Larry Fink: How to Start Investing | Lessons for Beginners

When I showed up for my first job on Wall Street in 1976, I was 23 years old. I had long hair, I was wearing turquoise jewelry, and I had on what I can only describe as the world's ugliest brown suit. I had no idea what I was doing. I'd just finished my MBA at UCLA, and I thought I knew everything about finance. I was wrong. I knew almost nothing. But here's what I did know. Even back then, investing was the path to building wealth. Not earning a salary, not saving in a bank account, investing, participating in capital markets, owning pieces of businesses that would grow over time, and that's still true today. Maybe more true than ever, because we've made incredible progress in the nearly 50 years since I started. In 1976, only about 20% of American families owned stocks. Today, it's nearly 60%. That's extraordinary. We've democratized investing in ways that would have seemed impossible back then. But here's what concerns me. Even with all that progress, one third of Americans still have no retirement savings at all, zero. And more than half are more worried about outliving their savings than about death itself. That's not just a statistic. That's a crisis. And it's why I wanna talk to you today, not as the CEO of BlackRock managing over $11 trillion, but as someone who started with nothing, who made mistakes, who learned hard lessons, and who wants to help you avoid those same mistakes. If you're a beginner, if you're just starting to think about investing, if you're overwhelmed by the complexity and don't know where to begin, this is for you. I'm gonna break it down simply, practically, in a way that makes sense, because investing isn't complicated. We've made it complicated. But at its core, it's simple. And if you understand a few fundamental principles, if you avoid a few common mistakes, you can build real wealth over your lifetime. All right, before we talk about how to invest, we need to talk about what investing actually means. Because I think a lot of people misunderstand this fundamentally. Investing is not gambling. It's not day trading. It's not trying to get rich quick by timing the market or picking the next hot stock. Those things, they're speculation. And speculation is how most people lose money. Real investing is simple. It's putting your money into assets that grow in value over time and produce income. That's it. You're buying pieces of businesses, pieces of real estate, pieces of infrastructure. And as those assets generate profits and grow, your wealth grows with them. Let me give you the historical numbers, because they're powerful. Since 1926, the U.S. stock market has returned about 10% annually on average. Some years, it's up 30%. Some years, it's down 20%. But over the long run, over 20, 30, 40 years, it averages about 10%. What does that mean practically? If you invest $10,000 today and it grows at 10% annually for 30 years, it becomes about $175,000. If you invest $10,000 every year for 30 years at 10% growth, you end up with about $1.8 million. That's not speculation, that's not luck. That's the power of compounding returns over time. That's what investing does. Now, compare that to keeping money in a savings account. Right now, savings accounts pay maybe 4% if you're lucky. At 4% for 30 years, that $10,000 becomes about $32,000. And those annual $10,000 contributions, they become about $560,000. That's a difference of over $1.2 million. Same contributions, same time period, but wildly different outcomes because of the power of equity returns versus cash returns. And this is why I get frustrated when I see people, especially young people, keeping all their money in cash. They think they're being safe. They think they're being smart, but they're actually making one of the biggest financial mistakes possible. They're missing out on decades of compounding growth. Now, you might be thinking, but Larry, what about risk? What if I invest and the market crashes? And yes, that's a legitimate concern. Markets do crash. I've lived through many of them, but here's what history shows us. If you're invested for 20 years or more, you've never lost money in the stock market, never. Not if you stayed invested. The people who lose money are the ones who panic sell during crashes, who try to time the market, who get scared and pull out at exactly the wrong time. Don't be that person. So that's the foundation. Investing means putting your money in assets that grow over time. And the reason to invest is that over long periods, it dramatically outperforms cash and gives you a real chance at financial security and independence. All right, now let's get practical. You understand why you should invest, but how do you actually start? Where do you put your money? How do you choose among thousands of options? And here's my answer, especially if you're a complete beginner. Start with a target date fund. That's it. That's the simplest, most effective way to begin investing. What's a target date fund? It's a mutual fund or ETF where you pick the year you plan to retire, maybe 2050, 2055, 2060, and the fund does everything else for you. It automatically invests in a diversified mix of stocks and bonds. And as you get closer to retirement, it automatically becomes more conservative, shifting from stocks to bonds. You literally set it and forget it. You contribute money regularly. And the fund handles all the complexity. No stock picking, no market timing, no constant monitoring, just simple, automatic, diversified investing. At BlackRock, we manage one of the largest target date fund franchises in the world. It's called LifePath. And I genuinely believe these types of funds are ideal for most people, especially beginners. Why? Three reasons. First, instant diversification. A target date fund doesn't invest in one stock or one bond. It invests in hundreds of thousands. So you're not putting all your eggs in one basket. If one company fails, it barely affects you because you own so many others. Second, automatic rebalancing. As markets move, as some investments go up and others go down, the fund automatically rebalances. It sells what's gone up and buys what's gone down. It maintains the right mix for your age and timeline. You don't have to think about it. Third, it aligns with your timeline. When you're young, the fund is aggressive, mostly stocks, because you have decades for growth. As you get older, it becomes more conservative, shifting to bonds, because you need stability as you approach retirement. This glide path is automatic. You don't have to manually adjust it. Now, I hear people say, but aren't target date funds boring? Don't I wanna pick my own stocks and beat the market? And my answer is, for 90 plus percent of people, no, you don't, because the data is overwhelming. Most people who try to pick stocks underperform the market. Most people who try to time the market get it wrong, and they end up with less wealth than if they just used a simple target date fund. There's no shame in simple. In fact, simple is usually better, because simple means fewer mistakes. Simple means staying invested. Simple means not getting emotional and making bad decisions. So, if you're a beginner, if you're just starting out, here's what I recommend. Open a brokerage account, or contribute to your 401k at work. Find a low-cost target date fund that matches your expected retirement year, set up automatic contributions every month, and then let it run for decades. That's it. That's the simple path that will work for most people. Now, as you get more experienced, as you build more wealth, as you become more knowledgeable, sure, you can get more sophisticated, you can add individual stocks, you can allocate to alternatives, you can customize your portfolio. But when you're starting out, don't overcomplicate it. Target date fund, automatic contributions, long-term perspective, that's the foundation. All right, now I wanna talk about something that's changing in the investment world, something that's gonna be increasingly important for building wealth over the next 20, 30, 40 years, and that's access to private markets. For generations, the standard portfolio advice was 60% stocks, 40% bonds, the 60-40 portfolio. And it worked well for a long time, but I've said publicly, and I believe this deeply, the classic 60-40 portfolio may no longer fully represent true diversification. Why? Because in 2022, we saw something that wasn't supposed to happen. Stocks and bonds fell at the same time. Both lost value. That destroyed the whole point of the 60-40 allocation, which was that when stocks fell, bonds would either rise or stay stable, providing balance. But when inflation surged, and the Fed raised rates aggressively, both stocks and bonds got hit. And that showed us we need true diversification, not just stocks and bonds, but a third category, private assets. So here's what I'm proposing. The future standard portfolio may look more like 50-30-20, 50% stocks, 30% bonds, 20% private assets like real estate, infrastructure, and private credit. Now, before you think this doesn't apply to you because you're a beginner, let me explain why this matters, even for people just starting out. Private assets, real estate, infrastructure, private credit, private equity, these have historically delivered higher returns than public stocks and bonds, and they're not correlated. They don't move in lockstep with the stock market. So when stocks crash, your infrastructure investments, your real estate holdings, they keep generating income, they keep performing, that's real diversification. But historically, private assets were locked behind high walls. Only wealthy individuals and institutions could access them. Minimum investments of $100,000 or more. Accredited investor requirements. Complexity, illiquidity, but that's changing. And at BlackRock, we're leading this change. We acquired Global Infrastructure Partners for $12.5 billion, we acquired HPS Investment Partners, a private credit manager for $12 billion. We acquired Precon, a private markets data platform. Why? Because we're committed to democratizing access to private markets. Assets that will define the future, data centers, ports, power grids, the world's fastest growing private companies, they're not available on the stock exchange. They're in private markets. And we're working to make them accessible to everyday investors, not just the ultra wealthy. Now, how does this apply to you as a beginner? Simple, look for target date funds that include private assets. Ask your 401k provider if they offer alternatives with private market exposure. And as you build wealth, as you accumulate more capital, start allocating a portion to real estate, to infrastructure REITs, to private credit funds when you can access them. You don't need to do this on day one. Start with a simple 60-40 or target date fund, but understand that as you progress, as your portfolio grows, adding that third leg private assets is gonna be increasingly important. Because here's the reality, pension funds allocate 20, 30, sometimes 40% to private markets. And they outperform 401k plans that are stuck in only public stocks and bonds by about 0.5% per year. That doesn't sound like much, but over 40 years, that compounds to 14.5% more wealth. That's nine extra years of retirement funding. So don't be shut out from these opportunities just because you're starting out. Understand they exist, understand they're becoming more accessible, and position yourself to access them as you grow. All right, here's something that might be the most important practical advice I can give you. Automate your investing. Make it automatic. Make it consistent. Take emotion and willpower out of the equation. What do I mean? Simple, set up your paycheck so that a portion automatically goes into your investment account every month before you see it, before you can spend it, before you can talk yourself out of it. This is called dollar cost averaging. And it's one of the most powerful wealth building techniques there is. Here's how it works. You invest the same amount every month, regardless of what the market is doing. Some months, stocks are expensive. So your contribution buys fewer shares. Some months, stocks are cheap. So your contribution buys more shares. But over time, you're averaging out your purchase price. And critically, you're removing emotion. You're not trying to time the market. You're not waiting for the right moment. You're just investing consistently, month after month, year after year, decade after decade. Let me give you numbers to show you why this matters. Imagine you're 25 years old. You start investing $500 per month. That's $6,000 per year. You do this consistently for 40 years until you're 65. At a 10% annual return, which is the historical stock market average, you end up with about $3.2 million. Now, let's say instead you wait until you're 35 to start. You invest $500 per month for 30 years. Same monthly amount, same return, but 10 fewer years, you end up with about $1.1 million. That's a difference of $2.1 million just from starting 10 years earlier. That's the power of time and compounding. That's why starting early, even with small amounts, is so critical. And here's what's beautiful about automation. It forces you to pay yourself first. Most people approach money backwards. They earn their paycheck, they pay their bills, they spend on whatever. And then if there's anything left, maybe they save or invest. But that's backwards. You should pay yourself first, automatically, before bills, before discretionary spending. Because if you don't, there will never be anything left. There's always another expense, always another thing to buy. So set it up automatically. In your 401k, elect to contribute at least enough to get your full employer match. That's free money. Don't leave it on the table. And ideally, contribute 15 to 20% of your gross income if you can afford it. Outside your 401k, open an IRA, a Roth IRA, if you're young and in a lower tax bracket. Max it out every year. That's $7,000 for 2025. And if you can open a taxable brokerage account and contribute there too. But the key is, make it automatic. Make it consistent. Don't try to time the market. Don't try to wait for dips. Just invest regularly, without thinking about it. And let time do its work. At BlackRock, we've studied investor behavior extensively. And we know this. The investors who do best aren't the ones who are smartest or have the most sophisticated strategies. They're the ones who are most consistent. Who keep investing through bull markets and bear markets. Who don't panic. Who don't try to get clever. Who just stick to the plan. Be that investor. Automate. Contribute consistently. And trust the process. All right, let me talk about mistakes. Because as much as I wanna tell you what to do, it's equally important to tell you what not to do. And there are three big mistakes I see beginners make over and over again. Mistake number one. Trying to pick individual stocks without knowing what you're doing. Look, I get the appeal. You hear about Tesla or Nvidia or some hot new stock. And you think, if I'd bought that five years ago, I'd be rich. Let me find the next one. But here's the reality. Picking winning stocks is incredibly hard. Even professional investors, people who do this full time with massive research teams, most of them don't beat the market over long periods. And if professionals can't do it consistently, what makes you think you can? I've spent almost 50 years in this business. I manage $11 trillion. And I still wouldn't bet BlackRock's money on my ability to pick individual stocks that will consistently beat the market. That's why we offer index funds. That's why we recommend diversification. Because we know how hard it is to win that game. So my advice, if you wanna own some individual stocks because it's interesting to you, fine. Allocate maybe 5% or 10% of your portfolio to that. Have fun with it. Learn from it. But keep 90 to 95% in diversified funds. Don't gamble with money you need for retirement. Mistake number two, panic selling during market downturns. This is the biggest wealth destroyer I've seen in my career. Markets fall. Sometimes they fall a lot. 10%, 20%, 30% or more. And when that happens, when you see your portfolio down 20%, every instinct tells you to sell, to protect what you have left, to get out before it gets worse. But that instinct is wrong, dead wrong. Because by the time you're feeling that panic, the damage is done. The market has already fallen. And if you sell, you're locking in your losses. You're turning a temporary paper loss into a permanent realized loss. And then what happens? The market recovers. It always does. Maybe in six months, maybe in two years. But it recovers. And you're sitting in cash, having missed the recovery, and you've destroyed your long-term wealth. I saw this in 2008. Markets fell 50%. People panicked and sold. And many of them never got back in. They missed the entire recovery from 2009 to 2020, when markets more than tripled. Same thing in 2020. Pandemic hits, markets fall 34% in five weeks. People panic and sell. But by August, just five months later, markets were back to all-time highs. The people who sold in March missed it. So here's the rule. Don't sell during panic, ever. If you're invested appropriately for your age and timeline, if you're diversified, you ride it out, you hold, you maybe even buy more if you have cash. But you don't sell. And mistake number three, keeping too much in cash. This is a huge problem right now. There's $10 trillion sitting in money market funds. People earning 4% and thinking they're safe. But they're not safe. They're losing. Because if inflation is 3% and you're earning 4%, you're only gaining 1% in real terms. That's not enough. That's not gonna fund a 30-year retirement. That's not gonna build wealth. Cash has a place. You need an emergency fund, six months of expenses, maybe a year. But beyond that, sitting in cash is not safe. It's opportunity cost. It's missing out on growth. It's guaranteeing you won't meet your long-term goals. So avoid these three mistakes. Don't try to pick stocks. Don't panic sell. Don't sit in too much cash. Follow those three rules, and you'll avoid the biggest pitfalls beginners fall into. All right, let me bring this all together with the single most important concept in all of investing. Time in the market beats timing the market every time. What do I mean? People obsess about when to invest. Should I invest now? Should I wait for a correction? Should I wait for rates to come down? Should I wait for the election? Should I wait for clarity on tariffs? And my answer is always the same, stop waiting, invest now. Because the research is overwhelming. The best time to invest was yesterday. The second best time is today. Here's a study we did at BlackRock. We looked at investors who put money into the S&P 500 on January 1st, 2000, right before the dot-com crash, literally the worst possible timing. And we tracked them through the financial crisis, through COVID, through every crisis and crash for 25 years. And you know what? Despite perfect, terrible timing at the start, if they just held, if they stayed invested, they still made 8% compounded annually over that 25 year period. Even starting at the worst possible moment, time in the market delivered wealth. Compare that to people who tried to time the market, who sold during crashes, who waited for perfect moments, who stayed in cash waiting for certainty. They dramatically underperformed. Some of them barely broke even. Some actually lost money. Because here's what happens when you try to time the market, you miss the best days. And research shows that if you miss just the 10 best days in the market over 30 years, your returns get cut roughly in half. And when do those best days occur? Right after the worst days during recoveries. When fear is still high, but smart money is moving back in. So if you sell during crashes, you almost inevitably miss the recovery and you destroy your long-term returns. That's why I say time in the market beats timing the market. It's not about being perfect, it's about staying invested. It's about giving compounding time to work. At 25, you have 40 years until retirement. That's 40 years of compounding. If you wait until 35, you've lost 10 years. You've lost the most powerful years because money compounds exponentially. The returns on your returns, that's what creates wealth. So if you take nothing else from this conversation, take this, start now, invest now. Don't wait for perfect conditions. Don't wait for certainty. Don't try to time it. Just get in the market and stay in the market. Because 20, 30, 40 years from now, you won't remember whether you started in a bull market or a bear market. You won't remember whether stocks were at all-time highs or in a correction. What you'll remember is whether you started, whether you stayed invested, whether you gave time the chance to work its magic. All right, let me summarize everything into a simple action plan. If you're a beginner and you wanna start investing the right way, here's what you do. Step one, understand that investing is about owning assets that grow over time. It's not gambling. It's not speculation. It's participating in economic growth through ownership of businesses and real assets. Step two, start with a target date fund. Pick the year you plan to retire. Find a low-cost target date fund or life path fund. Set up automatic contributions. Let it run for decades. Step three, as you learn more and build wealth, understand the shift to 50, 30, 20. The future isn't just stocks and bonds. It includes private assets. Position yourself to access them as they become available. Step four, automate everything. Contribute consistently from every paycheck. Don't try to time the market. Just invest regularly, automatically, without emotion. Step five, avoid the big mistakes. Don't try to pick stocks. Don't panic sell during downturns. Don't sit in too much cash. These three mistakes destroy more wealth than anything else. Step six, focus on time in the market, not timing the market. Start now, stay invested. Give compounding decades to work. That's how wealth is built. And here's what I want you to understand. This isn't complicated. We've made investing seem complicated with all our jargon, all our products, all our complexity. But at its core, it's simple. Own assets, stay invested, let time compound your returns. That's it, that's the formula that's created wealth for 400 years since the first stock exchange opened. And it will create wealth for you if you follow it. At BlackRock, we're working every day to make this easier, to give you access to better products, to lower costs, to democratize opportunities that used to be only for the wealthy. Because I believe deeply that everyone should have the chance to build wealth through investing, not just the top 1%, everyone. And that starts with you taking action. Not tomorrow, not next year, today. Open that account, start that contribution, begin your investing journey, because the best time was yesterday. The second best time is now. And 30, 40 years from now, when you're looking at a seven-figure retirement account, when you're living comfortably off your investments, when you're financially secure and independent, you'll look back at this moment as the moment that changed everything. Don't wait, start now. Your future self will thank you.