Beginner Investing: 6 Best Investments for Beginners
The biggest misconception about investing is that it’s reserved for the rich. That might’ve been true in the past. But that barrier to entry is gone today, knocked down by companies and services that have made it their mission to make investment options available for everyone, including beginners and those who have just small amounts of money to put to work.
In fact, with so many investments now available to beginners, there’s no excuse to skip out. And that’s good news because investing is a great way to grow your wealth.
6 Best Investments for Beginners:
1. A 401(k) or other employer retirement plan
If you have a 401(k) or another retirement plan at work, it’s very likely the first place you should put your money — especially if your company matches a portion of your contributions. That match is free money and a guaranteed return on your investment.
You can start with as little as 1% of each paycheck, though it’s a good idea to aim for contributing at least as much as your employer match.
2. A Robo-advisor
Maybe you’re on this page to eat your peas, so to speak: You know you’re supposed to invest, you’ve managed to scrape together a little bit of money to do so, but you would really rather wash your hands of the whole situation.
There’s good news: You largely can, thanks to Robo-advisors. These services manage your investments for you using computer algorithms. Due to low overhead, they charge low fees relative to human investment managers.
3. Target-date mutual funds
These are kind of like the Robo-advisor of yore, though they’re still widely used and incredibly popular, especially in employer retirement plans. Target-date mutual funds are retirement investments that automatically invest with your estimated retirement year in mind.
Let’s back up a little and explain what a mutual fund is: essentially, a basket of investments. Investors buy a share in the fund and in doing so, they invest in all of the fund’s holdings with one transaction.
4. Index funds
Index funds are like mutual funds on autopilot: Rather than employing a professional manager to build and maintain the fund’s portfolio of investments, index funds track a market index.
A market index is a selection of investments that represent a portion of the market. For example, the S&P 500 is a market index that holds the stocks of roughly 500 of the largest companies in the U.S. An S&P 500 index fund would aim to mirror the performance of the S&P 500, buying the stocks in that index.
5. Exchange-traded funds (ETFs)
ETFs operate in many of the same ways as index funds: They typically track a market index and take a passive approach to investment. They also tend to have lower fees than mutual funds. Just like an index fund, you can buy an ETF that tracks a market index like the S&P 500.
The main difference between ETFs and index funds is that rather than carrying a minimum investment, ETFs are traded throughout the day and investors buy them for a share price.
How Can Getezo Help?
Getezo is one of the largest upcoming online marketplaces in India, which you can access from almost anywhere. Just Log on to Getezo and search for the Investment Consultancy in your required location. The page takes you to a location where a list of Investment Consultancy services will be shown. Choose the option which suits you the best.
Also, Read: “Tips to Follow For Buying A Rental Property“.