Today, I’m excited to share some insights from Andrew at Slick Bucks, a site packed with tips on managing money and investing. If you’re thinking about starting to invest, Andrew has some advice for you.
Gone are the days when young people and newlyweds would just stash their money in savings or money market accounts. Those options offer very low returns. While the money is safe, it doesn’t really help you grow a substantial nest egg beyond what you earn from your job.
With the rise of online brokerage firms and easy access to financial info, more people are exploring different types of investments. The goal is usually to earn some income from investments while keeping the risk at a manageable level.
The challenge for beginners is figuring out how to balance potential returns with the risks involved.
**Best Types of Investments**
For young adults and newlyweds, three types of investments are worth considering. Remember, all investments come with some risk, but these options offer solid returns over the medium to long term if you’re patient and can handle occasional downturns.
In order of risk from highest to lowest, the three best investments are:
1. **Business Interests**: Investing in a business is like betting on yourself. If successful, it can provide for your family well into the future.
2. **Stocks and Bonds**: While these can be risky, sticking with established, successful companies can yield decent returns over time.
3. **Real Estate**: Property values can dip during recessions, but generally, real estate appreciates significantly over any 5 to 10-year period.
**5 Investment Tips for Beginners**
Before diving into investments, it’s important to get some advice to start off on the right foot. Here are five tips to help beginners:
1. **Have a Plan**: Just like driving without a destination can get you lost, investing without a plan can lead to confusion. Ask yourself:
– How much money do I have to invest now and in the future?
– What are my investment goals?
– How much risk can I handle?
Answering these questions will help you create a roadmap for your investments.
2. **Start Now**: It’s easy to delay saving and investing until you feel more established. But the longer you wait, the less time your investments have to grow. Start small if you need to, but start now. The earlier you begin, the more time your investments have to grow.
3. **Ask for Help**: Investing your money is serious business. Talk to people who understand investments—your bank, family, friends, or professional investment counselors. They can provide valuable insights into different types of investments, their potential returns, and associated risks.
4. **Keep It Simple**: Don’t overcomplicate things, especially when you’re just starting out. Focus on a few well-known, reliable investments. For example, if you’re interested in the stock market, start with two or three reputable stocks. As you learn more, you can gradually take on more complex investments.
5. **Diversify**: Never put all your eggs in one basket. A balanced investment portfolio includes a mix of different types of investments. If you invest in something risky, balance it with something more conservative. Diversification helps protect your financial security now and in the future.
Hopefully, these tips will help you make smart investment decisions. Your future is just as important as today, and investing wisely can help you maintain a good quality of life down the road.