Investment Strategy for Beginner Investors

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Everybody is interested in getting crazy rich because they found the right investment strategy!

If you doubt this, think about this: How many times have you binge-watched reality shows of the rich and wealthy?

How many times have you sat to watch them and wondered, “Oh, the things I’d do if I had that kind of money!”

Maybe you’d buy a house?

Go on a world tour?

Or maybe you just want to pay off your debt?

Give to the poor?

It doesn’t matter what you want to do with the money when you get it; it matters that you need it! We all do!

Why then do MOST of us fail to achieve the level of wealth we truly want, even though we all obsess about it so much. Why can’t we just take notes from these shows and reverse engineer our way to becoming a millionaire?

What are we doing wrong? Or what step should we take that we aren’t taking?

 

What is the secret of successful investors?

If you follow well-known entrepreneurs like Warren Buffet, George Soros, and others, or you try to research how to become rich on the internet, you will discover that all these resources emphasize Investing as the key to be successful financially. The surest way to gain financial freedom is to invest your money or time.

However, it can be challenging to attain financial freedom if you have low income or little savings. Most people doubt it is possible to earn something tangible from investing little money. Luckily, with as low as 100 USD, you can your income to thousands of dollars, provided you are ready to put in the required time and effort.

Investing yesterday would have been perfect. But investing today is more perfect.

Take note. You will benefit more if you invest early. Doing this will save you from spending too much. Instead of procrastinating, why not invest now so you can be thankful tomorrow.

Do not wait till tomorrow to start saving and investing, do it today. It’s meaningless to wait until all your debts are paid off before you start investing. Keep some cash aside to invest; doing this will keep you excited and motivated about the future.

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Webull was the first trading app I used when I was getting started, and it helped me in no small way to expand my knowledge about trading and the stock market.

My suggestion is that you get started with free stock and put in $100 (you get free stock along with the $100 deposit) so that you can learn how to trade high-valued stocks in real life.

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If you want to build passive income with ease, without requiring much day-to-day effort, then Investing is the way to go. If you think it’s possible to save money, or you already have some amount of free money sitting in your account, you have a wide variety of passive income ideas to choose from.

 

The best type of Investment Strategy for Beginner Investors

I have classified each passive income idea by capital, time, profit, and risk.

  • Capital: Money required to earn significantly
  • Time: a specific amount of time required to set up the income stream.
  • Profit: The average return on investment you can get from your passive income. External factors can influence it.
  • Risk: The risk required to make passive income, including the risk of losing all your money.

The scores I provide in this post are based solely on my personal experience.

1. Buy index funds and ETFs

MONEY: 5/5
RISK: 4/5
TIME: 1/5
GAIN:3.5/5

Index funds and ETFs (exchange-traded funds) are the best options for you if you have money to invest but no time, knowledge, or energy to devote to investing. Index funds and ETFs both track specific returns of a market index.

If you don’t want to get involved with risky investments and want your money to work for you in the long term, this strategy might be good.

It was a long time before I decided on how to invest my money. Because I have a bad history with gambling, investing in the stock market terrified me. Then I discovered index funds and ETFs, and since then, I’ve relaxed better. Last year, my investments pulled in over 20% in returns!

Investing in the market can sometimes have its ups and downs (thanks to the coronavirus, for example).

 

2. Invest in dividend-paying stocks

MONEY: 5/5
RISK: 4.5/5
TIME: 2/5
GAIN: 4/5

What are dividends? Simply put, they are cash paid by a company to the shareholders of that company.

Investing in a dividend-paying stock simply means buying a company’s share and becoming a part-owner of that company. When the company generates profit that it doesn’t want to re-invest, it returns some of that extra cash to the shareholders (including you) in the form of dividends.

While dividend-paying shares are wonderful tools to generate passive income, sometimes they aren’t guaranteed. For example, when the company does not generate enough returns, it can decide to cut or suspend its dividend.

3. Peer-to-peer lending

MONEY: 4/5
RISK: 4.5/5
TIME: 1.5/5
GAIN: 3.5/5

Peer-to-peer lending (P2P) means loaning money to other people. In P2P, you lend to people who don’t qualify for traditional financing. If you work with companies like Lending Club and Prosper, you can get returns in the range of 6 – 10%, rates much higher than the typical savings account.

P2P gives you the ability to select an investment based on your risk assessment strategy. However, before you allow the rates on offer to get to you, you must consider that higher returns usually mean a higher risk of losing your money.

Though borrowers are carefully picked according to credit checks by companies like Lending Club, you still have to assume many risks if you are going to put your money in.

For this reason, make sure you do in-depth research.

 

4. Invest in REITs (Real Estate Investment Trusts)

MONEY: 3.5/5
RISK: 3.5/5
TIME: 1.5/5
GAIN: 3.5/5

REIT is another way to invest in real estate. Companies that own, operate, or finance real estate and allow people to invest in real estate asset portfolios like stocks are called REITs. You can also purchase individual stocks or ETFs from REITs. Another investment strategy is to earn a share of the money gotten from the real estate investment without purchasing, managing, or financing property.

You can get capital growth and high dividend yields from REITs.

Article I recommend to learn more about REITs:

5. Bonds

MONEY: 3/5
RISK: 2/5
TIME: 1/5
GAIN: 2/5

Stocks and bonds are easily the most common topic when people talk about investing.

What are bonds?

Purchasing stocks gives you a tiny part of the company. Purchasing bonds means you lend money to the company and receive interest payments on that loan. Other than companies, you can get bonds from governments when they need to finance a project.

There are two key elements of bonds: the interest rate you get and the term (how long the money is being lent for). Bonds are less risky than stocks by far but do not provide a high ROI as stocks since you don’t benefit from the company’s growth.

Bonds have 2 major benefits:

  • They provide you with a fixed stream of income
  • They help offset some volatility from owning stocks, even though they are risky too.

 

6. Invest with Robo advisors

MONEY: 3.5/5
RISK: 3.5/5
TIME: 1/5
GAIN: 3.5/5

Until quite recently, investing in the market meant hiring a portfolio manager or financial advisor. By doing this, you had to pay substantial fees, along with the minimum sum to invest.

What are Robo advisors?

Robo advisors are digital platforms that help you invest with algorithm-driven technology. Using this method, high-quality investing is available to everyone, even with little money to start.

If you want a Robo advisor to help you without spending much time learning about investing, Betterment is what you need. Therefore, it is the largest Robo advisor available on the market, and it is, without a doubt, one of the best.

The fees are low (between 0.25 – 0.4%), and you don’t need much knowledge about the stock market. Also, you don’t need to invest a minimum amount.

 

That’s all for now!

Remember, as you go through your options, the sooner you start investing, the sooner you grow your wealth. If you ever thought of investing, this year is the best time to start!

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