Investing is how you take your hard earned dollars and make them multiply. For many, starting an investment portfolio can be intimidating. With so many different investment options to choose from, it can be challenging to know where to start. Here are three steps to start building an investment portfolio.

Set your financial goals

If you want to save money for retirement or start saving for your child’s education, you will probably want to invest your money very differently than if you are saving up for a vacation, to buy a home or start a business. It’s important first to identify what your financial goals are so you can find the right tools to accomplish them.  

Pay down debt

If you have any credit card or other high-interest rate debt, you want to pay that down or pay it off before you start saving. If you are paying 13 percent or higher annual interest, you won’t earn that much interest off of any type of investment, so you’ll end up losing money each year rather than gaining. There are options to help you pay down debt like balance transfers or debt consolidation loans. In doing so, everything you pay is going towards the principal rather than interest.

Start saving or investing

If you are setting aside money for retirement or college education, you can simply start saving. If you are interested in purchasing stocks, real estate, or other types of investments, you will need to start saving up before doing so. You can also begin investing immediately while you are saving by using an app like Acorns. While a simple app like Acorns is unlikely to generate any large returns, it can help generate at least a small return on investment, and it can help introduce you to the world of investing.

Find the right investment tools

While you are saving or starting to invest with a simple tool, you will want to start educating yourself on all of your different options. This might include speaking with a financial planner, taking some financial literacy courses, or just reading some books on investing. As your money grows, it will also require more management. The more educated you are, the more likely you are to make sound financial choices.