Failing to put your money in a good investment could mean you put your retirement in jeopardy. Bad things can happen—resembling the economic collapse that happened in 2008. It can be scary when you’re just learning how to invest and trying to figure out how it works.
While there is always a risk when investing, there are certain investments that are safer than others. If you’re looking for good investments for beginners, we are going to help you today.
Continue reading this article to learn the best tips for investing for beginners.
1. Employer Retirement Plan
When you’re just beginning, one of the no-brainer ways of getting started is taking part in your employer’s retirement plan.
Most employers offer a match up to a certain percentage of your paycheck. For instance, if your paycheck is $1,000 and you put in 3%, and your employer says they will match 3%, then they’re matching 100% of your investment. However, if you put in 5% of the $1,000, they will still only match 3% of the $1,000.
Before you get excited, make sure your employer does have a matching program in place and check to see what the terms are around the match.
Keep in mind that you should keep this money in the account until your retirement or you are going to get slapped with big fees.
The retirement plan your employer has is usually a 401(k), but you can only put $19,500 a year into a 401(k) as of 2020. However, if you’re 50 or older, you are allowed to put in $26,000 a year so you can catch up.
When you do opt to go with an employer retirement plan, you will let the employer know, and they will take it directly out of your paycheck. Many people find this makes it much easier for them to save.
When you first start investing, an employee retirement plan is one of the basics.
2. Robo-Advisor
If you don’t want to pick your own investments and deal with annoyances related to planning out investments, you might consider using a Robo-advisor.
Robo-advisors make it easy to automate your investing. You tell them how aggressive you want to be and what your goals are, and they put together the best plan for you to get you there.
These services generally have very little overhead, so they can offer their services to you at a very minimal price.
If you don’t have a lot of money to invest, this can be a good option as many of these companies have no minimum requirements.
The good thing about using a Robo-investor is that you’ll be able to see what they buy for you and how everything works. It’s a good way to see it in action, so you can learn to invest yourself if you want to.
3. Index Funds
Index funds have been a favorite to many investors for a long time. Index funds track a market index. That means you have a selection of investments that represent part of the market.
For instance, if you own part of the S&P 500, that means that you have stocks of around 500 of the largest companies in the U.S. If you always wished you would have gotten a piece of the big pie—now is your opportunity.
Index funds are a passive way to invest because you can track the market index instead of having to use professional management. Since no one has to manage them, they usually have lower fees.
There are companies that don’t have any minimums to invest in index funds, but there are a lot of companies that require a certain amount of cash for them to work with you.
4. Target-Date Mutual Funds
Target-date mutual funds are retirement investments that invest with your retirement date in mind. When you invest in a mutual fund, you get a bunch of different investments with only one transaction.
These funds usually hold both stocks and bonds, but depending on the date of your retirement, the strategy might be more or less aggressive.
For instance, if you have a retirement date that is only 10 years away, it’s likely you don’t want to be very aggressive because you don’t want to lose everything. The closer you come to your retirement date, the less risky the fund becomes because it will change out the investments in it.
5. Investing Apps
There’s an app for that. No, really, there is an app for investing.
If you’re not sure what to do with your money and how to invest it—let an app help you.
Apps like Acorns round up your purchase and invest it in your account. It might not seem like much at first, but it definitely adds up, and you barely notice it’s gone.
There are other apps that allow you to automatically invest each month or even each week, depending on how you want to schedule things.
The money in the account on the investing app buys EFTs and individual stocks. It may be different, depending on the app you choose to use.
Become a Pro at Investing for Beginners
You might be a beginner now, but you can work to become a professional. Now you have the important information you need to know about investing for beginners and will be able to work on your strategies.
Not all investments are equal, and when you’re investing money, you need to give yourself some early wins so you get a taste for how success with investments feel. Use the information above, and you’ll be well on your way.
Do you feel like you need more information about investing and other important things? Continue through the blog for the more great information.
