The idea of investing can be a little intimidating at first, especially if you are starting out. However, investing is a significant part of wealth creation that also helps to beat inflation in a country.
Investing rather than letting your money lie idle in your bank account is always a better idea. It might not only help in meeting financial goals but also sustain a healthy financial life. There are various investment ideas available for beginners.
A sustainable finance course can give you an in-depth understanding of various investment options for beginners. While some carry a certain level of risk, some do not. It is hence a wise option to scrutinise the best business investments to prosper financially. Keep reading to know the best investment plans for a beginner.
Best Investment Ideas for Beginners
1. High-yield savings account
This is one of the simplest ways to boost good return on your money and your regular earnings. A high-yield savings account promises higher interest on average compared with standard savings accounts and gives customers regular access to money.
These are usually opened through an online bank account and promise to be a great place to save your money for emergencies.
2. Employment retirement plan
If you have a strong retirement plan, you will likely make it your priority. This is especially true if your company matches the portion of your contributions.
You can start with as little as 1% of each paycheck, although contributing and meeting your employer match is a good idea. Strong retirement plans such as 401k need an individual to contribute 6% of their salary each year.
3. Certificates of deposits
These are another prominent way to earn additional interest on your savings. These, however, tie your money up for longer compared with a high yield saving account. Purchasing a CD for distinctive time periods is easy but accessing the money before the CD matures is prohibited without a penalty being paid.
The investment plan is entirely safe, and you can attain a cover-up when you purchase through an insured bank. Develop sustainable finance skills with an online finance course to gain an understanding of the certificates of deposits.
4. Robo-advisor
While you know that you are supposed to invest and have successfully managed to save the money, you might wash your hands of the entire situation. There lies the good news. Thanks to robo-advisors, managing investments is easier with the help of computer algorithms.
They charge lower fees compared to human investment managers. Typically costing 0.24% to 0.50% of the account balance per year makes it easy to open an account without any minimum amount.
They are furthermore benefitting beginners to get started with investing because they require the least money while taking care of most of the work for you. While it is still your money and you have complete right on it, the robo-advisor will do all the heavy lifting.
5. Invest in target-date mutual funds
As the name suggests, these are retirement investments done keeping your estimated retirement year in mind. However, a professional manager chooses the mode of investment with a certain kind of general theme.
A target-date mutual fund holds bonds and stocks together. For example, if you intend to retire in 30 years, you need to choose a target date fund with 2052.
Through the investment plan, you will be able to hold stocks as your retirement. Moreover, stock returns are profitable over the long run. With time, however, it will slowly shift some of the money towards the bonds, as individuals tend to take less risks as they reach retirement.
6. Index funds
They are precisely like mutual funds; however, they run on autopilot mode. Instead of employing a professional manager to maintain the portfolio of investments, these funds track the market index. It refers to a selection of investments representing a specific market portion.
Index funds adopt a passive approach to investing through tracking market indices instead of using professional portfolio management. They carry lower expense ratios and a fee charged based on the invested amount. Like mutual funds, the investors in index funds buy a chunk of the market in one single transaction.
7. Cryptocurrency
This is a form of currency that exists virtually or digitally and uses cryptocurrency to secure transactions. These do not have a central issuing or regulatory authority.
On the other hand, they use a decentralised system that records transactions along with new units. Enrol in a sustainable finance course to explore the benefits of earning money in cryptocurrency.
8. ETFs
ETFs stand for exchange-traded funds. These funds are quite like mutual funds and are secured investment methods. They are traded throughout the day in the same manner that a stock would.
However, these do not come with the same investment requirements as mutual funds, which are otherwise quite expensive. ETFs are purchased for the cost of one share in addition to fees and commissions associated with the purchase. Get a sustainable investing certificate by enrolling in a sustainable finance online course.
9. Individual stocks
This is one of the most common forms of investing and one of the riskiest kinds. But before you start trading, consider whether the investment is ideal for you or not. Stocks are priced every second of the trading day, so people often get drawn into short-term trading while owning individual stocks.
These represent a share of ownership in an entity or a company. Stocks are one of the most promising investment avenues for investors eyeing long-term investment. However, as these are market-linked instruments, the risk of capital loss prevails.
10. Investment apps
Most investing apps tend to target beginner investors. For example, Acorn rounds up your purchases on credit or debit cards while investing the change in a diversified ETF portfolio. This is when it works like a robo-investor while taking care of your portfolio.
There are simply no minimum criteria to opening an Acorns account. Instead, the service tends to start investing once an accumulation of at least $5 is completed in roundups. At the same time, you can make lump-sum deposits.
The ideal choice of investment lies in your hands. Depending on the risk appetite, you can choose to invest in market-linked instruments that remain unaffected by market movements.
Most investments tend to carry a specific level of volatility, and the returns are high when the levels of risk are high. Hence, the investment decisions are based on the investor’s risk appetite.
Take your first step in the world of investment and reap financial benefits in the future. Do not hesitate to enrol in a sustainable finance course to know more about the best investment options for beginners.
