Top 5 Share Market Strategies for Beginners

 Start by opening an IRA, then expand your investments using index funds and ETFs, and invest no more than 10% of your portfolio in company stocks.

For many Americans, an employer-sponsored 401(k) is their first investment vehicle, with 65% of U.S. workers offered one or a similar plan. But to build wealth, you also may want or need to invest outside of that plan.

Here are five investing strategies beginners can use to get more involved in the stock market:

1. Open an IRA

After an employer-sponsored retirement plan, the next stop for any stock market strategy is to invest in other tax-advantaged accounts, such as a traditional or Roth individual retirement account. You can open an IRA at an online broker — many brokerages don't require an account minimum, and you won't be investing any of your money until you're ready to do so. These days, brokerages are pretty similar to banks. The major difference is that with brokers, you'll have access to the stock market when you're ready to invest.

You can contribute up to $6,000 a year ($7,000 if you are 50 or older) to an IRA, either to one account or a combination of both these types of IRAs. Each has different tax advantages, so check out which IRA is best for you. And if you max an IRA out for the year, you can always continue investing in a taxable brokerage account — these are also opened at an online broker, but they don't offer the tax perks of an IRA.

» Ready to start? Find the best IRA providers

2. Only invest cash you won’t need for five years

One big drawback of traditional and Roth IRAs: There can be penalties and tax ramifications if you withdraw funds before the age of 59 ½. Roth IRAs are more forgiving on early withdrawals — you can pull out contributions at any time, but you may be penalized or taxed if you pull out investment earnings early.

But that restriction might be OK because there’s a key rule of thumb to keep in mind with any stock market strategy: Don’t invest cash you'll need within five years. Patience pays when investing — you need to give your assets time to weather the market's ups and downs.

“A key rule of thumb to keep in mind with any stock market strategy: Don’t invest cash you'll need within five years.”

If 59 ½ feels too far away, a taxable brokerage account won’t penalize early withdrawals, but it also won’t offer the tax advantages of an IRA or employer-sponsored account (most brokers offer both taxable and tax-advantaged accounts).

Opening a taxable brokerage account may be the next step if you're already maxing out a 401(k) and an IRA, and you have idle cash sitting in your bank account. However, the following strategies can be applied to both retirement and brokerage accounts.