The Best Investing Strategy For Beginners

The sooner you start investing the better but for many first time investors the language can be daunting. And the risk of losing your money through a lack of understanding and knowledge can be off-putting. Investing in anything requires some degree of skill and here we look at the best investing strategy for beginners.

First of all what do you hope to achieve with your investments? Work out your goals – will you be buying a home? Is it for retirement? Knowing what your goals are will help you make smarter investment decisions.

If you have a dream of becoming rich overnight this is highly unlikely. While it is possible it is also very rare. It is wiser to invest your money in a way that it will grow slowly over time. Get rich quick schemes are highly speculative and high risk.

Make sure you start saving regularly and always put money aside. This is commonly known as ‘paying yourself first’. You can start with a small sum and increase it over time. Make this an automatic habit and soon you won’t even notice the funds coming out of your account. But you will notice when it starts to grow! Invest this each and every month – you’ll be glad you did.

All investors should look at diversifying their investment. Diversifying means having a mix of investments in different asset classes and not exposing your money to the risks of one asset. Assets classes are the categories of investment you can use such as equities, bonds, cash, property, commodities and so on. Each asset class has a certain level of risk. Cash will have the lowest risk, followed by bonds, property and equities.

The best way for a beginner to get this diversification is with the use of mutual funds, also known as managed funds or unit trusts. These types of investment are particularly good for beginners who will usually have small amounts to invest. Mutual funds allow small drip feed investment in a range of assets to suit an investor’s risk profile. A risk profile is the amount of risk you are willing to accept with your money – the amount you are willing for it to lose in value at any time.

You should consider talking to a financial planner before making any investments. A financial planner can help you decide what type of investing you need to do to achieve your financial goals and match investments to your particular risk profile.

Start to educate yourself on investing as this is the best way for you to get ahead and understand what the best investing strategy is for you.

Lyn Bell has been in the finance industry for more than 30 years and is a Certified Financial Planner. She has helped many clients achieve their financial goals. Sign up to get Lyn’s free newsletter SoundFinance News and receive a free gift.

Please note this article does not contain specific advice and is for information/education purposes.

A disclosure statement is available free on request.