To the uninitiated, investing can be a scary concept. There is a certain amount of risk with any investment, and those who have a low tolerance for risk often avoid investing like the plague. But good investments can gain a great deal of value over time, and if you want to have a comfortable retirement, investing is one of the best ways to do it.
A beginning investor can’t expect to jump in and make a fortune right away. Anyone who tells you that it works that way is just out to get your money. But if you start out slowly and work your way up, you might find yourself wondering why you didn’t start investing sooner. Here are two of the best investment options that are great for those who are just getting their feet wet.
Some would-be investors are reluctant to invest in stocks because of brokerage fees. Commissions can eat up a significant portion of your investment, and when you don’t have much money to invest in the first place, that can be a deal breaker. But with a direct purchase plan, you can avoid those fees.
A direct purchase plan is simply a means of purchasing individual shares of a company’s stock directly from that company’s transfer agent. There is no broker involved, and transfer agents generally charge only a small set fee per trade. Some charge no fees.
Companies that sell stock through direct purchase plans do not advertise the fact, so investors must inquire with the company they’re interested in to see if this is an option. In most cases, that information is available on the company’s website.
If you’re more comfortable going through a brokerage, online brokerages charge much lower fees than their offline counterparts. Either way you go, remember to stick with companies that have been around a while and have a good reputation in the beginning. This will minimize your risk of loss.
A mutual fund is an investment that includes multiple stocks, bonds and other securities. It is managed by a professional, and is usually comprised of a mix of investments with varying degrees of risk. Mutual funds are great for diversifying your portfolio without having to get your hands dirty.
You could make the same investments that are made in a mutual fund on your own. But by putting your money into a mutual fund, you have the advantage of an experienced fund manager choosing investments for you. You can also enjoy the benefits of diversification without needing a lot of money to invest.
There are many other investment options out there. But if you’re just getting started, these are two of the easiest ways to invest. Once you’ve learned the ropes, you can always move on to other opportunities.