It’s easy to get lost in the world of investing. There are many options out there, and you may be overwhelmed with where you could place your hard-earned income. However, in recent years it has become easier than ever to start your investing journey. After all, investing is the best way to grow your wealth over time. Here are a few investment options for the beginning investor.
1. 401k or another employer retirement option
If you are working in a mid-size to large firm, it’s most likely you will have a 401k or retirement plan. This is a great way to grow your income over time.
There are options where an employer will match whatever contributions you make from your paycheck. This way, you are investing a small portion every month without even knowing it.
401k’s are best known for the fact that there is not a minimum amount of investment needed. The money you put in is also made pretax, which is another incentive.
Some 401k options also put your money into a fund that is only withdrawable at a certain date in the future, typically up to ten years after retirement.
Ask your company about the 401k options, or contact the Human Resources department.
2. Robo-advisor
A robo-advisor makes your job easier if you have some money to invest, but don’t know how to do it. They use computer algorithms to find the best stocks that would grow over time. They typically charge low fees for their services and are even cheaper than normal financial advisors. Though it’s an automatic process, you should check the account a few times every month to make sure it’s on the right track. But for the most part, the robo-advisor does the “heavy lifting” on your behalf.
These services also offer plenty of information on how to invest. It will show you how to build a great portfolio with room for experimentation in the process.
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3. Mutual funds
Mutual funds are among the most popular investments. They are a large number of investments put together to make both the highs and lows less effective for an investor. Some of the most popular ones provide great returns considering the lack of risk involved. It is a long term growth vehicle, and are mostly bought with retirement in mind.
Mutual fund managers are easily attainable through a quick Google search or word of mouth.
4. Index funds
Index funds track a market index, which is a select investment basket representing a certain part of the market. These indexes hold the top companies in the United States, and an index fund would try to copy the mix of the market index.
It is more of a passive way of investing, and there are lower fees associated with this type of investment.
5. Exchange-traded funds
ETFs are similar to index funds, except that they are traded throughout the day and are bought by investors for a share price. These prices usually range from $100 to $300.
ETFs are a cheap way to get the benefits of an index fund for a much lower price. They also have lower fees than mutual funds, and usually track a market index like the S&P 500.
Since ETFs are traded like ordinary stock, a broker would often charge fees to buy or sell them. There are also many brokers that offer commission-free ETFs, which is another incentive to purchase them.
6. Investment Apps
With the popularity of apps in our society, many have been offered to entice beginner investors to buy stocks. Acorns Is an example of one of these types of apps, and it invests by rounding up purchases on a debit or credit card, and investing that amount in a portfolio of ETFs. However, it charges $1 per month for an ordinary investment account, and $2 a month for a retirement account.
Another app is Robinhood. This app allows commission-free trades on the majority of stocks and ETFs traded on the open market. There is no account minimum and no fees associated. The company even allows investors to take part in the cryptocurrency trend that is gaining popularity. It is among the most popular investment apps for beginning young investors.
Investing could be a really easy task, but guidance is necessary in any endeavor you pursue. If you follow the guidelines above, you could be on your way to becoming a savvy investor with a lot more money in your bank than you ever thought possible before.
Image Credit: investment ideas by Pixabay
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