So you are planning for money investment? Making financial investments is one of the many things that you can do to take steps in securing a solid financial future. By creating a diverse portfolio, you can stand to reap the rewards of money well spent. The return on your investments can possibly change your financial status. But the world of investing can come down heavily on you if you don’t have a clear idea of what you are doing there. At one moment, your investment might be on the top of sky while it can be on earth in the next. Investment is always a good idea but for beginners, it can be a little scary.
Being a beginner, there is lot of things which you should be aware of. Most of the people do consultation from the professionals like where to money, which are the best area to invest and many more. But investing money is not something that should be entered into wearing a blindfold, especially for beginners. It can be tricky and you have to take risk at initial stage. But there are some low risk and even risk free investments that can be made. You should learn in the beginning what your options are. Here are some of the good investment options for beginners.
1.Stocks & Bonds: Making a stock investment does not require experience in the stock market. You don’t need to pick stocks on your own or take on excessive risk to invest in stocks. You should be aware before investing that stock prices do fluctuate. These two are among the most common investments for beginners and is considered as the best way to invest money. Stocks are equity investments and are relatively riskier than bonds. Bonds are actually debt investments. They are less risky but also yield a lower return while in stock, if the business is doing well, the value of its shares goes up. And if it is trending downwards, the share will lose value. But the chances of high returns in stock make it a good investment option.
2.Fixed Income: This include different type of securities like investing in corporate bonds, municipal bonds. A bond is a debt investment, similar to loan in which an investor lends an amount to an entity which borrows the funds for a defined period of time at a variable or fixed interest rate. Your initial work will be picking up the right bonds with the right yields and the maturities that match your investment horizon. Similar to investing in bonds, you can engage in P2P landing. It refers to lending money to unrelated individuals without going through traditional financial intermediates such as banks. But these are riskier than bonds and even bond investment can be risky too due to their fixed rate.
3.Mutual Funds: When it comes to investment for beginners, one of the best ways to invest money is to create an investment portfolio. If you can’t afford to create your own, you can buy into an already existing one by investing in mutual funds. The advantages of mutual funds are numerous. Firstly, they offer diversification, next they are extremely flexible and funds are managed by a professional. By purchasing small part of stocks, bonds and various securities, you can work your way up to building your own portfolio. ETFs trade like stocks and there are no margins for these securities. ETFs and mutual funds have a few apparent differences but also share many aspects.
4.Real Estate: Investing in real estate can be done by two ways:
-By owning property & collecting rent
-Or buy building property & selling it
Real estate investing for beginners is no different from the old pros. It is a good investment for beginners to get a good return on the property. But learning how to get that good is somehow tricky. Being a beginner, it is best to learn all before you jump into investing. The more you know more the money you stand to gain from your real estate investment. Only the preparations you need to make are study of market, study of properties and analyze the public reaction. Success at real estate investing often depends on where & what properties you buy. Keep in mind, being a beginner; it is always good to have some help rather than facing loss.
5.Certificates of Deposit: It is also a top choice for the beginners. With these, you invest a certain amount of money and you are guaranteed a return in a specific amount of time. The interest rate of CD’s are higher because you can’t access the money until the CD has fully matured. The maturity time can vary from months to years and there is a high minimum investment required to purchase.
But only stocks, bonds or mutual funds etc are not the only investment options for beginners. There are many other securities that may interest you depending on how much money you can put into your initial investment. The major points of concern linked with every investment strategy are low to high risks and low to high return. You will have higher risk in stock and that is why most of the people dread to invest in it. Talking about ETF, bonds or mutual funds, they are less risky and can even leads to lower returns. The time frame varies for high to low risk investment strategy and the decision is completely dependent on that. You can either choose robo-advisor or a traditional financial advisor depending on your investment portfolio. So plan accordingly on how much risks you can afford and how much time you can afford to expel returns.