Whenever discussing financial education, we hear mentions about the importance of making investments. The problem is that it is not easy to make great investments. There is a pretty long learning curve when interested in investments. This is why it is always a good idea to start with what is easy.
There are now countless investment options you can consider. If you are a beginner, Gregory Lindae, highly-experienced investor, recommends the following suitable options.
Exchange-traded funds (normally known as ETFs) give you a good opportunity to start doing work in stocks. When you are a beginner, you want to invest in ETFs because these pool various assets into one. This includes particular stocks, bonds and commodities. Performance is tracked against indexes. The ETF will allow you to trade various assets just like you would trade just one stock. We are looking at a very high diversification so your portfolio automatically starts off as one that includes both bonds and stocks. Risk is drastically reduced.
ETFs are highly flexible. You get to trade with ease, choosing when to sell and buy during the regular trading schedules.
The mutual fund is a pooled investment vehicle. It is perfect for the beginner due to 2 main reasons:
- The beginner can access professional trader services through fund managers even if capital amount is low. Many mutual funds have a required investment that is as low as $25.
- Investors are exposed to really low risks since mutual funds will invest in various asset class portfolios of commodities, bonds and stocks, all across various industries and markets.
After you take a good look at past performance and you analyze all that you can about a specific stock, you can find a good, stable investment option that is good for a beginner. However, you do need to be cautious. You have to be sure that the investment will not upset current risk tolerance when looking at the entire portfolio. Basically, you want to slowly start investing in the individual stocks while having most money put in more secure investments so you can learn and you can be safe.
Certificates Of Deposit
As a beginner, you seriously want to consider depositing money in banks over specified term lengths, as long as you have a guaranteed and fixed return on the capital put in. This comes through certificates of deposit. They are insured so you are guaranteed that you are going to get the money that you thought you would get as the certificate matures. The only problem is that you will normally not have access to the money until the certificate matures. If you need to take the money out, you will end up losing a large chunk of the initial investment and you will most likely not make a profit.
High Yield Savings Account
The difference when comparing with the certificates of deposit is that interests are not fixed. Interest ends up being calculated based on prevailing market rates. However, when you choose to work with high yield savings accounts, you do have easier access to your money, without having to deal with significant losses.