Knowing how to manage your money is one of the most important skills one can have. If done properly, investing can help provide a secure and stable future. For those just starting out, it can be helpful to look at some of the most common beginner investments.
Stocks
When it comes to the concept of investing, the first place many people look is the stock market. Long-term, the stock market generally tends to reward those who chose to invest in it. It is important to note, however, that many aspects of the stock market require extensive research and knowledge prior to participating. We’ll focus on the beginner investments available to get started.
Buying and selling stocks themselves is a fairly simple process. First, a brokerage account is required with a firm that specializes in stock trading. Once you have opened an account with a broker and funded it from your other accounts, you’re set to buy/sell stocks. For beginner investments, it is best to avoid volatile stocks (those that move up and down quickly). Until you have a better grasp of the market, avoid risky investments. Older, more stable companies usually provide a reliable return on your money and have proven track records in the long run. Some of these will also pay you money annually (called a dividend) just for owning a piece of the company.
Bonds
Bonds can also be a conservative beginner investment. Owning a bond is owning a piece of a company’s debt. Provided that the company is secure financially and repays its debts, this can be a good option. In this case, you are paid a percentage of your investment annually for owning the debt. Essentially, you become the lender. This is one of the easiest beginner investments as there isn’t much to do or follow.
Alternatives
There are other beginner investments other than those described here. Some choose to use a savings account or money market account that pays a small amount of interest, just to ensure their money is safe. If you are OK with a lower return on your money, this is a viable beginner investment option as well.
Taking control of your finances is the first step to financial freedom, and the beginner investments described here would be a great first step.
