The saying goes, “The best time to start investing is now.” For some beginners, this can be thorough, given the amount of information about the best investment with a guaranteed return. Other beginners will think that this is an easy way to make money quickly and immerse yourself in the market.
This post is for the amateur investor who is willing to make a strategic decision to protect his investment from unsustainable risk exposure, but with enough freedom to pursue conservative opportunities that yield capital gains and learn the ropes of trading while in her.
In addition to a theoretical understanding of how financial markets work, it is imperative for a beginner to get a realistic sense of the different strategies that investors use to seek market opportunities.
The following is a detailed explanation of the five best investment approaches suitable for beginners:
Exchange Traded Funds (ETFs) offer a less stringent opportunity to participate in the stock exchange. As a beginner, investing in an ETF is ideal because an ETF combines several assets, including specific stocks, commodities and bonds, and performance tracked against an index. ETFs allow you as an investor to trade several assets, usually as if they were one stock. The diversification of the ETF allows beginners to gain access to a wide portfolio of stocks and bonds, which provides convenience and reduced risk. Therefore, the flexible nature of ETFs allows investors to trade flexibly, with the choice of buying and selling at any time during normal trading hours.
- Mutual funds
Mutual funds are pooled investment instruments, ideal for beginners due to their two main characteristics. First, the beginner can access the services of a professional trader on behalf of a fund manager, despite the meek amount of capital, some of which is up to $ 25. Second, the investor is exposed to minimal risk because mutual funds, such as ETFs, invest in a diverse portfolio of asset classes of stocks, commodities and bonds in different markets and industries.
- Individual availability
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 must be taken to ensure that the investment in the particular stock does not impair the level of risk tolerance of your portfolio in the event of a negative reversal of events. Markets are not always predictable.
- Certificate of deposit
Depositing money in a bank for a certain period of time with a fixed and guaranteed return on capital plus interest is a good investment opportunity for a beginner. The certificate of deposit is insured and therefore the capital plus interest is guaranteed to the investor at maturity. However, it is important to understand that access to this money is limited during the specified investment period and may involve fees or loss of interest in the event of withdrawal.
- High yield savings account
This investment also includes savings solely for the purpose of earning capital gains from interest for a specified period. However, unlike the certificate of deposit, the interest rate is not fixed and therefore the interest rate is according to the prevailing market interest rates. However, the funds in this account are more liquid and therefore easily accessible.