Introduction
Investing is a financial topic that makes people either excited or really nervous. On one hand, you have the potential for great gains. On the other hand, you can lose a lot of money if you don’t know what you’re doing. I want to share the best types of investments for beginners.
1. Stocks
- Description: Buying shares of a publicly traded company, giving you partial ownership.
- Pro: High potential returns over the long term.
- Con: Prices can be volatile and subject to market risk.
There are many ways to get involved with investing in stocks. Generally they’re not a solid investment for beginners. It’s easier said than done.
That being said, Don’t try to be a day trader tomorrow. It takes more than a day to be a day trader. If you are going to start in stock, choose a longer term for your trades.
Decide on companies that you can invest in for weeks months or years. Next, choose a platform that works best for you.
They have all different types of features like visual representations of your trades and stock charts, special order types and all the bells and whistles. Do the research.
Find out what features you absolutely need. And sign up. The Robinhood app and Webull app are among the most user-friendly apps to start trading stocks.
2. Bonds
- Description: Lending money to a government or corporation in exchange for interest payments.
- Pro: More stable and predictable income than stocks.
- Con: Lower returns, and subject to inflation and interest rate risk.
Most people choose US Treasury bonds as great investments for beginners because they are considered more stable than the more volatile stock market. You can learn more straight from the government at U.S. Treasury Bonds.
3. Mutual Funds
- Description: Pooled funds managed by professionals, investing in a diversified mix of assets.
- Pro: Easy diversification and professional management.
- Con: Often includes management fees and less control over investment choices.
If you’re more conservative and want more of a stable investment than investing in stocks, you might want to look into mutual funds. When you invest in a mutual fund, you’re investing in professional managers who are a portfolio of stocks.
Their knowledge equals your stock market Edge. You can learn more before you invest at Investor.gov on Mutual Funds . A good place to start investing in mutual funds is Vanguard Mutual Funds.
4. Exchange-Traded Funds (ETFs)
- Description: Similar to mutual funds but traded like stocks on exchanges.
Pro: Lower fees and more flexibility than mutual funds. - Con: Still exposed to market risk and may require trading knowledge.
So, the ETF looks like a stock price chart. In most cases you can trade them just as easily. You can learn more or get started at Charles Schwab on ETFs
5. Real Estate
- Description: Investing in property for rental income or value appreciation.
- Pro: Tangible asset that can generate cash flow and tax benefits.
- Con: High upfront costs and ongoing maintenance responsibilities.
I love real estate. The following app is also option for real estate investing. I actually used this site as my investment base.
This is the conservative investment that you place your investment money in until you learn how to get higher returns through your personal education and experimentation.
In layman’s terms, don’t take your money and gamble with it. You want to put the bulk of your investment money in a stable slow low return investment vehicle.
Only take that money out and apply it to more aggressive Investments once you are sure that you can make a positive return. Groundfloor.us Is my top pick for all type of investments for beginners, PERIOD!
6. Cryptocurrency
- Description: Digital or virtual currencies secured by cryptography.
- Pro: High potential gains and 24/7 global trading.
- Con: Extremely volatile and largely unregulated.
If you’re not investing in cryptocurrency, someone needs to get you going quickly. The financial markets at shifting.
Be a part of that shift and you can profit immensely. Remember Bitcoin? Although Crypto can sound complicated, it’s still a good investment for beginners.
The key is to accumulate your investment. Keep buying $20 $50 $100 at a time until you get to an amount that you are comfortable with.
If you want to learn more about cryptocurrency or get started you can check out CoinMarketCap.
7. Commodities
- Description: Investing in physical goods like gold, oil, or agricultural products.
Pro: Can act as a hedge against inflation and currency risk. - Con: Highly sensitive to global events and market speculation.
The beauty of investing in physical Goods is that they literally hold their value. I think it’s partly because you can actually hold their value too. This makes them easy investments for beginners.
It’s hard to dispute something’s value when you can see it. These physical goods are a great way to diversify your Investments.
That means to spread your investments into different types to make sure that if a nuclear bomb destroys one type of your investment, you have others in different Lanes that will not be affected.
Check out Yieldstreet for more information on investing in commodities.
8. Options
- Description: Contracts that give you the right, but not obligation, to buy or sell an asset at a set price.
- Pro: Allows strategic trading with limited capital.
- Con: Complex and risky, especially for beginners.
I like options. Let me be specific. I have a love-hate relationship with options trading.
I think you need to have a good handle on how stocks work before you get involved with options. It’s because options are like the more erratic unstable bad boy cousins of stocks.
You can have more fun but they can get you into more trouble in the process. With options you are dealing with a time component because unlike stocks options expire.
This one element of options invites a whole new dynamic into Speculation of these securities. With each minute that ticks the value of options shift and change. I don’t these are easy investments for beginners.
Learn before you get involved. Consider yourself warned. This is the best place to learn about options: https://www.optionseducation.org/
9. Certificates of Deposit (CDs)
- Description: Fixed-term, interest-bearing deposits with banks.
- Pro: Very low risk and guaranteed returns.
- Con: Limited access to funds until maturity and low returns.
Some people swear by CDs. I am only mentioning this investment type so that I can present to thorough list.
I personally think they are not worth it. To have your money sit in liquid for pennies on the dollar, it’s not enough of a draw to let financial institution tie up my money.
You can make three to five times more in a mutual fund. If you still want to open a CD you can try Bank of America – CD or Chase Bank – CD.
10. REITs (Real Estate Investment Trusts)
- Description: Companies that own or finance income-producing real estate.
- Pro: Earn real estate income without owning property directly.
- Con: Dividends are taxed as regular income and subject to market fluctuations.
Imagine you want to get in real estate but you don’t want to deal with the headaches and surprises. Leave it to the professionals and invest with them.
REITs allow you to get involved while not having to deal with tenants and toilets. Learn more at Nareit – Why invest in REITs?
11. Collectibles
- Description: Investing in valuable physical items like art, antiques, or rare coins.
- Pro: Potential for high returns and personal enjoyment.
- Con: Illiquid and value is highly subjective.
I personally seen the power of flipping antiques. I would deliver a chair for $300 and the Dealer who had it reupholstered would later sell it for up to $3,000.
Once you pick a niche and learn it well, you can’t become extremely profitable. Learn more here: Video – Investing in Collectables?
12. Angel Investing
- Description: Providing early-stage funding to startups in exchange for equity.
- Pro: High upside potential if the business succeeds.
- Con: Very high risk of total loss.
There are many people starting businesses and need funding. Angel Investing is a way to get your hands around private companies without the heavy competition of publicly traded stocks.
Once you find a business idea and leadership team that you like, you can Supply the majority of the funds needed while acquiring The Lion’s Share of a rising company.
Learn more here How Angel Investing Works – Investopedia
13. Venture Capital
- Description: Investing in high-growth startups through structured funds or firms.
- Pro: Access to promising, innovative companies.
- Con: Requires large capital and typically has long investment timelines.
Venture capital takes the form of entity that comes together to invest in different companies. Imagine a couple of Angel Investors getting together pulling their resources to do bigger deals.
Depending on where you are financially, this may be a future Vision. At any rate, learning more about venture capital can’t hurt. Venture Capital – Wikipedia
14. Equity Crowdfunding
- Description: Investing smaller amounts in startups through online platforms in return for equity.
- Pro: Lower entry barrier for investing in private companies.
- Con: Startups are high-risk and may lack liquidity or transparency.
If the proposed timeline for starting your own venture capitalist firm it’s too long, don’t lose heart. There are easier ways to invest in startups.
Equity crowdfunding helps everyday people come together to make a difference in an entrepreneur’s life and future. It takes a complex industry and breaks it down to become a good investment for beginners.
Learn more here: What Is Equity Crowdfunding? – Nerd Wallet
Conclusion
We discussed some types of investments for beginners. Some are more difficult to understand than others.
My suggestion is to start with the Investments that seem to go right down your alley. Stay close to what you know.
While educating yourself before you experiment with your money. Use a blended approach between your boring conservative Investments that give you more of a stable return and more aggressive and risky Investments.
What was your favorite type of investment?
