The saying goes something like “the best time to start investing now”. For some beginners, this can be painstaking given the amount of information about the best investments with guaranteed returns. Other beginners will think it’s an easy way to make money fast and plunge headlong into the markets.
This publication is intended for amateur investors who are willing to make a strategic decision to protect their investments from the effects of volatile risk, but with enough freedom to take advantage of conservative opportunities that bring capital gains and explore the ropes of trade in the meantime.
In addition to a theoretical understanding of how financial markets work, it is important for a beginner to gain a realistic sense of the different strategies that investors use in their search for market opportunities.
The following is a detailed explanation of the five best approaches to investing that are suitable for beginners:
Exchange-traded funds (ETFs) offer less stringent opportunities to participate in an exchange. For a beginner, investing in an ETF is ideal because an ETF combines multiple assets, including specific stocks, commodities and bonds, as well as performance tracked by an index. ETFs allow you as an investor to trade multiple assets normally as if they were a single stock. Diversifying ETFs allows beginners to access a wide portfolio of stocks and bonds, providing convenience and reducing risk. Thus, the flexible nature of ETFs allows the investor to trade flexibly, with the choice of buying and selling at any time during normal trading hours.
- Mutual funds
Mutual funds are pooled investment funds that are ideal for beginners because of two main characteristics. First, a novice can access the services of a professional trader on behalf of the fund manager, despite the restrained capital, some of which is only $ 25. Second, the investor is exposed to minimal risk because mutual funds, like ETFs, invest in a diverse portfolio of asset classes from stocks, commodities and bonds in different markets and industries.
- Individual stock
After a detailed analysis of the past performance of individual stocks and the prevailing facts, individual stocks can offer a stable investment opportunity suitable for beginners. However, care should be taken that investing in specific stocks does not violate the risk tolerance of your portfolio in the event of a negative turn of events. Markets are not always predictable.
- Certificate of Deposit
Depositing money in a bank for a fixed period with a fixed and guaranteed return on capital plus interest is a smart investment opportunity for a beginner. The certificate of deposit is insured, and thus the capital plus interest is guaranteed to the investor at maturity. However, it is important to understand that access to this money is limited over a period of investment and may result in a commission or loss of interest in the event of withdrawal.
- Highly profitable savings account
These investments also entail savings with the sole purpose of obtaining capital gains from interest over a specified period. However, unlike a certificate of deposit, interest is not fixed and therefore interest is accrued according to current market rates. However, the funds in this account are more liquid, so easily available.