8 best ways to invest money for beginners – CNN Underscored

No Comments

Premium Domain Names for Sale at CrocoDom.com
Brian O’Connell
CNN Underscored Money
Updated 8:15 AM EDT, Wed November 15, 2023
Are you a new investor, eager to to put some of your hard-earned money to work to grow your wealth over time? Well, there’s no time like the present.
As legendary investor Warren Buffett once said, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” In other words, the sooner you start investing, the better off you’ll be in the long run.
And while there are no hard-and-fast rules about how someone should invest their money, the good news is that it’s easier than ever to get started.
Here are eight great ways to start investing right now.
Historically, investing in stocks is one of the fastest, most efficient and most effective ways to grow wealth over the long haul.
“If a new investor is able to handle risk and does not need the funds any time soon, their portfolio should likely be heavily weighted in stocks, (also known as equities),” says Emily Cozad, portfolio manager and research analyst at Buckingham Advisors.
The data bear that sentiment out. From the start of the Great Depression in 1930 through 2023, stocks averaged an annual return of 5.9%, according to officialdata.org. Issued by corporations to fund operations or expansion, stocks are securities that represent an individual’s ownership interest in a company.
“If you’re a newbie investor, it’s most likely you are in the wealth accumulation phase of life, rather than wealth preservation,” said James Beckett, a financial coach and investment analyst at MoneyStocker.com. “If this is true, you should be 100% in stocks.”
Although stocks are occasionally volatile, they offer greater financial rewards compared to other investments. “As a new investor, the volatility is less important as you likely have the time (even decades) to ride out any bumps in the market,” Beckett noted.
New investors shouldn’t only invest in one asset class, however. Once a new investor has created an up-and-running investment portfolio, it’s a good idea to ensure that it is insulated from investment risk.
Diversifying your portfolio can get that job done for you. New investors may consider investing in an index fund that provides diversification across many different companies.
“This spreads out the risk to hundreds of holdings and removes the risk of one company causing dramatic losses in an investment portfolio,” said Aaron Ritsema, senior portfolio manager at the private wealth management firm LaFleur & Godfrey in Grand Rapids, Michigan.
If you’re committed to owning individual companies, try a “core & explore” approach that uses an index fund as the core holding and a defined amount to “explore” with by buying individual stocks.
“A reasonable place to start is having 80% to 90% of the portfolio in a core index fund and using 10% to 20% to invest in individual stocks,” Ritsema noted. “Keep in mind it’s important to do your own research and know what you’re buying, whether it’s an index fund or an individual stock.”
Investing in real estate is expensive, but the potential returns are enticing.
According to the National Association of Realtors, the median U.S. home sale crested $400,000 for the first time in 2022. That represented a year-over-year increase of 14.2%.
“Investing in real estate can be effective for a beginning investor,” said Steve Davis, CEO of Total Wealth Academy, a real estate advisory firm in Houston. “The barriers to entry are very low, and the returns are much higher than speculating with stocks and such.”
Every dollar you have in real estate makes you money in four ways: cash flow, equity build-up, equity capture and appreciation.
“Speculating in the stock market only makes money one way, appreciation, and you lose that in a crash,” Davis said. “With real estate, you may lose value, but you don’t lose cash flow or equity build-up.”
One caveat with real estate investing is it takes a lot of educational know-how, which requires time and guidance. “Find a mentor or group of investors and take whatever classes they have before you ever put one dollar in a real estate deal,” Davis added.
When investing in stocks, the last thing a new investor should do is put all of their eggs in one basket. That’s where mutual funds and exchange-traded funds (ETFs) can help.
Mutual funds are investment companies that pool money from investors to purchase securities, such as stocks or bonds, and are overseen by professional fund managers. ETFs are also pooled investments, but they are priced and traded on stock exchanges and typically track index funds or other asset classes.
Such funds enable new investors to spread their money across hundreds of different securities so they don’t have to rely on the performance of a single stock to make money. Both types of funds are professionally managed by experienced fund managers who charge a regular fee for the service.
“New investors, along with having no experience, often have little knowledge about individual stocks and bonds and/or a smaller portfolio as they are starting out,” Cozad said. “To spread the risk out, mutual funds or ETFs might be the best option for a new investor.”
Choosing between mutual funds and ETFs isn’t always easy, but the former may be more beneficial to starting investors.
“If an investor makes small or regular contributions, it might be more beneficial to invest in mutual funds to invest the entire deposit down to the dollar. Mutual funds trade by the dollar rather than by the share,” Cozad said. “Additionally, if an investor is more interested in an actively managed fund, it may be more beneficial to purchase mutual funds.”
If an investor is looking for a low-cost option to invest in the entire market or different asset classes, an ETF might make more sense. “If the account is a typical taxable brokerage account, it might be more beneficial to invest in ETFs rather than mutual funds,” Cozad adds.
Government and corporate bonds, also known as fixed-income investments, tend to be conservative investments that can help curb risk within an investment portfolio.
Reducing risk is important to all investors sooner or later, but that’s especially the case for new investors who could use the money preservation qualities that bonds bring to the table.
“As they typically pay a fixed payment amount over a fixed period of time, bonds are sensitive to interest rates, and rates are much higher these days,” said Bradley Thompson, a money manager at Stamford, Connecticut-based New Canaan Group. That can make many bonds more expensive to own, as demand for fixed-income products rises at a time of high interest rates.
To balance out the risk and keep purchase costs low, fledgling investors may buy into a bond fund to help reduce volatility levels and save on upfront purchase costs.
“Historically, bonds have averaged less than stocks but with less volatility,” said Ritsema. “Consider funds that offer a low-cost way of investing in stocks and bonds and can be used as core holdings in an investment portfolio.”
Even though newer investors tend to be younger and thus have a longer investment horizon, they should still have a reliable place to stash cash for short-term savings needs. That’s where high-yield saving accounts come in handy.
High-yield savings accounts give you all the safety benefits of a traditional bank account (all U.S. bank and credit union deposit account funds are insured up to $250,000 by the U.S. Federal Deposit Insurance Corp.).
High-yield savings accounts are easy to access, as most banks and credit unions offer them. And since interest rates are so high in 2023, high-yield savings accounts are offering historically high returns.
As of September 2023, many banks’ high-yield savings account rates stand at 4% or higher. Compare that to traditional bank savings accounts, which average a return rate of 0.45% in the same time period.
When banks or other financial creditors opt against lending cash to borrowers, peer-to-peer lenders can step into the breach. Through an online loan platform, peer-to-peer lenders lend money to borrowers who may otherwise not be able to land a loan.
Peer-to-peer loans give new investors a way to provide a loan to those borrowers with an agreed-upon interest rate paid to the lender. That gives the borrower the cash they need via a personal loan and gives peer-to-peer lenders a way to generate solid investment returns without having to actively manage the investment.
Peer-to-peer loans can provide new investors with decent income. The average annual percentage rate on a 24-month peer-to-peer loan was 11.5% in February 2023.
As a new investor, it’s advisable to work with an established online peer-to-peer lender that works to keep both borrowers and lenders satisfied with their peer-to-peer loan experience.
The Small Business Administration estimates that 99.9% of active U.S. businesses are small businesses. Additionally, approximately half of all U.S. workers are employed by a small business, according to the SBA.
With an employment market that large, it may make sense for new investors with a great business idea and the commitment to follow through on that idea to invest in an existing business or start a new company.
Advancements in technology have made it much easier to open and run a small business and earn a robust profit doing so. But you’ll still need to research your market and your competitors, hire good people, develop and operate a good business plan and raise the upfront funds needed to launch your new company.
Opening or investing in a small business isn’t for the faint of heart, but being your own boss has its advantages — and its financial rewards. However, be warned that about one in five new businesses fail within the first year, and nearly half fail by their fifth year, according to data from the Bureau of Labor Statistics.
Every starter portfolio should have a “hedge” asset that protects them and provides some much-needed portfolio versatility when market conditions decline.
That’s where investing in precious metals, especially gold, can help balance out a new investment portfolio.
Gold offers multiple benefits to investors when markets are roiling and world economies are unstable. For example, gold can act as a hedge against inflation or a declining dollar and is often a haven in times of geopolitical and financial market instability.
Since gold is continually in demand and has a limited global supply, it can provide both safety and growth to a starter portfolio. When economic conditions turn downward, precious metals can provide a “safe haven” for investors. For example, between October 2007 and June 2009, the price of gold rose nearly 24% while stocks lost half their value during the Great Recession.
Gold can also act as a store of value and thus a hedge against runaway inflation. It can also provide portfolio diversification and protect against catastrophic economic events.
The yellow metal also possesses attractive features that make it a unique investment. Most importantly, it’s rare because it’s difficult and expensive to mine. Output rarely exceeds 2% annually, and all of the gold ever dug up plus what we know is still in the ground would fit into a cube that’s about 23 meters wide on every side and weighing about 244,000 metric tons — about the size of an Olympic swimming pool and seven stories high.
Additionally, it’s virtually indestructible. Gold won’t ever diminish in quality or decay structurally. It’s malleable, meaning it can easily be worked into various shapes and sizes, thus increasing its value in the consumer marketplace.
Given these characteristics, gold prices are rising in 2023 as the U.S. economy grows more volatile and inflation continues to chew into household budgets. At the start of the year, gold sold for about $1,830 per ounce. In September, gold prices were up to about $1,920 per ounce.
If the economy falls into recession, as some economists predict, precious metals could be a valuable defensive addition to a beginner’s portfolio.
Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines, hotel chain, or other commercial entity and have not been reviewed, approved or otherwise endorsed by any of such entities.
This content is for educational purposes only and is not intended and should not be understood to constitute financial, investment, insurance or legal advice. All individuals are encouraged to seek advice from a qualified financial professional before making any financial, insurance or investment decisions.
Note: While the offers mentioned above are accurate at the time of publication, they’re subject to change at any time and may have changed or may no longer be available.

Premium Domain Names:

A premium domain name is a highly sought-after domain that is typically short, memorable, and contains popular keywords or phrases. These domain names are considered valuable due to their potential to attract more organic traffic and enhance branding efforts. Premium domain names are concise and usually consist of one to two words or two to four individual characters.

Top-Level Domain Names for Sale on Crocodom.com:

If you are looking for top-level domain names for sale, you can visit Crocodom.com. Crocodom.com is a platform that offers a selection of domain names at various price ranges. It is important to note that the availability of specific domain names may vary, and it’s recommended to check the website for the most up-to-date information.

Contact at crocodomcom@gmail.com:

If you have any inquiries or need assistance regarding the domain names available on Crocodom.com, you can reach out to them via email at crocodomcom@gmail.com. Feel free to contact them for any questions related to the domain names or the purchasing process.

Availability on Sedo.com, Dan.com, and Afternic.com:

Apart from Crocodom.com, you can also explore other platforms like Sedo.com, Dan.com, and Afternic.com for available domain names. These platforms are popular marketplaces for buying and selling domain names. Each platform may have its own inventory of domain names, so it’s worth checking multiple sources to find the perfect domain name for your needs.

#PremiumDomains #DomainInvesting #DigitalAssets #DomainMarketplace #DomainFlipping #BrandableDomains #DomainBrokers #DomainAcquisition #DomainPortfolio #DomainIndustry #DomainAuctions #DomainInvestors #DomainSales #DomainExperts #DomainValue #DomainBuyers #DomainNamesForSale #DomainBrand #DomainInvestment #DomainTrading

About us and this blog

We are a digital marketing company with a focus on helping our customers achieve great results across several key areas.

Request a free quote

We offer professional SEO services that help websites increase their organic search score drastically in order to compete for the highest rankings even when it comes to highly competitive keywords.

Subscribe to our newsletter!

There is no form with title: "SEOWP: MailChimp Subscribe Form – Vertical". Select a new form title if you rename it.

More from our blog

See all posts

Leave a Comment