Investing 101: What Are the Best Investments for Beginners?

If you’re planning to dip your toes into the investing world, you’re not alone. 15% of all current U.S. stock market investors in a recent survey said they first began investing less than twelve months prior.

One of the barriers keeping many away from using Conservative Investing Portfolio Applications is deciding where to actually invest their money. Stock market tips are a dime a dozen and the field is ripe with high-risk low return options. Find your path to financial growth in our easy guide to some of the best investments for beginners.

Retirement Plans

We know. Retirement plans are probably not what you were hoping to read when looking into investments for beginners. They are, however, a solid investment option that should be considered.

If you have a retirement plan at work like a 401(k), it might be the first place you should look to invest your money. Even more so if your employer matches a portion of your contributions.

Start small and start early where even as little as 1% of your paycheck makes a difference. Although, if you can contribute at least as much as your employer matches, that match is free money and a guaranteed return on your investment.

Target Date Mutual Funds

Target date funds are a mix of buying stocks and bonds but in a single fund which becomes more conservative over time. They are designed to tackle the risk that you get with stocks where the stock market can take a dip at any time leading up to your retirement. A recession-like dip can wipe away a large chunk of your investment when you need it the most.

Target date funds mitigate this risk by initially holding mostly stocks when your retirement date is a long way into the future and slowly shifting more money towards bonds so your investment becomes more conservative over time. Your employer may also offer a target date fund since they are a simple way to save for a defined period.

Index Funds

Index funds are like mutual funds but more on autopilot. Instead of a professional manager building and maintaining the fund’s investments, index funds track a market index.

For example, the S&P 500 is one index that holds the stocks of around 500 of the largest companies in the U.S. An index fund that tracks the S&P 500 would aim to mirror its performance by buying only the stocks in that index.

Another plus for index funds is that they take a passive approach to investing compared to buying and trading stocks and tend to carry lower fees. This means more of your money is getting invested. If you’re still keen on the stock market, however, it is possible to find stock brokers like who offer easy access to international share trading with zero brokerage.

Exchange-traded funds (ETFs)

ETFs are similar to index funds in that they take a passive investment approach and typically track a particular index, sector, or commodity. The main difference is that ETFs are traded throughout the day and investors can buy them for a share price.

Although ETFs are like trading stocks, recent changes in the investment market have seen commission-free trades become the norm. This means if you plan to invest regularly in an ETF you should look out for a commission-free ETF so you aren’t paying a commission each time.

Investments For Beginners: Start Today

Now that you’ve learnt investing isn’t all about cryptocurrencies and day trading, it’s time to choose your own investment strategy. Whether you’ve got your eye on the security of a retirement fund or would like to be more involved in ETFs, there’s actually a large number of investments for beginners. Continue your learning and find out more about the investment vehicles available in our Investing section.