4 Tips for the Beginner Investor

Zeitung Financial Times / newspaper financial timesStocks, bonds, ETFs, Index Funds, Options, Mutual Funds – yikes! If you’re new to investing, you probably had a mini freak out over all those crazy terms. You make money and you want it to work for you, so you figure, a gal’s got to invest her money and make those dollars multiply.

Absolutely. But how do you remove the “I am utterly confused” factor from investing? It can be daunting and scary taking your hard earned money and investing it in the stock market.

With everyone shouting “start now, start now” from the mountaintops, there’s this underlying feeling of panic that if you don’t start now you’re going to be left behind.

The key is to stay calm, get over that feeling of overwhelm and remember there is help for the newbie investor. Don’t feel you have to jump right in before you’re comfortable.

Take some time out to learn, figure out your risk tolerance, and how much you can invest now that you’ve got budgeting, savings and debt under control.

Here are some tips to help the beginner investor get started:

Learn, learn, and learn

The best place to begin is with educating yourself. Familiarize yourself with all those scary (they’re not really) terms – stocks, mutual funds, etc. It will help you decide if you want to DIY it or have an advisor helping you. There are a lot of great resources to get you started:

  • Speak to an investment advisor at your bank. Advisors are there to give advice and will help even if you go the DIY route.
  • Check out the personal finance section at the library.
  • Look to the online investing gurus. Sites such as The Daily Worth, LearnVest and Go Girl Finance are great places to start.

Play a game

If you decide to DIY, many of the discount brokers offer a trial trading account. This is where you play the stock market with imaginary money. It’s perfect when you’re trying to figure out order types, how stocks trade and how the markets work in general.

Take it slow and start small

Still terrified about investing in the stock market? Start with a small amount of money and a lower value stock when dipping your toe in for the first time. If there are any market fluctuations, having only $500-1000 invested will ease the shock and lessen the blow to your wallet.

Choose what you use

Take a look at some of your favorite products you use each day. These can be great stocks for the newbie investor as they’re established, and you’ll be motivated to keep up with say, Starbucks – because you’re buying lattes from them. When you have an interest in the value a company brings to your life through their products, you’re more likely to invest and be interested in how their business runs and its stock trades.

Once you become more comfortable, you can start diversifying the stocks you’re invested in to build a more balanced portfolio. Balancing your portfolio is one of the ways you can minimize your losses and risks.

So before you freak out thinking it’s all too complex, calm down, keep it simple and remember that when you’re in your 20’s and 30’s, you’re investing for the long-term with a specific goal in mind.


  • Great tips, especially starting with products you actually use. When I started I only invested in companies I knew, but now I’m also starting to branch out a bit. Research is key!

    • That’s great DJ, and it’s so true. My first two stocks were in Coca Cola and Disney, because I knew – and liked – them. Today I have diversified accounts and I love it. But I never invest in anything I don’t fully understand.

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