Start With Simple Investments
When beginning to invest, it is best to start with simple investments. Unless you are investing a lot of money, don’t get carried away with trying to create a well diversified portfolio and trying to split up your investments into dozens of different categories. Instead, take a simple approach.
Make initial investments in one or more diversified mutual funds or exchange traded funds. As your money grows and you add more money to your portfolio, you’ll learn more and more about investing. Use this knowledge to find different investments.
Here are some simple ways to start investing:
- Sign up for a mutual fund direct investment plan, where you agree to invest anywhere from $25 to a few hundred dollars a month. The mutual fund will not charge you trading fees and you can forego the minimum investment amount that most funds charge by signing up for one of these programs. Check with T Rowe Price, Vanguard and Fidelity for these plans, although most mutual funds have similar plans.
- Save as much as you can each month, and each time you reach $1,000, buy some shares in a mutual fund or market ETF.
- Use a company like sharebuilder to buy stocks direct each month, without having to pay individual trading costs. You commit a small amount of money each month or week, pick your stocks and the plan will automatically invest for you based on your specifications.
- Or, simply open up an online trading account with a discount broker, fund it, and pick out a few investments to get your portfolio started.
As your investing knowledge and your portfolio value grow, start diversifying and expanding your investment selections. Begin adding some individual stocks, real estate and bonds. Read all the investing magazines, blogs and online finance sites to continue to grow your knowledge and to help you find new investments. The more you invest, the more people you’ll meet who also invest. Get ideas from them and share all the information you can. Stick with it, and over time, your simple investments will turn into the portfolio of your dreams.
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MisterMighty, 4 weeks ago
This is overly simple.
Mutual funds are terribly expensive in Canada, with hidden fees on the order of 4% or more. Add inflation of 3.5 and most mutual funds are complete losers. It’s a slow death of your money.
Why not talk about actual specific guidelines for picking actual winners? Profitability, low debt, decent dividend yield, high cash-flow companies are where you need to put your money. Large caps who fit this description are a great buy right now. Dividend yields of 5% is not uncommon, in addition to 4-7% growth YOY.
Editor, 3 weeks ago
I don’t invest from Canada, but most Vanguard and T Rowe Price mutual funds offer rates of less than 1% and no hidden fees. Also, while by definition not every fund can outperform the market, many of these funds perform at or above the market sector they are tracking.