• JPMorgan’s head of financial planning, Michael Liersch, shared tips for new investors.
  • Liersch says most investors can be successful if they have a plan, manage their perspective, and stay the course.
  • He also recommends that investors ask someone else – a friend, family member, or financial adviser – to look at their investment strategy and challenge it.

Whether you are looking to start saving for retirement or you want to put some extra cash in the stock market, investing can seem daunting to the inexperienced.

But investing doesn’t have to be complicated, says Michael Liersch, head of goals-based advice and strategy at JPMorgan. In fact, Liersch told Business Insider that most investors can be successful if they have a plan, manage their perspective, and stay the course.

1. Make a plan

Liersch thinks the first thing someone should do before investing is create a budget and see where your money is currently going.

“As a simple first step, roughly estimate how much of your total income is going toward spending, giving, saving, and investing,” Liersch said.

Numerous apps can help you set up a budget and manage your finances, or you can use a spreadsheet tailored to your finances.

Once you see where your money is going, you can decide how much you want to invest and save. You may even decide that your discretionary expenses are too high and you need to move some of that into more constructive places.

“Ask yourself if that’s really how you want your money allocated and adjust accordingly,” Liersch said.

2. Reframe your decisions

While pulling money away from your disposable income to invest may be tough to stomach at first, all it takes is a new perspective.

Rather than focusing on having less money to spend on dining out now, think about how much more money you’ll have for buying a house or travelling in retirement.

“Reframing is simply the process of looking at the same situation from a different perspective – a glass half full versus half empty,” Liersch said. “For example, instead of agonizing over what you’ll do without the latest electronic gadget, you can contemplate what to do with the money saved.”

And if you’re freaked out about a stock market decline, Liersch says you can see it “as an opportunity to buy low and not as a reason for panic selling.”

3. Stay the course

On a related note, Liersch reminds young investors that earning profitable returns on your investment is a long game.

Imagine if you lost 20% on an investment, Liersch said. “If the money was intended for retirement in 30 years, you could calmly and patiently wait for the market to recover. Now imagine how differently – and emotionally – you might react if you needed the same investment for a house down payment in three months.”

So decide what your priorities are, he said, and “just remember to stay the course.” In other words, be patient.

Cole gave similar advice when the stock market took a dive in February. She wrote “you have to be in it for the long haul – through big swings in either direction. Don’t slow down, and don’t try to time the market. You won’t win. The only thing to do is stay the course.”

4. Don’t go it alone

Two heads are better than one, as the saying goes. Hiring a financial adviser to help with your investment strategy could be all you need to calm your fears, but professional help may not be feasible for everybody. Fortunately, you don’t need to hire an adviser to get a second opinion.

According to Liersch, a partner in your investment strategy “could be a spouse, parent, child, financial adviser – anyone with a different mindset who’s willing to challenge your views and help you stay focused through good times and bad.”

This means that if you are risk-averse and conservative in your investment strategy, you may want to get help from someone who is more likely to take risks, or vice versa – you want to make sure you’re seeing the full picture.

5. Take small steps first

As mentioned before, beginning your investment journey can be terrifying, but it will get easier. While Liersch acknowledges saving money isn’t a first instinct for everyone, anyone can take small steps to get there.

“Instead of focusing on the total cost of a home, college, or retirement, commit to paying down a credit card or putting a few extra dollars in an IRA,” he said. Ultimately, you’re creating momentum – as you begin saving and investing, it’s easier to keep going.

“If you’re a reluctant saver, consider doing it automatically by contributing part of each paycheck to a company retirement plan or arranging monthly transfers from checking to savings,” Liersch said.