As a beginner, you might think investments are only for the rich, but the truth is, anybody can invest with little money. So many investment platforms have come up to help and encourage people to invest more with any amount of money, encouraging investments for beginners.

There are various investment options available to you such as mutual funds, stocks, real estate, bonds, funds etc. However, before you invest, you must understand the kind of investment you want to do. In this article, we will tell you the best investments for beginners.

7 Investments for beginners

1. CERTIFICATE OF DEPOSIT (CD)

This type of investments is usually known as low-risk investments and is one of the best investments for beginners. Certificate of Deposits pays you a stipulated rate of interest in exchange for you investing your money with the bank for a definite period.

A lot of people are not particularly comfortable with their money being tied down for an extended period, but the longer you invest, the higher the rates you enjoy on your investment.

Similar to the savings platforms I talked about earlier, early withdrawal will incur a penalty.

2. REAL ESTATE

Real estate investments are good investments for beginners, it is the easiest and smartest way to invest your money. You can gain huge profits from real estate

With real estate, you can get capital appreciation, rental income (if being used as a rental property) and substantial tax benefits from real estate. You can accept loans from banks to purchase a property and pay it over time as real estate is an attractive investment. Real estate investment is one of the best investments to hop on in 2020. It requires little attention except it is a rental property where you have to pay attention to it and be active in management. There are a few real estate options to choose from:

• HOUSE HACKING

Ever heard of house hacking, in simple terms, you will be living for free. This is similar to multifamily properties where the house owner rents a part of his out as a means of extra income. This is living free because the expenses are on the tenants.

• RENTAL PROPERTIES

You can invest in rental properties, buy properties and rent them out. Before doing this, you need to do your research on the rental value of properties in that community. Investing in rental property is a big responsibility as you are responsible for the cost of maintenance of the properties. You need to consider these costs when you are calculating the rent. A lot of time and effort is being put into the running of rental properties, but you can always hire someone to oversee such responsibilities

• LAND FLIPPING

This is under real estate. You buy land in a fast-developing area at low prices and simply sell at a higher rate. You can get earn a 100% return on investment. Sounds interesting, doesn’t it?

[Also read: First Time Home Buyer – 10 Mistakes To Avoid ]

3. STOCKS

Stock Market is a very volatile place to invest. And without prior knowledge, it is easy to lose all your money. However, there is not a doubt to what value the stock market brings and how much you would earn from it.

With stocks, you can earn money by capital interest or dividends. A dividend is an amount a company pays its investors from the profit they generated that year. It is usually paid yearly, bi-annually or quarterly depending on the company. Before you invest in a company, you must make sure that they have a good history of paying dividends and their dividends increase over time.

Also, it is necessary to know that before you buy the shares of a company’s stock, they m

To be honest, the stock market is a volatile place, hence, making investing in stocks quite risky. More often than none, companies tend to have volatile stocks. This is why having savings is of top importance. You must do your research before investing in a company. I know the stock market may be quite overwhelming, but over time the stocks yield high returns, so do not pick stocks in an attempt to beat the market.

[Also read: INVESTING IN THE STOCK MARKET – THINGS TO KNOW]

4. Gold

Gold is still one investment that is still valuable in today’s economy. The investment in gold is still relevant in today’s global economy, making it a smart investment. You can buy gold in jewellery, coins or bullion bars, its worth always appreciates.

Commodities and goods expert, Jim Rickards says he sees gold becoming a larger part of global commerce in years to come particularly after the next global meltdown.  Gold truly is a valuable investment to dive into as a beginner.

5. INVESTING IN A BUSINESS

You can invest in a promising business. It could be yours, a family member’s, a friend’s or even a startup business. You can invest in a business by putting a part of your money into the growth of a business and getting a percentage yield of its returns.

However, you cannot do this naively. You must do thorough research on the business; know the business plan and how much growth yield it’ll bring forth in the future. The major downside to this is; risk of the business not being forthcoming. Anything can lead to the downfall of a business. Like Jeff Bezos, the CEO of AMAZON, said “No company is too big to fail”

It is advisable to diversify your investments to reduce risks that may occur.

[Also read: How to come up with a side business idea (you can do along side your day job) ]

6. ROBO ADVISORS

In case you are still skeptical on picking either individual stocks or index funds. A Robo-advisor is an option worthy of exploration. It is a digital platform that uses algorithms to build a model portfolio for you, based on your requirements. Robo-advisors charge a percentage of your assets.

Robo-advisorsr relieves investment stress by asking questions to establish your goal and risk tolerance. They take up to $500 or less and invest it in a highly-diversified low-cost portfolio of stocks and bonds. The charges are very low and feasible.

The major disadvantage is the annual percentage fee they charge can make quite a difference in your balance especially if it accumulates. Nonetheless, Robo-advisors are a good choice for beginner investors.

7. DIVERSIFIED PORTFOLIO

Diversification in investment is simply a way to manage risks. The purpose of having a diversified portfolio of unrelated assets will yield higher returns with less risk long term.

A diversified portfolio should look like this:

Stocks: they are classified under high risk investments but yield high returns. They perform well when there is economic growth.
Bonds: they do well in a slow economy. The returns are not so much neither is the risk.
Commodities: the prices of commodities vary with demand and supply.

CONCLUSION

If you have not started investing, the best time to start, is now. You may not have a lot of funds at the moment, but that doesn’t mean it’s a lost cause. Start small and let time and compound interest do the rest.

There are so many investment options for beginners to choose from. It is up to you to decide which investment option works best for you, how much risk you are willing to take and how involved do you want to be with your investments. The choice is solely up to you to make, make sure to invest wisely.
What other Investments for beginners are out there?