The adage goes something like 'the best time to start investing is now'. For some newbies this can be strenuous, given the volumes of information on the best investment with guaranteed returns. Other newbies will think this is an easy way to make money fast and dive head first into the markets.
This position is for the amateur investor who is ready to make a strategic decision to protect their investment from exposure to unsustainable risk, but with enough leeway to seize conservative opportunities that generate capital gains and learn the tricks of the trade.
Apart from the theoretical understanding of how financial markets work, it is imperative that a beginner has a realistic idea of the different strategies that investors employ to seek out opportunities in the markets.
Here is a detailed explanation of the five best investment approaches suitable for beginners:
- AND F
Exchange Traded Funds (ETFs) offer a less rigorous opportunity to participate in the stock market. As a beginner, investing in an ETF is ideal because an ETF combines several assets, including stocks, commodities and particular bonds, and tracked performance against an index. ETFs allow you, as an investor, to trade multiple assets as if it were a single stock. The diversification of the ETF allows beginners to access a large portfolio of stocks and bonds offering convenience and reduced risk. Therefore, the flexible nature of ETFs allows an investor to trade flexibly, with the choice to buy and sell at any time during regular trading hours.
- Mutual fund
Mutual funds are ideal mutual investment vehicles for beginners due to its two main characteristics. First of all, a newbie can access the services of a professional trader on behalf of the fund manager despite the low amount of capital, some as low as $ 25. Second, the investor is exposed to minimal risk as mutual funds, like ETFs, invest in a diversified portfolio of asset classes made up of stocks, commodities and stocks. 39; bonds in different markets and sectors.
- Individual stock
After a detailed analysis of an individual stock's past performance and the prevailing facts, individual stocks can offer a stable investment opportunity suitable for beginners. Care should be taken, however, to ensure that investing in the particular stock does not disrupt your portfolio's risk tolerance level in the event of a negative reversal of events. Markets are not always predictable.
- Certificate of deposit
Depositing money in a bank for a fixed term with a fixed, guaranteed return of principal plus interest is a good investment opportunity for a beginner. The certificate of deposit is insured and therefore the principal plus interest is guaranteed to the investor at maturity. However, it is important to understand that access to this money is limited during the stipulated investment term and may result in fees or loss of interest if withdrawn.
- High Yield Savings Account
This investment also involves saving for the sole purpose of making capital gains on interest over a specified period. However, unlike the certificate of deposit, the interest is not fixed and therefore the interest is based on the prevailing market rates. The funds in this account, however, are more liquid and therefore easily accessible.