When someone hears about investments, they typically think about the traditional stock market. While this can definitely be a lucrative investment, it’s not the only one available. If you’re new to the world of investments, it’s important for you to know your options. In this article, we’ll be covering the best types of investments for beginners.
1. Day Trading
Day trading has a similar premise to the stock market. But rather than buy shares and have them accrue value, day trading has you buying penny stocks instead. Contrary to what the name implies, penny stocks don’t actually cost one cent. Their value ranges from $1 to $5, which makes them cheap to afford.
The appeal of day trading is that once you purchase these stocks, you have 24 hours to sell them. To have an easier time, make sure to look for penny stock watch lists as these can help you net a profit. Day trading, along with any other type of investments, does require you to learn more about it. Despite its simplicity, you can’t just hop into it and expect to prosper overnight. Knowing what you’re doing is the key to success.
2. High-Yield Savings Accounts
Another investments that’s easy for beginners and can help avoid investing mistakes are high-yield savings accounts. These work more or less the same as a regular savings account. The only real difference is that you can earn much higher interest on your investment, which can be up to 10 times the normal amount. What’s more is that you’re not taxed upon depositing your funds, so you don’t have to worry about losing money.
3. Participating in the Stock Market
Even though it’s a bit more complicated than the previous two options, the stock market is also a beginner-friendly option. But before we get into it, there’s another factor to go over, which is risk. Risk plays the biggest role in any kind of investment you make. Investing is a high-risk, high-reward type of expense.
Nothing proves this more than the traditional stock market. How it works is that you choose a company and purchase a share of it. In other words, you’re now the owner of a very small fraction of the company. What happens with the share, or shares if you bought multiple, is that it can either increase or decrease in value.
If the stock market goes up, then what you’ve invested in goes up in value. Alternatively, if there’s a decline, then your stock can potentially plummet in value. The key to making the most out of this investment is to keep a close eye on it. You need to pay close attention to what’s occurring in the stock market. Aside from seeing the current value of your investments, one thing in particular you need to look out for is a potential crash.
The stock market is riskier than you might think. A stock market crash is when the prices of all the participating companies’ stocks drastically decrease. This can be an investor’s worst nightmare as it can make the entire thing moot.
Fortunately, it is possible to back out of the stock market if a crash is on the horizon. That way, you can still make it out with a reasonable profit. It’s also recommended that you research ways to prepare and save your finances in the event of a crash as well.