Best Investment Strategies for Beginners

Best Investment Strategies for Beginners

Investing your money can sometimes seem like a daunting task, particularly if you have never done it before. Investing might have been one of your financial goals as you gathered the funds needed to make your first investment. However, you may feel ill-equipped to make the decisions needed to manage your money.

As a beginner, there are several strategies you can implement to help you get returns on your investments.

Researching the investments you are considering before you make them is one of the most important steps for a beginner. Expert opinions can help to guide you, even if you lack experience yourself. Many beginners, however, want a simpler start than making their own trades. Some investors prefer to use some of the tools that are available to those with less financial expertise, such as automated investment managers. Find a list of strategies below to get started with your investments in 2019.

Create a Plan

While you may already know that you want to invest, it is a very broad field. There are several ways to invest and a multitude of reasons to do so. Before deciding how you are going to invest, make sure you know your reasons and desired end goal. Many beginners want to invest in order to have their savings work for them, instead of remaining passively in a bank account. In this case, you may have a long-term financial goal, such as retirement, in mind. In this case, you could benefit from a retirement savings account based on the number of years you have left before retirement. You would also use your desired return as a metric for how much money you should invest.

Related Article: How to Invest Ethically

Some people are interested in other areas, such as investing in stocks and real estate. For this, consider hiring a finance manager to take control of your funds. Otherwise, start by making smaller investments and gradually adding to them.

Furthermore, be sure to create a budget for your investments wisely. While you may gain from your investments, there is no guarantee. As such, it is too risky to place all of your money into investments, regardless of how confident you are in your plans. Even if your investments are all successful, a portion of your funds should remain liquid to prevent any cash flow issues.

Retirement Funds

One of the most important decisions to make when starting out as an investor is the vehicle you wish to use for your investment. There are many options to consider. If you are a beginner investor and have not yet set up a retirement account, this is the best option for you. Retirement funds are an important part of financial planning. They allow you to grow your funds, instead of simply saving them.

Consider placing some of your investment funds into a traditional or a Roth IRA. If you already have an IRA, you can take your investment strategy a step further by requesting the money be invested in a specific place, rather than the default investment made for you.

Related Article: Pros and Cons of Investing in a Roth IRA

A 401(k) is another excellent option, provided you are employed. Like an IRA, a 401(k) will be automatically invested in certain areas. You can choose where you want it invested instead, and take control of your funds. If you have a longer period before retirement, you might be able to take additional risks with these types of investments. However, if you are close to retirement, exercise caution, as you must rely on the funds you have already accumulated.


This is a relatively new investment tactic, offering an automated replacement for a financial advisor. While the use of robo-advisors offers little opportunity to personalize your choices, it can be a good way for a novice investor to get started. Many robo-advisors have low minimum balances and are easy to navigate, even if you know very little about finance. They often have user-friendly apps and websites that make it easy for users to keep up with their investments. Many also provide helplines for investors who want further assistance. Some of the best-known robo-advisors include:

  • Betterment.
  • Wealthfront.
  • Wealthsimple.
  • Schwab Intelligent Portfolios.
  • SoFi Wealth.
  • Personal Capital.

Diversify Your Portfolio

Diversifying is an essential part of investing. It means that you invest your money in multiple places, such as splitting them between stocks and bonds. Investing all of your money in one place is very risky. When you diversify, you lower this risk, as each investment performs differently.

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Strategies such as robo-advisors and retirement funds can be even more valuable for those starting out. Each of these provides diversified investments without requiring you to make too many decisions. Other areas of investment, such as mutual funds, also provide automatic diversification. However, it is still best to extend your portfolio beyond a single fund.

Stay Informed

If you choose to invest in specific stocks, research your choices beforehand. Making these choices based on your own understanding of the market is not advisable as a beginner, as stocks can be much riskier than other investments. Find industry experts who can provide insight on investments with long-term growth. This could be a recently developed technology or a market that is rapidly expanding.

At the same time, it is important to watch for patterns and trends. This can be difficult and time-consuming, which is why many beginners choose to rely on experts. However, if you research how to watch for growth, peaks and declining trends in the market, you can learn how to make the most of your investments.

Related Article: Investing in Riskier Assets

By Admin