matt, you look really fit to me!

Trogdon: Well, thanks David!

Gardner: I've got you pegged for probably 60 or more, if you like.

Trogdon: Yes, you've got to keep eating the vegetables.

Gardner: Did we just double your time horizon in less than 30 seconds?

Trogdon: Yeah, imagine that!

Gardner: That's profound.

Kretzmann: Well done!

Trogdon: Imagine that. But if you're thinking about investing over a 30-year or 50-year time horizon, then you should be making different decisions than if you're just investing over a three-year to five-year time horizon. As we all know, the stock market can be extremely volatile over a one-year period or even a three-year or a five-year period, but historically the trend is pretty steady in the upwards-to-the-right direction if you look over a 10-year, 20-year, or a 30-year period. So just thinking about what your time horizon is before you start investing I think will help you make decisions down the road.

Kretzmann: And something else to add to that is that the longer your holding period or the longer your time horizon, the greater the odds that you will make money over the longer term because looking at the data of the S&P 500 going back to 1871, there's actually never been any 20-year stretch where if you bought and held S&P 500 for 20 years, where you would actually lose money. You would gain money over every 20-year period. That goes through World War I, the Great Depression, World War II, the Great Recession. So lengthening that window where you can buy and hold stocks dramatically increases your odds of coming out ahead as an investor.

Gardner: And maybe I'll make that my term -- the "S&P 500." A lot of people who regularly listen to this podcast know that as the Standard & Poor's 500, but I'm sure we have some new listeners this week, and I want to make sure that you know that the S&P 500 is 500 of the largest companies in America. It's chosen by Standard & Poor's, which is a longtime publishing company that got its brand on this group of stocks [the S&P 500].

It's companies like Apple, and Home Depot, and a lot of the companies you'd expect to be there, but we use the S&P 500 as a proxy for the overall market's return. There are certainly a lot more stocks than just those 500, but when you take those 500, that's a pretty good way of estimating how they do in a given year. We say that's "how the stock market does."

Now you'll also hear the Dow Jones Industrial Average quoted on the nightly news and online sites like ours, and that's just 30 companies. It's a much smaller group, and it's a longer-standing traditional index. I don't think it's as effective a measure because it's just 30 companies and there's some historicity that makes it a little bit funky; but, it's so popular and so talked about that I did want to mention it here.

But the S&P 500 for us, here, at Fool HQ is a group of companies and a phrase that we just take for granted. I would want to make sure anybody who's thinking of getting started investing this week knows that you can buy an S&P 500 "fund," which we might talk about later. Or a lot of the companies that you might buy. Like, Matt, when you bought J.P. Morgan back in the day as your first stock, I'm pretty sure that was in the S&P 500.

Trogdon: Absolutely. One term that we haven't mentioned but that I think is kind of beneath the surface of all of our other terms is "compounding." I think the most powerful idea in investing [and certainly one of the more powerful things I ever learned] was how money compounds and money grows.

Compounding can work for you on the upside in the stock market or it can work for you on the downside with credit card debt. But if you think about investing over a long period of time and getting a sustained return year after year, that money grows exponentially and not linearly and that's something I wish more people knew.

Gardner: So that 8-10% -- let's just call it 9%. That first year, if you have an average year, your money just went up 9%. And as Jason said earlier, good news. You didn't have to do anything. That's one of the reasons I love investing. We can all be lazy bums and just make good choices and your money, as Jason said earlier, works for you. So you're up 9%. That next year you're up 9% more. Well, good news! You'd already made 9%, so if you had $1,000 you were actually at $1,090 and that goes up 9% and all of a sudden that's more than just $90. And 10 and 20 and 30 years later, that just starts being very profound.

Maybe one of the heartbreak truths about people not investing is that they don't understand that, as Matt said. Often they're making the opposite mistake. They're actually paying at high double-digit rates credit card debt and that's compounding against you as well. That's what keeps a lot of people in the cycle of poverty or near poverty. They can't break indebtedness for that same reason.

But again, going back to the positive, here, those of us who've started investing; that's the purpose of the podcast this week, is to get you on that train. I'm glad you mentioned compounding, Matt, because it's so profound. And, again, one of the heartbreak stories of investing is it's not that exciting to make $90 in your first year. It doesn't sound like something that was that big of a deal.

But when you can just play it forward 10 or 25 years later, 9% at that point is really meaningful. Often you're going to be making more in an entire year off 9% [say 25 years from now] than you started with today, and part of what we're trying to do, here, at The Motley Fool, is open people's eyes to recognize that that's how life works and to get on that train.

Moser: One of the biggest mistakes I see with folks who are just getting into investing at an older age is because they have delayed that for so long they feel like they have to make up extra ground, and unfortunately that's not the way it works. We talk about people wanting to get rich quick and if it was that easy, like I said, everybody would be doing it.

So if you are just getting started in investing and you're 35 or 40 years old, make sure you're going in there with the appropriate expectations. Don't think that this is going to be your opportunity just to make up all of this lost ground. It doesn't work that way. You do need to get started, but really time is your buddy, and that's what we teach these kids all the time. That's what we were taught as kids. It is amazing the difference that time makes.

And when you're 15, most people don't really care about investing all that much. Then all of a sudden you're 30 and you realize, "Oh, yeah! I've got that investment account that's been working for me all these years." And that was really my goal in starting my kids with it at five and six. They don't care about this stuff that much. We talk about it every once in a while, but my goal was for them to have a living, breathing example so that when they're adults, they can look back at it and say, "Wow! That's a powerful lesson! I'm going to keep that ball rolling."

Kretzmann: Yes, it's far better to start now with a smaller amount of money rather than wait for some arbitrary number to save and invest down the road. Just start with $50 or $100 today because the sooner you start, you let that magic of compounding work in your favor rather than delaying that down the road.

Something we do with the kids that always gets them jazzed up is a condensed game or experiment to highlight the power of compounding. Imagine you have a 30-day period, a one-month period where you have two options. Option one is you can start with a penny and double its value every day. So day one, one penny. Day two, two pennies. Day three, four pennies and so on for 30 days. Or option two is receiving $100,000 each day for 30 days. So which one do you think would be worth more on day 30?

Gardner: I'm guessing most of us would think that $100,000, because that's so amazing; but, I'm pretty sure the main point of this exercise, David, is the power of compounding.

Kretzmann: Exactly, yes! With option two, with $100,000 a day after 30 days we have $3 million. But with the penny doubling, compounding each day for 30 days, that's worth $5.4 million.

Gardner: It's not even close. Not even close! A total blowout!

Kretzmann: Yes, so let compounding work in your favor. That's a message to hammer home.

Gardner: Not only that, but on day 32. Wait, were you doing 30 days?

Kretzmann: Thirty days.

Moser: This wasn't February, I don't think.

Gardner: So on October 1st, day 31, that $5.4 million goes to $10.8 million and you've still just got that lousy [it doesn't sound that lousy], but lousy $100,000 for the person who made the wrong choice back on day one. So if you play it forward from there, it gets stark.

Kretzmann: Pretty sweet!

Gardner: What a great example!

Trogdon: To make it a little bit darker, how many 55-year-olds do we know that say, "Oh, I want to retire in seven years or I want to retire in 10 years, but I don't think I'm going to be able to. I wish I had another 10 years to save." Now if someone had been able to start saving at 25 instead of 35, or 35 instead of 45; well, there's your 10 years right there. So it's a lot easier to do those 10 years on the front end if you have the money and are able to do it than have to wait to do those 10 years on the back end and potentially have to work longer.

Gardner: All right, so getting started investing. We've got it down to three steps and we're definitely going to be delivering this. Before we do, I hope I'm not delaying too much the gratification of this podcast, but I do feel like we should talk briefly about "volatility" and "market drops."

Whether you're invested in stocks, or whether you own stock funds [equity funds if you will, David Kretzmann], you need to realize that one year in three historically the market drops. And for a lot of people, psychologists tell us the pain of loss is greater than the joy of gain. And sometimes if somebody starts and their first year of investing was one of those one-in-three years where the market drops, they might have a really bad taste in their mouth, stop funding their account, and decide this wasn't for them and stop investing. And we all know what a horrible mistake that would be.

Gentlemen, any thoughts about market volatility drops and how that affects us with that lifelong odyssey of investing?

Moser: I'll just chime in. I think this is why investing in your retirement account, whether that's a 401(k) through your employer or a self-directed IRA is so important. If you're doing that, ideally with an employer, you're having a little bit of your money taken out of your paycheck every pay period. Normally, that's every two weeks or a couple of times a month.

Gardner: Trying to max that out, right?

Moser: Max it out!

Gardner: It's getting matched.

Moser: Exactly. It's free money. But even more valuable is that you're just going on with life and that's happening every pay period year in and year out. Market up, market down. It really helps you cope with that volatility, because at the end of the day we teach people this. It's actually because when you're a net buyer of stocks, you like seeing that stock market pull back because you're getting a little more bang for your back. And when you're looking at it in 10-year and 20-year time frames, it really can start to add up.

Trogdon: To add to that, money is so emotional for us and it's emotional in ways that we don't even realize. When you see the market drop, it's hard to hang on and it's hard to buy more. It's just the actual way that our brains work. They work against us in those instances.

It's interesting. Vanguard put out a study earlier this year -- I know it was quoted in Bloomberg -- that shows that young adults who have started investing since the financial crisis are much more conservative than the experts would suggest for them to be. That four million accounts Vanguard has of people who'd already begun investing were twice as likely to hold no stock in those accounts as those who had begun investing before the crisis.

Gardner: Wow! And this is not just a survey, Matt. This is real data from Vanguard looking over the accounts of four million account holders and what they're doing.

Trogdon: And so going back to what we said earlier about time horizon, these are folks who have accounts, and they're young, so this is a great time for them to get started buying stocks. But they're a little gun-shy and it just goes to show you how emotional it can be and how market volatility can scare people off.

Kretzmann: I think that emotional piece for most people is probably the most challenging aspect of being a successful investor. Most people -- even people on the street -- can recognize a good company. They can look at Apple, Starbucks, or Netflix and recognize that those are great brands and solid companies that are becoming more relevant.

The tricky part, though, is being able to buy and hold those companies through thick and thin. Through periods like the Great Recession or if an individual company is going through a tough quarter, or year, or two. Again, it comes down to time horizon. Whether it's individual companies or a fund like the S&P 500, the longer your time horizon the higher the odds that you will come out ahead. And that's why anything you invest in the stock market should be money that you comfortably won't need for at least three years and ideally much longer.

So if you can do that and have that mentality, start small with your investments. Ideally add a little bit every month, quarter, or year; whatever time frame works for you, I think that helps ease the nerves that come with seeing that inevitable short-term volatility with the stock market.

Gardner: Well put. Thank you very much! Let me close off this portion of the podcast by saying that we've tried to speak as helpfully as possible to you, whoever you are, especially if you're new at this.

I'm quite sure we've probably missed something. We may have made some assumptions that were wrong assumptions, or maybe we just didn't give you enough. That's why one month from this week, we're going to have part two to close off this short series for Rule Breaker Investing, "Get Started Investing." We're going to have part two.

It's going to be driven by what you tell us. The email address is We would love to hear any additional questions that we didn't speak to that seem important. We'd also love to hear some stories. Maybe you have a great story about how you got started investing. We'd especially love to hear that you got started investing from this podcast. That we helped you do that, because that's what we're trying to do this week. So again, one month from now, E-mail us. Let us know what more we can program for a few weeks from today.

With that said, gentlemen, three steps to getting started investing. I'm going to read them off one at a time. Let's start with step No. 1 -- "open your account."

Trogdon: I'll take this one. Opening a brokerage account continues to get easier and easier. According to The Ascent, which is The Motley Fool's personal finance brand, you can now easily open an account in almost 15 minutes with a number of brokerages.

Three things that you need, probably, in order to get started. A bank account. You'll need to have your bank account information with you, you'll need to have your Social Security number with you, and you'll need to have your driver's license or state ID just so you can go on the account and identify yourself as being who you say you are and get started that way. It's fairly simple.

Gardner: I'm the person who the more things I can do with a click of a mouse at my home computer, the happier I get. It's one of the reasons I love Amazon. I know I'm not the only one. Many of us love Amazon. So it really is as simple as tapping into a web page these day.

However, if you have a local office, let's say a TD Ameritrade, you can just walk right in there, but you're still going to need your driver's license, your Social Security number...

Trogdon: And your bank account information.

Gardner: And your bank account information to do that, regardless online or off. Anything more to say about opening that account?

Kretzmann: Just to know that there are a number of different brokerages out there. You mentioned TD Ameritrade. Robinhood is increasingly popular, especially with a younger audience. I have a Robinhood account and that's really just an app. You can download the app pretty quickly, as Matt said. Just breeze through and set up an account.

There are a number of different brokerages out there and I think at The Motley Fool we still have a broker comparison tool, so if you search "Motley Fool," "broker comparison," that will give you a few different options at different brokerages out there. All of them essentially provide the same service where once you have that account set up, you'll be able to buy stocks.

Trogdon: And just to underscore again. If you think about opening an account, that might make you a little bit nervous. That might seem like a really big deal. But it's gotten to the point with our technology that it's no harder than most any other online interaction that you're going to have, whether it's buying a gift or buying tickets to a show or something like that.

Gardner: Let's put a few more names into play just because there are so many choices out there and far more than we can cover in one podcast, but we've already mentioned TD Ameritrade, which, by the way, is a sometimes sponsor of this podcast. Robinhood, which is an app, as David mentioned, and especially for people who love apps [younger people often], a great way to get started. I use Schwab. That's a big, well-known name.

But Stockpile. Who can speak to Stockpile? They have a very interesting way to get started investing. I've seen gift cards of stocks.

Kretzmann: With Stockpile, you can invest as little as $5 into any given stock. I think they have over 1,000 individual companies available, so any names or brands that you're familiar with like Starbucks, or Apple, or Netflix are most likely available through Stockpile. It only costs $0.99 per trade, so I'd say especially if you're starting out with an amount of money between $100 and $1,000, Stockpile is probably a great option, if the idea of owning individual stocks is appealing to you, as a way to get started.

You can easily build up a basket of 15 to 20 companies through Stockpile, so it's a way to get that diversification quickly without having to buy entire shares of the companies. So a share of right now is around $2,000. Buying one share of Amazon straight from the get-go for someone might not be feasible, but through Stockpile you'd be able to allocate $20 or $50 and get a slice of Amazon.

Moser: And for those folks who do like apps, we have our friends over at Rubicoin who have built out a couple of really great investing platforms. They have Rubicoin Learn, which is a structured, educational app to teach you about investing, but then Rubicoin Invest. They partner with DriveWealth that will allow you to open a brokerage account in that app and they also offer fractional shares.

Gardner: So Rubicoin is kind of like the Rubicon River -- crossing the Rubicon -- but it's Rubicoin. I should mention The Motley Fool's invested in Rubicoin. When that talented team came to us some years ago and said, "Hey, our dream is to get young people, especially, but more and more people to get started investing," we said, "That sounds like what we're trying to do at The Motley Fool," so we're invested in them, as well.

Anyway, I think we've done a decent job covering many choices. There are far more beyond that. We could have said Fidelity. There are all number of these. If you have a friend who has had a good experience, you could ask a friend and say, "Hey, what do you use?" So that's step No. 1.

The critical, sometimes overlooked step, especially by this podcast because I love talking about stocks, is we sometimes forget to just explain that you need to have an account and here's what it takes to open one. That's step one. Step No. 2 is to "fund the account." Who's going to speak to that?

Moser: I'll speak to that. Once you have the account opened, funding it is as easy as one, two, three. Kind of what we're telling you here today with getting started. In most cases brokerages will have a tab or a section in your profile where you can transfer funds in and that goes back to Matt's point of knowing your bank account information.

As long as you have that information [typically a routing number and an account number], you can set it up so you can transfer money from your [bank] account over to your brokerage account. Typically that money is available fairly quickly and once it is there and ready, it will be in there as tradable funds, typically they call it, and you are ready to rock and roll.

Gardner: Anything more to say about that? It's pretty straightforward.

Kretzmann: It's straightforward. I'd say it's a similar process if you have PayPal or Venmo. It's a similar process to transferring cash from your savings account or checking account into those apps. Really an identical process.

Moser: And of course you can write a check. You could drop it off at the local brokerage. I know Scottrade, before they were acquired by TD Ameritrade, had offices everywhere. You can take a check in there and give it to them.

Gardner: Your broker would like you to fund that account in whatever way. You can probably just walk in with cash and just go, "Here you go, guys! Please put this in!"

Trogdon: One thing I'll add, here, is you'll have an opportunity to set up an "automatic withdrawal" if you so choose. Automatically adding money into your brokerage account every month can be a very powerful way to make investing something that you continually do.

Gardner: Spectacular! And that brings us to the all-important step No. 3 -- "invest!" Now, you could buy stocks. You could buy funds. Or you might be investing on behalf of your children. And I think we should speak to each of those, because there are many different approaches to getting started investing; the actual investing part of that.

Let's start with funds. The Motley Fool, in our very first book 20-plus years ago, said that a great way for the whole world to invest is just buy an index fund. We talked about it earlier, the S&P 500 Index Fund. Ones from Vanguard over the years have been very low-priced, and you're getting, basically, the market's return without having to take the risk of investing in individual stocks. Without having to feel like you need to know stocks. You could just "mail it in," as I've often said with that index fund. That's definitely one flavor of getting started investing.

Matt Trogdon, working within Motley Fool Asset Management, you're talking to people all the time who just want funds.

Trogdon: Yeah. Funds, whether it's a traditional mutual fund or whether it's an ETF; the main benefit, there, is its instant diversification. The second main benefit, there, is that you don't have to pick the individual stocks yourself. I stopped picking individual stocks a long time ago. I realized that just wasn't my forte and it wasn't something I was particularly good at.

Gardner: How dare you, Matt Trogdon, come on Rule Breaker Investing and say that! This is heretical! Burn him!

Trogdon: We all have to know our strengths and we all have to be self-aware. It's just not something that I'm particularly strong at. But I want to keep investing. I'm definitely interested in having money that grows, and so funds and ETFs make sense for me. As I said, it can provide instant diversification and knowing that you're invested in, say, 50 stocks, or 100 stocks, or even 500 stocks helps you sleep better at night not having to worry that one or two of your stocks might go down.

Gardner: So for a lot of people listening, that's a great answer. Possibly the majority of those listening to Rule Breaker Investing are willing to, with Matt Trogdon, break the rules of this podcast and talk about not investing directly in stocks, but thank you, Matt! And certainly for the vast majority of Motley Fool members, they probably have at least one fund, if not the majority of what they have in funds, as much as we do love stocks, and let's talk next about stocks. David Kretzmann, I know you got started with stocks as a kid. For somebody who's investing their first $1,000, how would you suggest they approach the stock market?

Kretzmann: Well, for those of us who aren't looking to mail it in with the gentleman's C with funds there are a number of options with different brokerages, as already mentioned. Like with Stockpile where you can invest flat amounts. It could be $50 per stock or a $100 per stock, and pretty quickly you can build up a diversified portfolio of anywhere between five to 20 companies initially. And then if you're able to add some money over time, you continue to build out your portfolio.

Perhaps you're a member of Stock Advisor or Rule Breakers, or you follow some of David's stock picks...

Gardner: My five-stock samplers.

Kretzmann: Five-stock samplers, thank you! There's a lot of different ways you can get ideas for certain stocks. Start with companies that you're familiar with. Companies whose products or services you know and love. Just start with things that you understand and pretty quickly through Stockpile, Rubicoin, or some of those other apps [or brokerages], you can pretty quickly build up a nicely diversified portfolio of individual stocks.

Gardner: I appreciate that, David, and certainly with $1,000 you won't be building a fully fledged Fool portfolio. It's a step toward your next thousand and your next thousand after that where you do build that portfolio out over time.

To make an argument in favor of investing in stocks, one of the reasons that The Motley Fool exists is because I think we have a pretty good track record for beating the stock market. So it's exciting, on the one hand, to hear the stock market returns around 10% a year. It's even more exciting when you're beating that per year and doing so over a long period of time. That's why we really love the stock market. I certainly do.

But I think that everybody should own one stock. I'd love to think that even Matt Trogdon may still hold his J.P. Morgan...?

Trogdon: I don't...

Gardner: Doesn't? No, no, that's OK!

Trogdon: I do hold...

Gardner: Well, you had a tough time, there, in 2008 and 2009.

Trogdon: I do hold some others, but I don't hold that one.

Gardner: Good. But in favor of stocks, I've always liked to think rather than buy all of the companies in an index, or all of the companies in a sector, let's buy the best ones. Let's just buy the best ones and probably, I hope, outperform over time.

I want to keep it moving, here, so Jason, I'd love for you to speak to getting started investing for one's kids.

Moser: Sure. You know, this talk of samplers and apps is making me hungry, so I'll try to get through this as quickly as possible. All great information, here, and great answers. I support fun stocks. I think it really does depend on the individual. I think the nice part about getting started investing when you're a kid is you have a lot of years ahead of you, so you can take on a little bit more risk. So it's actually a great time to get them into individual stocks, assuming you feel comfortable enough to help make those choices with them.

And that's essentially what I've done with my daughters up to this point. I've never made the choices for them. We've always held discussions. We typically whittle it down to four names. We talk about those names on the way to school. We eventually come down to two names and then we'd pick the best one. It's kind of like our version of Explorer, David.

I think for getting kids started, it's really about taking tooth fairy money, birthday money, or whatever they're doing to earn money. We've helped them out along the way, as well, played the role of employer and matched some of their funds. That's just been more fun for us, because we know that ultimately it's going to a good cause. But [because of] the advantage of getting them started in individual stocks at such a young age, we aim to buy one either every quarter or at the very least a couple of times a year.

Gardner: That's great!

Moser: And the rule of thumb is that once we buy one holding in their portfolio, that is off the table for the next round, and that encourages diversity. So they bought Starbucks. Now they can't buy Starbucks ever again. They own it. Now we have to consider something else.

Gardner: Love it!

Moser: Consequently, they have a portfolio, now, with I think nine or 10 names and they're all Foolish names that everybody listening here would recognize, I'm sure. And I, of course, don't need to tell you that their portfolios have done quite well, but that is because we've chosen good businesses that they wanted to be owners of and then we've committed to owning those businesses indefinitely. In some cases that's worked out. Now they owned Whole Foods and they lost a little money on that investment when the acquisition was made; but hey, they learned about the acquisition and lucky for them they each own a share of Amazon anyway. So it all worked out in the end.

Gardner: Well, earlier at the start of this podcast I said we're going to talk about $1,000 and I sure hope that we've delivered on that. I hope that especially if you're listening as a new prospect -- somebody who might think, "Yes, I'm now going to get started investing with my $1,000" -- darn it, I hope we've served you well!

However, some people have less than that and some people have more than that, and I wanted to speak to that briefly. David Kretzmann, what if I don't have $1,000? I have $100. You might be summarizing again a little bit of what was said earlier, but if I'm starting with a smaller amount of money, how should I start investing this month?

Kretzmann: The first thing is to absolutely still get started. It doesn't matter if you're investing a smaller amount like $100. You can still go ahead and buy an index fund, whether it's the S&P 500. Get a little piece of the S&P 500. It's instant diversification that way. Or, if you're like me, and you're more excited about the idea of initially buying five, 10, or 15 individual companies, you can absolutely still do that through different brokerages that allow fractional-share investing. You can buy $5 or $10 each of several different stocks and get started that way with individual stocks.

Gardner: Outstanding! And now some people have more than $1,000. They've been sitting on savings for a while. They've just not invested it. Matt Trogdon, if I have not $1,000 but $10,000, how would you speak to that situation vs. the $1,000 that we've focused on with this podcast? $10,000.

Trogdon: Well first, David, I would tie it back to something we talked about earlier in the show, which was compounding. Just running the number on my financial calculator, here, if you have $10,000 and you invested for 30 years, and you got 8% a year; at the end of that 30 years that $10,000 would turn into $109,357. That's the power of what we're dealing with.

Gardner: And you haven't even added anything.

Trogdon: And you haven't even added anything. So I think at $10,000 your strategy doesn't necessarily need to be any different than it was at $1,000. You could go with a group of stocks like David was talking about. You could go with funds, ETFs, or index funds like I was talking about. $10,000 might give you an opportunity to get a little bit more sophisticated with asset allocation and thinking about what types of stocks you want to own. Do you want to own international stocks or any small-cap stocks?

But that's not necessary. I would say the three steps that we outlined for $1,000 would hold quite well for $10,000, as well.

Gardner: That's $1,000. That's $100. That's $10,000. Gentlemen, thank you very much for your time today getting Fools started investing with this podcast! I'd love it if you each could provide one resource, one takeaway, or maybe one web page I can click into or app to download. What's something I can take away and have that to support me through my first month of investing?

Kretzmann: I have several articles that I've written. I think currently the best place to find them is actually on LinkedIn, just reiterating some of the stuff we've already talked about here; the steps needed to get started investing. People can reach out to me on LinkedIn at David Kretzmann or on Twitter @David_Kretzmann. I'd be happy to pass those along.

Gardner: Excellent!

Moser: I would be remiss if I did not refer people directly to all five of our valuable podcasts. I think we have a library of content that is unmatched, and the best thing about it is it's all totally free. You can download it on your iPhone. You can get it through Stitcher. However you like to listen to podcasts, we have Motley Fool Money, Market Foolery, Industry Focus, Rule Breaker Investing, and Motley Fool Answers. Just wonderful educational content. I just can't speak highly enough of it all. I love it!

Gardner: Thank you, Jason, and thank you for helping host Industry Focus in our financial podcast! It's been really fun to hear you on a regular basis now on that one. I do want to call out Motley Fool Answers, especially connected to this podcast, because if you're new to the market, of our five podcasts Motley Fool Answers is almost set up for you on a weekly basis to help you think through a lot of the things that we're talking about right now. Answers -- Motley Fool Answers -- to some of your basic personal finance questions and get-started investing questions. So I definitely want to underline that one, as well. Matt?

Trogdon: My favorite new resource -- I want to call out my friends at The Ascent, which is The Motley Fool's new personal finance brand. If you just go to on the home page and then hover over the personal finance tab, you'll see a link to click there. They have lots of pages on best potential bank accounts for you, best brokers, best mortgage lenders, credit cards; anything you need. If you're trying to decide how to get started with something personal finance related, I think The Ascent could be a good resource.

Gardner: Thank you! Ascent as in ascend a mountain. And I'm glad you mentioned them, Matt, because that's a kinetic site. And the purpose of this podcast, this week, was to be very kinetic. To get you into action mode. To act to get started investing. Certainly The Ascent is all about that for things like choosing credit cards, etc.

To conclude, thank you again to my guests Jason Moser, Matt Trogdon, and David Kretzmann for your help and we're looking forward to hearing back from you one month from now. We're going to bring this talented group together and have part two of "Getting Started Investing." Hear from you any questions that were aroused by our conversation today or things that we failed to say, or maybe said not well enough. We'd love to hear from you. What can we bring back a month from now and help close the loop on getting you started investing?

Next week I'm going to be reviewing one of my five-stock samplers. That's right. Around a year ago I picked "Five Great Stocks You've Never Heard Of," so we'll be reviewing and seeing how those are doing and no doubt other delights. In the meantime, thanks for listening! This has been Rule Breaker Investing. I'm David Gardner. Fool on!

As always, people on this program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing at