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Doable investment options for the beginner investor

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What’s better than working more to make more money?

Answer: Not working more to make more money.

All you have to do is set aside what you can and put it towards the many different and easy investment options presented in this article.

First, look at your spending habits. You know you can save at least $100 a month somehow. There is no excuse for any working American to not find a way to save at least $100 a month. Look at your spending habits: Did you really have to eat out that one night? Did you really have to go to the bar to buy a $10 beer when you could have bought a six pack for cheaper? There is simply no excuse why you cannot find a way to come up with $100 a month. Buy cheaper food, cut out a gym membership and workout at home instead, cut coupons if you have to… The point is: you CAN do it if you try.

But why scrimp and save just to throw money to something you won't see come back to you for possibly years? Why is it important to invest? Simply put: For most working Americans, your paycheck isn’t enough. Do you want a comfortable retirement? Do you want to be able to pay for your kid’s college? Do you want to have more money when you’re older and need it for possible life-changing events? If you answered “yes” to any of those questions, unless you got a killer job making over $200,000 a year, then you need to invest. I know it sounds like a risky business, but think about this way: most millionaires (that weren’t born into a rich family) got to be millionaires by being smart investors. Plus, you’ve gone to a casino and lost money, right? If you’re smart, you know that you lost your money because the odds are against you. In the investing world, the odds are in your favor! Now doesn’t that sound like a more fun game to play?

If you’re a complete beginner, this article is a great starting point to start investing now. None of these are get-rich quick schemes. They are just conservative basic easy ways to make a little extra money off your extra $100 or $1000 or whatever you can spare per month that you can use to play with. Bear in mind, for the purpose of being concise, I’m leaving out a lot of information here and I could probably blab for days about each option, but I’m hoping if you’re interested that you can just google articles and financial experts’ advisories about the subject to learn more.

So here’s what you can dabble in. But first remember that it’s ALL about diversification. You do not want to put ALL your money into one investment just because it might be low-risk or because you think you’ll make good dough.

For the long-term: Buy a condo or house (when able). Once all debts are paid off, credit is good, and you make enough to afford a property, buy a house. Even if it takes you 30 years to pay off the loan, before it’s time to retire, you will never have another rent or mortgage payment! That means after your usual bills, ALL of your paycheck is YOURS! Plus you get tax benefits and the ability in an emergency to take out home-equity loans that are better rates than any credit card or installment loan you could ever get. Not to mention house appreciation making your home worth more over time and thereby increasing your net worth. Look up houses for sale in your area on trulia.com.

Retirement: First off: For reasons I won’t get into, maxing out your 401k is by far the best investment advice you will ever receive. Start young. Start now. Invest as much as you can reasonably afford every month towards it. Choose a high-risk, high-reward target retirement; over time, you will generate more money by the time you are able to retire. If your employer matches 401k contributions, contribute as much as possible: that’s FREE MONEY!! To get more info, talk to your employer’s 401k provider and set something up. If you do not have a 401k and cannot get one, get an IRA Vanguard account (vanguard.com) and talk with them over the phone about your options.

To counter-balance a recession: Buy some gold and/or silver. When the stock market sucks, you can still make money. Buy over $1,500 worth and you won’t have to pay the sales tax (in California). Also, be sure to buy when the economy is good so you can get it as cheap as possible. Precious metals’ worth increases when there’s a recession. Since the economy is becoming more stable, buying now or soon would be a smart thing to do. Buy gold and silver at usagold.com or go to a local retailer.

Retirement: Get a Roth IRA on top of a 401k so you can retire sooner with more money and tax benefits. Go to vanguard.com to learn more.

For the medium term (e.g., College savings for your kid, etc.): EE Savings Bonds from the U.S. Treasury. Guaranteed to double in 20 years. You can buy one for as little as $25. Check out treasury.direct.gov.

Short to Medium term: Vanguard STAR mutual fund. Minimum investment: $1,000. 60% Stocks 40% Bonds. All in one fund completely diversified for your convenience. When the stock market is doing well and you need a few extra bucks to get you through the month, cash some of it out. If you got $3,000 and you’re feeling a little more risky, purchase and add into the Vanguard 500 Index Fund; it makes more on average than the STAR fund but its lows can be really low which may cause doubt, but its highs can be high causing eventual satisfaction. Go to vanguard.com.

Short to long term: For cash that you will see within a few months vs. waiting years, buy 30 Year Treasury Bonds. Minimum investment: $100 per bond. You get dividends every 6 months. Once you have enough of them, you’ll be getting paid monthly. FDIC-insured safest bonds you can ever buy. They don’t pay much, but it’s the safest investment you can make, even safer than the bank and at a better rate of return! Go to treasury.direct.gov.

Short to long term: This one’s a bit risky, but if you conservatively keep your selection of who you lend money to, Peer 2 Peer Lending can be profitable. Check out Prosper.com or Lendingclub.com. Lend small portions to lots of people. 99.9% of people who invested little bits of money to over 100 or more borrowers received a positive profit. You can start lending for $25. Check out lendingclub.com

Of course there are many other investment schemes one can dabble in, but these seem to be the easiest to jump into for the beginner investor. For someone that can spare $100 a month for now, I would recommend starting or increasing their 401k contribution at $125 (pre-taxed) per month. In 30 years, if you never increased your contribution amount and did not have an employer match, you would have roughly $200,000. The more you put into your 401k, the more you will have and the faster you can retire!

If you can spare $200: put $125 to 401k (pre-taxed), $25 to EE Savings Bond, $25 to P2P Lending, and $50 contribution to either Roth IRA or towards a $100 30-year Treasury Bond.

If you can spare $300: $175 to 401k (pre-taxed), $100 to 30-year Treasury Bond, $25 to EE Savings Bond, $25 to P2P Lending, $25 towards purchase of silver coins (American Eagle Silver Coins are the best choice).

Overall, you can never go wrong as long as you diversify. Just be sure to be debt-free before you start investing. It makes no sense to try and make 8% on your investments when you’re paying over 20% interest to credit cards.

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