Investment 101: A Novice Investor’s Guide

SHARE:
Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

Investing is a great way to build wealth. Of course, having cash sitting somewhere won’t definitively increase its value. Moreover, while keeping money in savings bank accounts allows you to benefit from the interest, it’s not enough if you want your finances to grow substantially.

Therefore, aside from making bank deposits, it’s indispensable for every individual to invest. But stocks are so volatile and complicated, that novices are daunted and choose to avoid its risks instead.

Volatility isn’t solely reflected on stocks. No investment in any form or type is guaranteed to be fruitful. However, you can control and mitigate losses by carefully selecting where to invest your money. Diversifying your portfolio is also an effective tactic. Therefore, while you can’t eliminate risks, you can still reduce threats and safeguard your cash.

Below, we’ve listed down four beginner-friendly ways to invest:

Annuities

An annuity is a legal agreement or contract in which it’s indicated that you must pay a specific amount, and in turn, you’ll receive a series of payments over a defined period of time. The insurance provider or company will be the one to extend this payment.

There are fixed, indexed, and variable annuities and the main difference lies with the calculation of your future payouts. Moreover, it’s typical for annuities to provide a benefit of getting taxes delayed on earnings until the actual payout. You have to take note, though, that this investment come with high fees that can lessen the amount you earn. Thus, it’s vital to do your research and ask an expert before deciding to acquire annuities.

Savings Bonds

According to Michael Keenan of gobankingrates.com, if you want an investment with sustained interest rates, then going for savings bonds is the way to go. The federal government offers these bonds and pay the interest over a certain period, making them highly low-risk ventures. In fact, the only situation that will cause losses is when the government decides to default its debts.

Real Estate

Andrew Beattie of Investopedia suggests purchasing and owning real property as a lucrative and safe investment strategy. It also doesn’t require much startup expense because unlike investors of stocks and bonds, buyers of real estate can utilize leverage so they can own property by shelling out only a portion of the total price. The rest of the costs, such as the balance and interest will be paid off over an extended period of time.

Accordingly, there are four primary ways to generate income from real estate: renting out properties, engaging in real estate trading or flipping, working with real estate investment trusts (REITs), and joining real estate investment groups.

Small Businesses

House Model With Keys And Ballpen On Contract Paper

You may be questioning this because how can it be recommended to invest in small businesses when these establishments are higher-risk and more vulnerable to economic instability? While it’s true that buying shares from small businesses is not exactly a fool-proof or secure move, you can still have peace of mind by choosing to invest in a company that offers Enterprise Investment Scheme (EIS).

The EIS advance assurance is specifically designed to assist small business organizations to obtain financing by giving a tax relief offered on shares, provided that these enterprises are eligible. Therefore, investors are provided with a tax-efficient method of investing in small businesses.

Investments are unpredictable by nature, and there’s no such thing as a no-risk undertaking. However, by assessing multiple factors and indicators of growth and profitability, you can significantly reduce the likelihood of losses. Moreover, while the investment options discussed are recommended, you are still accountable for the results of your ventures so invest at your own risk.

Categories
Scroll to Top