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Low Cost Investments for Beginners
The best way for a beginner to get their feet wet in investing is to start slowly. Investing only a small amount of cash when you haven’t yet learned the ropes is a very smart idea. It allows you to learn as you go and potentially make money without forfeiting tens of thousands of dollars due to a mistake.
Try starting out with these investments that require a lower bar of entry and are some of the simplest investments to grasp and understand:
- Stocks. Beginners should stick with the safer, seasoned stocks that have proven to be stable moneymakers over a period of time. Of course, the appreciation of the stock won’t skyrocket overnight, but then again, it is very unlikely to plummet overnight as well.
- Generally, the “safe” stocks are with well-established businesses that sell everyday items that people will purchase whether or not an economic crisis is in place. Businesses that sell moderately priced personal care items, food, and cleaning products fit nicely within this category.
- When choosing a hot stock, the chances of earning money quickly are higher. However, the stock can lose value easily just as fast. However, if you buy low and sell high and can do so quickly, there’s money to be made.
- Choose an online broker, such as www.etrade.com or www.optionshouse.com as the startup cost is low – generally less than $10 – to gain access to the members area which will give you all of the tools, advice and buying power necessary to make a successful buy or trade.
- CDs. A certificate of deposit holds no risk; however, the return is minimal. Another caveat is that you’re unlikely to see your money or any return for a while, as the general CD terms are 6 months, 12 months, 1 year, 3 years and 5 years.
- Essentially, when you open a CD, you’re loaning the bank your money. In return, you’re repaid with interest, which is generally low.
- Most seasoned CD investors like to have three CDs at a time: one for a 12 month term, another for a 2 year term, and a third for a 3 year term. When the first CD has matured, they’re able to cash out, yet still have two CDs accruing a higher interest.
- The startup cost for a CD varies widely and depends on the funds you have available and are willing to invest. Some CDs can require as little as $500, while others can have a minimum of $10,000 or more.
- Mutual funds. Rather than the investment and all of its earnings being solely yours to claim (and fund), a mutual fund has thousands of investors contributing their own monetary investments into the funds of the investment as a whole; hence the term mutual fund.
- Mutual funds are attractive to beginners because the fund is managed by a seasoned investment professional that calls the shots – and because of this, he is often able to generate more money for the investors as a whole, rather than if they were to go it alone.
- You can start a mutual fund with very little cash – in some cases as little as $500 to $1,000 in a lump sum or even $25 per month on a regular basis.
As you can see, investing can be very lucrative. While you may not be able to buy a house using your proceeds, everyone has to start somewhere. By utilizing the investment methods mentioned above, you’ll be off to a great start.