How to Start Investing? A Basic Guide and 4 Options

Investing is when you buy an asset with the hope it’ll make you a return. Assets can be pretty varied: stock, currency, property, or precious metal. 

Nowadays, investing is easier than ever. You don’t need a lot of cash to start, and there’s many online companies to help you get started.

Today, we’ll walk you through basics and highlight a few good options to start investing.

Investing for Beginners

Everyone has their own method. The only way to learn your personal style is through trial and error. 

After you’ve dipped into the market, use strategies that work for you and leave the ones that don’t. Experience and research will help you refine your methods.

Here are some important tips to keep in mind to get started.

Start saving now

Usually, the longer you keep an investment, the more it’s worth, but you need money to start. 

The sooner you have the initial investment saved, the sooner you can start buying assets. 

So the time to start saving for investing is now. Remember, every dollar counts.

Save often

Don’t worry about saving a lot. Focus on saving often, even if it’s just a few dollars a week.

Get in the habit of putting away money whenever you can.

Research the investment 

The number one way to increase your chances of a return is to know where your money is going.

Research is your friend. 

Read about the markets in general. Do research on your specific investment area. 

Does the asset you’re investing in typically hold value? What are the concerns of other investors? What do economists predict for the market?

These are all questions you should ask yourself each time you invest in an asset.

Figure Out Your Risk Tolerance 

Every investment comes with risk. Often, the higher the risk, the higher potential return.

How much you risk you can take on is a personal choice and is unique to each investor. 

We recommend starting with lower risk investments.

Remember there is no such thing as a completely safe investment. You can always lose the money you put into an investment.

Keep costs low

Don’t overpay.

These days, there are many online exchanges for many assets. Most are cheap, fast, and safe.

But most options also come with fees. Make sure you’re comparing the fees of different services so you’re getting the best deal.

The last thing you want is to make a small return on your investment that you have to use to pay off the fees it cost to earn the money.

Set a goal 

Before you start, set a goal for yourself. 

How much do you want to make? By when?

Your goal can be a set number or it can be a percentage return. The date you set to make your return will let you know whether your strategy has been effective.

Remember to also pick a bottom number. When your investment dips below a certain breakpoint, cut your losses and take your money out.

Ask for help

People who spend their whole lives investing still make mistakes, and you can ask those people for help to avoid the mistakes they made.

Don’t be afraid to ask for help. Investing is a skill and you can get better, especially with good guidance.

4 Investing Options

When you’re ready, it’s time to put money down. 

Remember: there’s no such thing as a safe investment. You can lose your invested money. 

Safer investments mean lower risk, not riskless.

Only invest what you’re willing to potentially lose. 

The investing options we picked here are some of the most popular, but they’re not all low-risk so do your research.

Individual Retirement Account (IRA)

IRAs great if you’re investing for retirement. 

The money you put into an IRA can be tax-deducted or tax-deferred.

An IRA is a kind of like a savings account that allows investments into portfolios that can include safer stock investments and bonds.

If you’re interested in opening an IRA, you can start your research on the Internal Revenue Service (IRS) website.

Stocks

The stock market is an exchange where people buy and sell pieces of company ownership. Those pieces of ownership are called stock. 

The more pieces of stock someone has, the more of the company they own. 

The stock market is complicated, and it’s easy to get lost. 

To start, we recommend a broad-based index, which is a collection of stocks for companies in different industries. 

Buying an index means you spread your risk between different companies. Online stock brokers make it easy and cheap to buy and sell stock.

Forex

The Foreign Exchange, or Forex, is another type of exchange. Instead of stocks, Forex handles currencies or different monies of the world. 

The concept of Forex is simple: you buy one currency with another.

The Forex marketplace operates differently from the traditional stock market. Research is incredibly important before buying Forex.

The value of currencies can change overnight, so Forex investing comes with it’s fair share of risk.

One of the largest U.S. Forex brokers, FOREX.com has a helpful guide for beginner investors.

Cryptocurrency

A cryptocurrency is a digital currency that functions without a central bank. 

Instead, cryptocurrencies rely on encryption to regulate the generation of units and the transfer of funds. Bitcoin is the most famous cryptocurrency.

Cryptocurrency exchanges allow people to buy and sell cryptocurrencies online.

Some cryptocurrencies are new and unstable and can lose you money quickly. Others can gain value just as fast. 

If you’re going to invest in cryptocurrency, spend a long time reading about the technology before you put your first dollars on the market.

What’s next?

At the beginning, investing may seem like a goal that’s difficult to reach. But now investing is much easier and cheaper than ever before, and anyone can get in on the action.

Remember to start small and stay consistent. Once you have a goal in mind, stick with it. 

If you can save a little each month, then you should have enough to invest soon. The sooner you begin, the better. But it’s never too late to start investing.