One of the biggest misconceptions surrounding investment is that you should be rich to start investing. You, however, will hardly get out of the poverty cycle without investing in one way or another. While there are now several options for investing, some of these are run by cons out to fleece you. To this end, you should first get a financial expert to investigate the investment plan that attracts you before sinking your money into the same.
Under the guidance of this company offering financial planning services in Guilford, you can invest even with the lowest possible amount and slowly grow your wealth. For beginner investors without so much money that they can sink into risky investments portfolios, the company will often recommend the lowest-risk platforms. Here are some of the commonly recommended investment portfolios for beginners.
Target-Date Mutual Funds
These are retirement investments that will automatically invest your deposits according to your targeted retirement year. A mutual fund is one basket for all investments. You will buy a certain number of shares in the fund so that all your holdings are in one transaction. There is a manager who often chooses what investment best suits the fund but most mutual funds have a theme like real estate, stocks and bonds. If you want to retire in thirty years, for example, the initial funds of your investment will be spent on high-risk yet high-earning investments like stocks. The years towards your retirement will take a less risky investment approach with something like bonds.
Index Funds
These are more or less like mutual funds on auto-pilot. You will not have a manager to build then keep track of your investments: Instead, this fund will track a market index. This encompasses investments that will represent what is happening in a particular market. Index funds are mostly inexpensive since you do not pay a manager. While some index funds will have minimum requirements, some do not, and you can invest with as low as $50.
ETFs {Exchange Traded Funds}
ETFs, like index funds, will also track specific portfolios. Instead of a minimum investment like in index funds, ETFs will be traded throughout the day in shares. The prices of these shares, like stocks, will fluctuate. Since these are traded like stocks, brokers will charge commissions to sell and buy them. You can, however, choose a commission-free ETF if you are planning to invest regularly through automatic weekly or monthly deposits.
Employer Retirement Plans
The most popular of these is 401 {K}. You can invest as little as 1% of your salary on an employer retirement plan and then increase your contribution over time. Most employer retirement plan contributions will be deducted from your salary before its taxation and are deposited straight into the account.
With the above alternatives, you can grow your wealth within a short period and afford to invest in high-risk ventures. Even so, a financial planner will always advise you to diversify your investment portfolio. Though this might seem daunting, you will start small and work your way up over time.
