Investing 101: 4 Ways to Secure Your Future

Investing as a beginner can be overwhelming and intimidating. But why shouldn’t you learn how to invest your money for the best returns, just as big corporations like insurance companies do? Don’t let terms like shareholders, stocks, bonds, or mutual funds make you panic.

There are four simple tips to help total beginners get started in investing so you can lay the foundation for investment success. Whether you are interested in investing in a mutual fund for retirement or life insurance investment plans, learning more about the stock market, or finding out more about investing in real estate, there’s a path for everyone.

Getting Started With Investing

Before you start investing, you should be sure you have an emergency fund and maximize your retirement savings by contributing the maximum to your retirement account. Maximizing your contributions is even more important if your employer offers matching contributions. Otherwise, you’re turning down free money.

You need to have a good idea of your goals and investment timeline. Know how long you will have until you need the investment funds and understand your risk tolerance. Decide what kind of investment you might be most interested in.

Types of Investments

There are many kinds of investments to consider. Mutual funds are a good option, particularly if you don’t have much time to invest. You could consider investing in the stock market through individual stocks or learning about bonds.

Other options include short-term or long-term certificates of deposit, government bonds, high-yield savings accounts, or index funds. In addition, you might be interested in real estate investing by purchasing rental housing or learning about cryptocurrency.

#1 – Stock Market Investing

If you are interested in investing in the stock market but don’t know where to begin, start doing some research. There is a lot of information online and a lot of good books about the stock market and investment principles at your local library.

If you decide the stock market is the right choice for you, you have quite a few options. First, you might decide to use one of the online trading apps. If so, get as much information as possible before you start.

You might choose to use an online broker or a brick-and-mortar or discount broker. Full-service brokerage services usually require a high initial investment. Discount brokers offer limited services, most of which are available online, and many include an education section for users.

Be sure to check the fees and associated charges before committing to brokerage service. In addition, some fintech apps allow you to buy into the stock market by using your change from daily transactions and purchasing fractions of stocks.

You may be able to invest through a program offered by your employer. It’s worth checking with your company’s HR department. If you can only invest a small amount, set a goal and be consistent.

#2 – Mutual Funds

Mutual funds are a great way to benefit from the stock market without risk. You can purchase mutual funds that align with your goals, risk tolerance, and long-term goals. However, be aware that any mutual fund will have a fee attached to purchase, and most will carry a load.

Mutual funds are professionally managed pools of investor funds. Each fund has a stated investment focus, such as tech, energy, or finance. Investors will accrue fees when buying mutual funds. Talk to an adviser at your brokerage or financial institution about your options.

Beginning investors may find that mutual fund fees are lower than commissions on stock trades.

#3 – Real Estate Investing

Investing in real estate can be a great way to build your nest egg. You can start with a small rental or Airbnb and leverage the value of the property and mortgage payments to increase your assets. Then, after a few years, you may be in a position to add other properties.

Keep in mind that you will incur maintenance and insurance costs as well as property taxes. You will also need to hire a property manager or do this yourself. If you’re doing it yourself, check out specialized property management software.

#4 – Other Investment Options

There are many ways to invest your money for growth. Options like cryptocurrency investing, precious metals including gold and silver, art, classic cars or furnishings, and exchange-traded funds (ETFs) are excellent investment choices.

Investing for the Future

Investing can provide you with a source of income, help you fund your retirement, or even get you out of a jam. Investing is a way to grow wealth. It’s a way to help you meet financial goals and increase your purchasing power.

Alexandra Arcand writes and researches for the insurance comparison site, TheTruthAboutInsurance.com. She is a finance expert who enjoys sharing her knowledge with others to start their investing journey.

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