What to Invest in for First Time Investors

what to invest in

Graduating from college, entering the “real world” and landing your first full time job are exciting.  Some would say these three things are the first steps towards the next phase of your life.  That phase includes paying off student loan debt, learning to live on a budget in order to sustain your lifestyle and figuring out all the kinks for the first time on your own.

That also includes learning how to invest money.  Living on less than you learn, being financially responsible and starting to plan for your future are all steps that young adults need to take towards living a happy financial life.

I’m not going to lie, learning how to invest money can be scary.  With headlines telling everyone the markets are dropping doesn’t exactly make first time investors want to run to their bank and hand over stacks of their cash savings.

One of the most common questions I receive as a financial planner from first time investors is what should I invest in?  Ah if life were only that simple.  What to invest in is part of a bigger financial scenario because how a first timer invests their money is a personal decision.

Here are five ways new investors can invest money

Remember it’s for the long term

When you’re choosing what to invest in you want to remember that you’re investing for the long term.  Depending on the level of risk you choose for your investment portfolio you may experience high or low daily fluctuations.

What happens in your investment account from today to tomorrow is not important, what’s important is that you choose investments that align with your goals over the long term.  Short term fluctuations are normal for investors who are planning for the long term.  Just take a breath and ignore daily market changes.

Diversify from day one

There are several different types of investment options on the market and new investors should look at diversifying their money.  Purchasing one investment and putting all your eggs in one basket is not the way to invest money.  It’s very risky and it can be very discouraging.

A mix of domestic fixed income and equities can be purchased directly or in a collective portfolio through mutual funds.  Just remember to check the fees to ensure you aren’t overpaying for a service you don’t need.

Sometimes it’s cheaper to purchase investments individually instead of through a pre constructed portfolio because the fees are too high.  1.5% to 2% is a reasonable fee to pay for a well balanced portfolio.

Don’t look at your account every day

This is the single best piece of advice I can give to new investors.  Having money is exciting and watching your savings grow after being invested can be addicting, but looking at the value of your account every single day will make you crazy…literally crazy.

If you see the value of your investments drop you will panic and panic leads to rash decisions.  You don’t want that.  Looking at your investment accounts once a month or with your quarterly statements is a good idea to make sure all your contributions get deposited and keep an eye on the performance, but no more than that.  You’re invested for the long term and probably don’t need your savings until retirement so don’t worry about it now.

Set up contributions you can afford

The worst thing you can do for your investments is to over contribute.  Set up pre authorized contributions that fit comfortably into your budget every month and make the frequency coincide with your paycheck.  That way you can always afford to invest and won’t need to withdraw money from your savings if you over contribute and find yourself short on cash one month.

If you have extra money at the end of the month you can contribute to your investments a la carte, but don’t try and invest too much regularly because you don’t want to strain your everyday lifestyle.

Always stay informed

According to CNN Money an informed investor is the best kind of investor.  “If you’re willing to do your homework and want to buy individual stocks, go for big names, also called blue chips, investors say.”

Researching your options will not only help you find the perfect investment based on your comfort with risk, time frames and investment objectives, but it will also help you rest assure that you always know what’s going on with your money.




  • Great tips. I know quite a few people who put off investing in anything as it seemed so confusing, they didn’t know where to start etc. This post makes it really easy to understand. I think a big one for me and many I speak with has been not checking the investments daily otherwise the up and down of different markets can do your head in!

  • Hi Kylie,

    That is so true, between the mass of options available and the daily fluctuations investing can definitely make a first timer go nuts. It’s sad that people put it off because cash savings will never grow – at least they’ve got a shot with investments over the long term. Thanks for reading.

  • “Don’t look at your account everyday” is so important. I used to tell myself that I would just look to see where it was at, and not to make decisions, but I found myself selling and buying more than I realized. I finally quit looking until it’s time for my annual rebalance. Great article!

  • Hi Kalen,

    I check my bank accounts every single day to make sure there’s no fraud, but I rarely check my investment accounts other than the occasional glance.

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