Quick Guide to Financial Investments for Beginners

One of the biggest misconceptions surrounding investing is that it’s only for the wealthy or the well-to-do.

To some extent, this may have been true in the past, but now there are investment opportunities for everyone — whether you already know what to do or need some assistance.

There are resources available, especially for beginners, that there is no reason not to grow your wealth by investing.

And proper investment planning is more than learning about the stock market. The more you research and learn, the better your investments will be — and the more money you have the potential to make.

Ideal Investments for Beginners

Investing in your future can feel overwhelming, but it doesn’t have to be.

It is important to do research to determine what works best for you and your situation rather than diving in headfirst.

And keep in mind, the opportunity that works for your neighbor or parents might not be the route that works best for you.

Retirement Plan

There’s a variety of retirement plan options available, and if you have one through your employer, you should look to invest in that first.

Looking at the plan available through your employer is important because the company might match a portion of your contribution.

That match is free money and a guaranteed return on your investment.

Contributing to a 401(k) is simple; the money is taken from your paycheck and put into an account without any work from you — aside from signing up and monitoring the account.

If a retirement plan through an employer is not an option, then you should consider a Traditional IRA or Roth IRA account.

Find a solution that works for you and begin saving for your future with the help of Hudson River Community Credit Union.

Investment Apps

Investment apps are designed to kick-start a savings portfolio, usually with a small amount of money.

Acorns, for example, helps users save money by rounding up purchases on linked credit or debit cards, then moving the change to a computer-managed portfolio.

The approach is certainly useful and straightforward.

While you shop, Acorns simply moves the change from every purchase to your account.

The downside? There’s a monthly maintenance fee which varies depending on the plan you choose.

And since there is a monthly fee associated with the service, it’s likely to fluctuate every year.

Index Funds

A market index is a selection of investments representing a portion of the market.

As an example, Standard & Poor’s 500, more commonly known as S&P 500, is a market index holding approximately 500 of the largest companies in the United States.

So, an S&P 500 index fund would aim to mimic the performance of the S&P 500, purchasing stocks in that index.

Index funds take a passive approach to investments by tracking a market index instead of using professional portfolio management. Therefore, they tend to carry lower expenses based on the investment amount.

Rather than employing a professional manager to build and maintain your portfolio of investments, index funds track a market index.

Index funds can have minimum investment requirements, but some firms like Fidelity, offer a selection of index funds for less than $100.

Exchange-Traded Funds

Typically, exchange-traded funds (ETF) track a market index and then take a passive approach to investing.

And compared to mutual funds, exchange-traded funds tend to have lower fees.

Like index funds, you can buy an ETF that will track a market index such as the S&P 500.

The main difference between the two is that rather than carrying a minimum investment, exchange-traded funds are traded throughout the day. Investors buy them for a share price — like a stock price, it can fluctuate.

A share price is the exchange-traded fund’s minimum amount. And depending on the fund, it can range upwards of $300 or more.

Since it is traded like stocks, brokers could charge you a commission fee to buy or sell.

For more information about investment opportunities and to get started planning for the future, contact the financial team at HRCCU.

We’ll be happy to help get you on the right path to achieve your financial goals.