The proverb goes something like ‘now is the best time to start investing.’ For some newcomers, this can be a daunting task considering the amount of optimal investment information, including guaranteed returns. Other newcomers will find it a quick way to make money and an easy way to get your head around the market first.
This post is for those amateur investors who are ready to make a strategic decision to protect their investments in the face of sustainable risk, but with sufficient latitude to pursue conservative opportunities that can raise capital and learn the ropes of the trade while in it.
In addition to a theoretical understanding of how financial markets work, it is essential that a novice investor gain a realistic understanding of the various strategies employed in looking for opportunities in the market.
Below is a detailed explanation of the five best investment strategies suitable for beginners:
Exchange-traded funds (ETFs) offer a less rigorous opportunity to participate in stock exchanges. As a beginner, investing in an ETF is ideal because an ETF combines several assets, including specific stocks, commodities and bonds, and tracks performance against an index. ETFs allow you as an investor to trade multiple assets as if they were a single stock. The diversity of ETFs enables newcomers to access a wider portfolio of stocks and bonds while minimizing benefits and risks. As a result, the flexible nature of ETFs allows an investor to trade flexibly, with the option to buy and sell at any time during the regular trading hours.
- Joint venture
Mutual funds are the ideal investment vehicle for beginners because of its two basic features. First, a beginner is able to access the services of a professional trader in the name of a fund manager despite having a modest amount of capital, some less than $ 25. Second, investors face minimal risk because mutual funds, like ETFs, invest in a portfolio of different asset classes of stocks, commodities and bonds across different markets and industries.
- Individual stock
After a detailed analysis of the past performance of an individual stock and the existing data, the individual stock may offer a stable investment opportunity suitable for newcomers. However, caution should be exercised so that investing in specific stocks does not upset the risk tolerance level of your portfolio in the event of a negative turn of events. The market is not always predictable.
- Certificate of Deposit
Depositing money in a bank over a period of time is a good investment opportunity for a beginner with a fixed and guaranteed capital and interest return. Certificates of deposit are insured and therefore capital and interest are guaranteed to the investor at maturity. However, it is important to understand that access to this money is limited during certain periods of investment and there may be loss of fees or interest in case of withdrawal.
- High yield savings account
This investment also includes savings for the sole purpose of earning capital from interest for a fixed period of time. However, unlike the certificate of deposit, the interest is not fixed and hence the interest is at conventional market rates. The funds in this account are more liquid so easily accessible.