Life's funny. We often don't know as much as we really need to know until well after we really need to know it. In other words, hindsight truly is 20/20. Not only is this even true for investing, it's especially true for investing.

With that as the backdrop, here's how I'd do things if I were starting all over again with $5,000 worth of seed money -- and all the cumulative lessons from the mistakes I made since my first foray into the market nearly three decades ago.

Half goes into a diversified index fund

It's advice most investors have heard over and over again, often resulting in eye rolls and groans. Not only is it a cliché suggestion, it's the least interesting way to participate in the market. Nevertheless, your best first investment really is stepping into a long-term position in an index fund like the SPDR S&P 500 ETF Trust (SPY -0.87%) or the Vanguard Total Stock Market ETF (VTSA.X).

Reality: Your first goal as an investor isn't beating the market; it's simply not underperforming the market, trusting that in time, market-based investments in index funds will deliver good results. On average, the S&P 500 gains on the order of 10% per year, even if in most years it does considerably worse or considerably better. Time is key.

But isn't playing defense -- playing not to lose rather than playing to win -- the fearful investor's way of avoiding picking stocks? Perhaps, but know that an aggressive effort to beat the market by picking individual stocks is a tricky business that often leads to lagging it. Not even the professionals can do it consistently.

In its 2021 year-end report on the matter, Standard & Poor's notes that nearly 80% of U.S. stock funds underperformed the S&P 1500 Composite Index. For the past 10 years, 86% of these funds lagged the index. For the past 20 years, 90% of mutual funds didn't keep up with the broad market. So, if the pros can't even do it...

Moral of the story? Start simple, and keep it simple.

Four smart stocks to start with

Index funds are the place to start, but they don't have to be the place you finish. Once you've got this foundational piece of your portfolio in place, it's easier to confidently stick with individual stocks even when they may be losing ground. The key is limiting yourself to names with real staying power.

Not that owning just four individual tickers is considered adequate diversification for the remaining half of this hypothetical portfolio, but these four stocks make for a great start to this end.

Alphabet (GOOGL -1.23%) (GOOG -1.10%) continues to be my favorite go-to name for nearly all investors. While its highest-growth years are likely in the rearview mirror, this parent to Google and YouTube, as well as the owner of the Android operating system, is still crushing it. In only two quarters since 2010 has its year-over-year revenue fallen, and one of those quarters is linked to the arrival of COVID-19 in the United States. That's because it dominates the web search, online video, and mobile OS markets. As long as the world craves short-form video entertainment and relies on their mobile devices and needs a way to search the internet, Alphabet will have something to monetize.

I'm also a fan of Verizon Communications (VZ 0.90%) for a similar reason: As long as consumers depend on call phones and the wireless internet connections they offer, Verizon will have plenty of customers lined up to pay for their mobile service every month.

There's little to no growth here, to be clear -- Verizon is strictly viewed as an income machine. And I'd be sorely tempted to not reinvest its dividends in more shares of Verizon, but instead plug into its current, reliable yield of 5.2% to fund purchases of other stocks as they arose.

Bank of America (BAC 3.35%) handles two roles as the third individual stock pick for a new portfolio. One of those roles is driving cash. The current yield of 2.6% isn't exactly thrilling, but it's something to reap now while you hold on to the stock for its capital appreciation potential.

In this vein, the other role it plays is offering you exposure to the highly cyclical but highly worth-it financial sector. BofA ebbs and flows with the best of them, but it's a best-of-breed name among banks with a solid long-term track record. Barring a complete societal collapse, the world's going to always need a way to connect savers with borrowers and investors with corporations in need of capital.

Finally, I'd round out the launch of this new $5,000 portfolio with a piece of a fairly young company called Upstart Holdings (UPST -1.97%). Think of it as the indulgent, risk-seeking piece of your portfolio that at the very least makes things fun, and gives you something interesting to talk about at cocktail parties.

Simply put, Upstart does what the traditional credit bureaus like TransUnion and Equifax should have been doing a long time ago: using an artificial intelligence algorithm to determine an individual's creditworthiness rather than reducing people to a score based on misguided metrics (which often paint an incorrect picture anyway). Upstart's approach leads to 75% fewer loan defaults than most banks' current loan-approval regimen, or said another way, it green-lights 173% more loans without increasing the loan-loss rate. Helping lenders make more (but lower-risk) loans is the big reason revenue is projected to grow to the tune of 48% this year.

Common sense is still king

These are just five suggestions, of course, and not yet a complete portfolio. The Motley Fool recommends owning a portfolio of at least 25 different stocks, and while devoting half of the hypothetical $5,000 to an index fund technically checks off that standard, four names still isn't enough to fully round out the individual-stock half of your holdings. I'd aim for at least a total of 10, but you can tack those on in time.

Whatever the case, the one thing worth adding to this "getting started" discussion is plainly saying a little common sense goes a long way even if you're not an investing veteran. Namely, if something sounds too good to be true, it probably is too good to be true. Steer clear.

And, although the constant news coverage of the stock market makes it seem like you should forever be buying and selling something, this really is a long-term game, won by people who play it as such. That means having the willpower to leave your portfolio alone even when things are getting a bit uncomfortable. That's because time -- not stock-picking prowess -- is an investors' best ally, even if you're not starting out with a fortune.