You’ve probably heard that investing is one of the best ways to get your money working.
The power of compounding can turn even a modest savings into a substantial nest egg over time.
If you save $ 100 a month and put that under the mattress, you will have $ 36,000 after 30 years.
But if you invested the same $ 100 per month and got an average return of 8% per year, the $ 36,000 you would have set aside would have grown to over $ 140,000 after 30 years.
But if you’ve never invested money in the stock market before, the prospect can be overwhelming. Which investments should you choose? And what kind of account do you need to get started?
Investing for beginners doesn’t have to be complicated. How to start.
What should I invest in? 6 types of investments for beginners
The stock market is the abstract space in which investors buy and sell stocks. When you invest in stocks, you are buying stocks or small pieces of ownership of a company.
When you invest in stocks, you benefit from good company performance. There are two ways to make money:
- Your stocks go up in value. If the company’s prospects are good, other investors will be willing to pay more money for your stock than you originally paid.
- The company pays you a dividend. That is, it distributes part of its profits to the shareholders. Smaller companies are less likely to pay dividends than larger ones. You will often have to reinvest that money in the company to keep growing.
With an app called Stash, you can own parts of popular companies like Amazon, Apple, Google, and more for $ 5 or less. Seriously, with just a few dollars, you can invest in thousands of stocks and ETFs that can help you grow your investment portfolio and meet your retirement goals.
The best part? Some companies may even send you a quarterly check for your share of the profits called dividends. If these companies benefit, so can you.
It takes two minutes to sign up and your investments are protected.
2. Real estate investment
It’s simple math. The world population is growing every year, but the land area is not. This basic equation means that the value of land and the structures on it will increase in value over the years.
Look at some of the richest people. Chances are they are invested in real estate in some form. It’s easy to believe that this is out of the reach of the average person, but there are ways to invest in real estate for almost everyone – and you don’t have to buy a piece of land or become a landlord.
You don’t have to be rich to invest in real estate. In fact, you can get started for as little as $ 10.
A company called Fundrise enables you to enter the world of real estate by giving you access to an affordable, diversified portfolio of private real estate. The best part? You don’t have to be a landlord. Fundrise does all the heavy lifting.
Fundrise’s starter portfolio has a minimum of just $ 10 and is aimed at first-time real estate investors. Your money will be invested in the company’s flagship fund, which already owns more than $ 250 million in real estate across the country, from apartment complexes to the red-hot apartment rental market to larger last mile e-commerce logistics centers.
When the tenants pay their rent, you can make money from quarterly dividend payments and, over time, make money from the potential appreciation of the property. Since 2014, Fundrise investors have earned around $ 100 million in dividends alone.
It only takes a few minutes to log into Fundrise and create an account.
3. Exchange Traded Funds (ETFs)
Exchange traded funds or ETFs are bundles of investments that are packaged and traded as a single investment. Purchasing shares in a single ETF allows you to invest your money in hundreds or even thousands of companies. Best of all, you can get started even if you don’t have a lot of cash, which makes it a great option for aspiring investors.
Some ETFs are actively managed, which means that people choose the investments. However, the vast majority of these funds are passively managed, which means that they try to track the composition of a market index.
One way to invest in ETFs is with a tool like M1 finance. Not only does it have some really powerful tools, but it is also easy to use. You can put together your own individual portfolio from stocks, bonds and ETFs.
You can set up regular automatic deposits to use money on your investments. Any new money you invest will be used to realign your portfolio and bring the percentages back in line with your goals.
Even better? Once you have deposited $ 1,000 you will receive a free $ 30 bonus. It only takes a few minutes Sign in.
4. Mutual Funds
Mutual funds are pre-made collections of stocks, bonds, and other types of fixed assets. Typically, mutual funds are designed and managed by financial professionals. However, some mutual funds are index funds, which means that their composition and performance are tied to a market index such as the S&P 500 or the Dow Jones Industrial Average.
Investing in a mutual fund allows individual investors to buy a diverse segment of the market without doing all of the footwork of researching and buying individual stocks.
Unlike stocks, mutual funds are not traded on the stock exchange. To buy and sell shares in a mutual fund, you must contact the investment company that manages the fund. This is only possible at the end of the trading day.
Many mutual funds require an upfront investment of $ 1,000-2,500, which can be steep for beginners.
In the broadest sense, cryptocurrency is simply another form of payment – like a US dollar, a Mexican peso, or a Japanese yen. What sets cryptocurrency apart from traditional hard currency is their decentralized nature and the lack of anything associated with them.
Instead of a government regulating cryptocurrency, these digital dollars are controlled by advanced math and massive computer networks that passively review every transaction. The technology behind the cryptocurrency is known as blockchain.
While some investors view cryptocurrencies as too new and too risky, others believe that these currencies are the future and they will only increase in value.
While they still haven’t eliminated that risk, cryptocurrency continues to expand as investment platforms like Robinhood increase support for these new currencies.
Make your first investment in cryptocurrency for just a few dollars. It’s free to buy and trade stocks, options, exchange traded funds (ETFs), and cryptocurrencies. There is also no account minimum and no maintenance fees.
6. Art investment
Every year most of us are at least a little surprised when works of art are auctioned at record prices. Sellers of such art often see their investments in these works accelerate across many of the strongest stocks.
At the more affordable end of the art market, you’re likely to find less consensus on value and, as a result, more volatility. So unless you have a real passion for art and the pieces you invest in, investing in the high end of the market can be a more solid investment.
No, you don’t have to be a millionaire to invest in millions. A company called Masterworks makes millions of dollars worth of investments in works of art accessible to ordinary people like us. You can use it to buy shares in valuable historical masterpieces – and instead of having $ 1 million on hand, all you need is $ 5,000 to get started.
Invest for the long term
Remember that you are investing for the long term. Market fluctuations are part of everyday life.
While it can be tempting to rip your money from the market when you see a scary headline, don’t look at investing from a short-term perspective. Diversify your stocks and keep you going through the lean times. The market usually corrects itself over time.
* Past performance is not an indication of future results. The publicly filed offer circulars of the Rise Companies Corp. For sponsored issuers, which may not all be qualified by the Securities and Exchange Commission at this time, please visit www.fundrise.com/oc.
Investing in securities involves risks, including the risk of loss. M1 Finance LLC is a SEC registered broker-dealer. Member of FINRA / SIPC.