Investing For Beginners: A Quick Beginners Investing Guide

This guide will walk you through how you make your first investment as a complete beginner. Get an overview over investing here.

What is an Investment?

Investments or investing is a long-term plan to utilize and grow your money and let your capital work for you. An investment is taking risk and therefore a gamble: compared to the security of guaranteed return. You are risking your money in order to potentially gain more money in the future. Often the higher risk associated with the investment means higher potential returns.

You can invest in almost anything:

• Bonds
• Shares
• Government bonds
• US Property market
• Gold
• Crypto
• Funds

… and much more.

For most investors investing is however putting money in the stock market.

Putting money in the stock market is what this guide will cover and will be a great guide for investering for begyndere. So how does a beginner start invest in the stock market?

Firstly, you need to open a brokerage account. There are many great brokers online we however prefer eToro for beginners due to them having no brokerage fees making it perfect for new investors investing smaller amount.

How Does the Stock Market Work?

Trying to keep is as simple and beginner friendly as possible for the purposes of this guide. The stock market is simply a place where sellers and buyers meet to exchange company shares. Each share being a tiny part of a large company listed on an exchange.

So what are shares and why do they exist? They help growing and potentially boost profits of a business providing them capital to further grow their business. You buy shares if you think this is a good business and more money would help them grow their profits even further.

So what do you get in return? Well if the company does well more investors will be interested in owning shares of that particular company and will buy shares. This results in your shares increasing and suddenly your investment starts to grow from your initial buy point.

What kind of growth is realistic from Stock Investing?

This is a common question for new investors, since they want to answer if it would be worth for them risking their hard-earned money in the stock market. Let’s be blunt: we can’t actually determine how much you will gain or lose buying stocks. But let’s give you a rough estimate…

With a savings account being at historical low levels around 1% – the incentive to get higher returns elsewhere has never been stronger.

You would of course rather prefer earning 5-8% yearly compared to a measly 1%, but this requires increased risk. As mentioned previously higher risk = higher reward. Investing is risky and therefore rewards you for taking this risk, only invest what you can afford to lose.

5 Golden Rules For Investing

1. Don’t put all your eggs in one basket. Always diversify your risk as a beginner we always recommend starting with an index for example the S&P 500
2. The higher return you want requires you to take on more risk.
3. Don’t panic. Investments will move up and down throughout the day. Don’t be tempted to panic sell hold you investment and follow your strategy
4. Review your portfolio. Quarterly or yearly go over your portfolio, maybe that oil company you bought isn’t as attractive anymore with energy moving towards greener alternatives.
5. If you are saving short term, then don’t take on too much risk. You need to be invested at least 5 years in order to benefits from the risk exposure of the stock market.

Is Investing Right for you?

Over the long run, stocks and shares have outperformed saving cash in a savings account. This has been proven again and again.

Therefore it is very relevant to have some exposure to the stock market in order to get more out of your money. There is however no guarantee for this. Its all about personal circumstances. You might soon retire and would not want to take unnecessary risk with your money or you might be young and willing to take on more risk. It all depends on what you believe and what certain life situation you are in right now.

Evaluate your goals and form a strategy of where you will be in 10, 20 or 30 years and devise a investing strategy that fits your personal life.

Closing Thoughts

It doesn’t matter if you are a complete beginner or a seasoned investor, remember to don’t put on more risk than you are willing to lose, but investing can be very profitable if done right.

Investing is a fun hobby and a great way to build financial freedom by letting your capital and hard-earned money work for you while you do other things.

Also Read: Are Bitcoin Transactions Anonymous? Everything Explained