Your Wealthy Mind

What’s the Best Investment for Beginners?

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Alright, let me make a disclaimer first. This is article is merely my opinion based on all the personal finance and investing books that I’ve read. I’m no financial planner and I’m not an investment professional so take the advice here with a grain of salt. I’m likely just like you, except I studied a few good investing books here and there. Now, if you’ve ALSO read and researched some good books, then good. That means you probably won’t need this info. If you haven’t then just read this article for some basic information. You WILL still need to do your own research to find the investing style that works for you.

What’s the Best Investment for Beginners?

By beginner’s investment, I mean something that DOESN’T require a lot of research, and it should be something that just about anyone can invest in.

Before we begin let’s list the usual investments: Stocks, bonds, mutual funds, real estate, gold and other precious metals, commodities, antiques, and more. Now I can’t talk about gold and precious metals, commodities, antiques or others in that line as I didn’t want to study them for now. I wanted to fully concentrate on the first four that I mentioned:

So what IS the best investment for beginners?

Answer: A mutual fund… but not just ANY mutual fund. It’s a specific type of fund called an “index fund.”

What is that? It’s a mutual fund where your money is invested in a portfolio intended to track or follow a market index (Read more on Investopedia’s page about index funds here). The downside of index funds is that they usually won’t post mega-high returns like “winning” mutual funds or individual stocks. The upside, however, is that they won’t post mega-high LOSSES either, and markets (tracked by index funds) usually post good positive returns over time. Aside from that, index funds are usually low cost (they only need a computer-based algorithm, no need for constant management from a “professional”) so less of your cash is lost to the manager’s fees. Thanks to that, your investment is allowed to grow more. If you want to learn more about why index funds are great investments, you can check out “The Boglehead’s Guide to Investing”.

That is just my recommendation though. You really NEED to do your own research and find an investment vehicle or investment method that you like. Just make sure to study it well and to watch out for possible scams.

If you want to learn more about investing by the way, then just read our previous articles here:

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