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Posted by Jim McClaflin, EA, NTPI Fellow, CTRC

Top 3 Best Investment Ideas For Beginners

Top 3 Best Investment Ideas For Beginners

Suppose you intend to invest but are still confused about how and what to invest; fear not. The goal is to walk you through the top three investment ideas as beginners. Investment may be a bit complicated and foggy, but it's an approach to having a better future, especially for those approaching retirement. 

There are unlimited investment options, and finding the right to invest can be challenging. People seek advice from family members and market news but may still end up with ill-driven stocks. The best way to enjoy an investment is to start early. The investment will accumulate compound interest to boost your investment horizon as your money grows. For beginners, here are the three top picks for investment.

1. 401(k) or other retirement plans

A 401(k) form is the simplest and easiest investment with huge incentives to benefit an investor for life. Most employees work this payment through their monthly paycheck, which their employer matches. You can alter the match if you're unsatisfied with the appropriation instead of rejecting free money. A conventional 401(k) investment is made before deducting tax and is not subjected to tax during withdrawal. 

A target-date mutual fund manages your investment without you moving a finger to do anything. After making the first investment, you will enjoy the automatic reinvestment system. Towards your retirement time, the funds are transferred to a lower-risk asset account for a shorter investment time.  

2. A Robo-advisor

If you intend to invest and still lack the money to do so, then the Robo-advisor investment is for you. The investment option uses computer algorithms to manage your scrape investment at low fees, usually at 0.25% to 0.50% of your annual earnings. They are good at working with minimum investment. The option requires a negligible amount and does most of the investing work, making the process seamless for beginners. However, it is essential to keep observing your accounts while the Robo-advisor does the heavy work.

The services enable an investor to construct different types of investments according to a portfolio. Also, the option has classes for those ready to invest. It also has educational tools, content, and a customizable portfolio that help you to experiment.  

3. Exchange-traded funds (ETFs)

ETF funds are similar to index funds but are good at tracking the market index to make a healthy investment. Their fees are lower, unlike mutual funds, and you can purchase this investment like an index fund. The gap between ETFs and index funds is that ETF funds do not require a minimum investment and are traded for 24 hours on a share market price which fluctuates like a stock price. Based on the fund, ETFs share pieces replace their minimum investment and range from $1000 to $3000 or more.

Brokers need a commission if you expect them to buy or sell these funds and are charged like stock. However, some brokers have dropped their fees to a trading cost of $0. If you choose to invest on a weekly or monthly basis, it is beneficial to enlist the help of a zero or one-time fee broker to automate the procedure, so you don't have to pay commission each time.


Bottom line

As a beginner in the investment sphere, the first thing to look out for is your investment's risk tolerance and financial goals. Some investments allow investors to withdraw funds in times of emergencies, such as high-yield saving accounts. Keep in mind that these investments are considered long-term plans. If you have zero investment knowledge, we recommend the Robo-advisor investment option. The investment option does all the heavy lifting and can be used to manage ETFs based on your financial earnings, needs, and readiness to risk.


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Jim McClaflin, EA, NTPI Fellow, CTRC
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