Category: Investing

Investing 101: Clever Tips for New Investors

One common misconception is that it takes a pre-existing wealth to start investing. Actually, a spare sum of, say, $50 can be your entry ticket into the world of return-yielding investments. Also, apart from the stock market, there are other methods, too. Each comes with a different set of options, risks and interest rates. Choosing the right one will depend on your proficiency, namely whether you’re a seasoned investor or just getting started. And, most of all, the financial resources at your disposal.

A major piece of advice for the beginner would be not to use up the bulk of his/her savings for investing, especially since low-risk investments take time to make a profit. Be advised that this period can take years. Hence, a well-thought out investment plan would imply always keeping an adequate sum as a reserve.

Here are some practical tips for a beginner aiming to avoid investing in the stock market. If you prefer to invest in the stock market, you can use tools like StockTwits and the Finviz screener to find better stocks to trade. We will highlight some that are considered both profitable and safe:

Investing in real estate

Investing in real estate will require a sum much larger than the aforementioned $50. However, it is a market that yields large profits, and is considered a safe investment. Namely, when you invest in a tangible asset (real property), you can be certain that it will be sought-after in the future, hence profitable.

There are several ways to go about jumping into the real estate market. They include rental (if you already own a property), real estate flipping (buying and reselling), capital appreciation (rise in market price). Depending on your financial situation, you can buy property as the sole owner, or partner up with someone else. Another option is to invest in a company that owns profitable real estate (a real estate investment trust).

Investing in gold 

Speaking of tangible (and safe) investments: gold. It may seem old-fashioned, especially in our current globalized and digitized economy. However, many leading economists argue that the value of gold will only increase in today’s unpredictable market conditions. In case of another recession, some predict the value of gold to rise to $10,000 per ounce.

Unlike currency, gold is not devalued by inflation, and is typically resistant to great market upheavals. And when thinking of investing in gold, you should think in broader terms than just jewelry. You can buy gold in various forms – bars, ingots, coins, etc.

P2P lending

Like real estate, peer-to-peer lending is considered a rather safe investment. Unlike real estate, however, it does not require having a large sum at your disposal. What is P2P? Through a network, or rather, a company, you give loans to your peers. You gain profit by means of interest rates which apply when your peers pay you back.

By lending (investing, actually) to a multitude of peers, you will reduce the risk of a borrower not repaying the loan. That way, if one of them does not make his/her payment, damages are minimized.

Companies that provide such services and network include the likes of Lending Club, Peerform and Prosper. Their websites will make for a good starting point with regard to P2P lending.

Investing in bonds 

If you are about to make your first investment, another way to go would be bonds. A bond represents an investment whereby the investor loans money to an entity (governmental or corporate), for a defined period, at a fixed or variable interest rate. The sum that they loan determines the price of the bond. As for the profit, it stems from the interest that each investor receives as part of the loan. But bear in mind that higher interest rates typically also involve increased risk.

Bottom line

We have singled out some of the investment methods for a beginner aiming to avoid the stock market. As you have seen, in terms of resources needed, risk and profits, they all have their pros and cons. Before you make any decision, it is imperative to have a good look at your assets, needs and projected timeframes. The best scenario would be to save up a sum which you can “forget about” for a certain period and use only for investments.

Investing Your First $1,000 – How to Get Started

You may be tempted to write off rich people’s success, attributing it  to inherited wealth, connections, or sheer dumb luck, but that is simply not true in most cases. Many people who are affluent now started from nothing, and made their money through wise investments.

The good news is that you can do that too, especially with good financial advice. In this guide, we will give some suggestions on how to invest $1,000 wisely, with great returns. However, you should keep in mind the fact that you shouldn’t invest any more money than you are comfortable losing!

Choose Your Investment Vehicle


Exchange-traded funds: These funds, abbreviated to ETFs, have become quite popular in recent years, which is a great success, especially considering they were only introduced about 20 years ago. The ETFs can be bought or sold at an exchange during any trading day. ETFs hold a diversified portfolio of assets such as technology stocks, or a representation of the overall stock market.

These funds offer a few benefits. Firstly, they make sure you haven’t put all your money in one basket, since the portfolio managers diversify the investment among many different stocks. Secondly, the management fees are not particularly high, especially compared to actively managed funds. If you plan on trading these funds regularly, you may want to consider one of the day trading brokers.

Mutual funds: Though people usually invest a lot more money into mutual funds, that is not to say that it is impossible to invest $1,000 in them. For most retirement mutual funds, the minimum investment just so happens to be $1,000, so you should be able to do it quite easily. They are easy to set up and manage, especially for a beginning investor.

There are several advantages to mutual funds, depending on your goals. Firstly, mutual funds also expose the investor to a broad swathe of carefully picked stocks, which diversifies your investment automatically. Secondly, if you intend to keep investing after your initial $1,000, then mutual funds are the best option, since the returns are better for larger and regular investments.

Certificates of deposit: These are the safest investments available to most investors, since they are insured by the Federal Government (the Federal Deposit Insurance Corp, to be more specific). Therefore, it is next to impossible to lose money on a CD, since whatever you lose will be reimbursed by the government. However, since there is no risk, the returns are small as well. In fact, the highest yield among CDs is a bit less than one percent annually.

These are great for beginners, since there is no risk, and even the small return you get is better than having your money sit beneath your mattress. Furthermore, many banks do not even charge penalties from withdrawing money early, so you will most likely be able to get at your money quickly if you happen to need it.

However, CDs are not going to make you rich. Most economists suggest taking on some risk, especially for young people. In fact, a commonly cited formula for investing is that you should subtract your age from 100, to find out which percentage of your money should be invested in items with a bit of risk, and the rest should be kept safe. For instance, if you are 25, you should invest 75% of your funds available for investment into items with a bit of risk.

Another good piece of advice is to invest in the stock of well-known companies. These are considered relatively safe investments, since many of these are simply too big to fail. Therefore, you should invest in a company you know well and believe in, so that you can anticipate price fluctuations. For instance, if you are into tech, you might want to consider investing in Google or Facebook, or other notable tech companies.

Finally, if you are investing, why not simply invest with the best? Warren Buffet is considered the greatest living investor, so investing in his company, Berkshire Hathaway, is a relatively safe bet, based on his long history of great investments. In fact, Buffet may even be able to beat the market, which is the goal for all investors, so you can benefit from that too!

Whichever of these options you choose to go with, you have to keep one very important thing in mind. Don’t invest without having done through research into the company and industry you are investing in. A successful investor must do their homework!