The saying goes, “The best time to start investing is now.” For some beginners, this can be thorough, given the amount of information on the best investment with a guaranteed return. Other beginners will think that this is an easy way to win quickly and immerse yourself in the markets first.
This publication is for an amateur investor who is willing to make a strategic decision to protect his investment against exposure to unsustainable risk, but with enough freedom to look for conservative opportunities that yield capital gains and to learn the ropes of trade, while in it.
In addition to a theoretical understanding of how financial markets work, it is imperative that the beginner gets a realistic sense of the different strategies that investors use in seeking market opportunities.
The following is a detailed explanation of the five best investment approaches suitable for beginners:
Exchange traded funds (ETFs) offer a less stringent opportunity to participate in the exchange. As a beginner, investing in an ETF is ideal because the ETF brings together several assets, including specific stocks, commodities and bonds, as well as the results tracked against the index. ETFs allow you as an investor to trade multiple assets as often as if they were single shares. ETF diversification allows beginners to access a broad portfolio of stocks and bonds, providing convenience and reduced risk. Therefore, the flexible nature of ETFs allows the investor to trade flexibly, with a choice of buying and selling at any time during regular business hours.
- Mutual funds
Mutual funds are pooled investment funds, ideal for beginners due to their two main characteristics. First, the novice can access the services of a professional trader on behalf of a fund manager, despite the meek amount of capital, some of which is only $ 25. Second, the investor is exposed to minimal risk, as mutual funds, such as ETFs, invest in a diverse portfolio of asset classes, stocks, commodities and bonds in different markets and industries.
- Individual stock
After a detailed analysis of the past performance of a single share and the prevailing facts, the individual shares can offer a stable investment opportunity suitable for beginners. However, care must be taken to ensure that investing in specific stocks does not impair the level of risk tolerance of your portfolio in the event of a negative turn of events. Markets are not always predictable.
- Certificate of deposit
Depositing money in a bank for a certain period with a fixed and guaranteed return on capital plus interest is a good investment opportunity for beginners. The certificate of deposit is insured and therefore the capital plus interest is guaranteed to the investor at maturity. However, it is important to understand that access to this money is limited during the specified period of the investment and may attract fees or loss of interest in the event of a withdrawal.
- High yield savings account
This investment also includes savings solely for the purpose of gaining capital gains on interest for a specified period. However, unlike the certificate of deposit, the interest rate is not fixed and therefore the interest rate is in line with the prevailing market interest rates. However, the funds in this account are more liquid, therefore easily accessible.