How to invest

Investing For BeginnersAt InvestorPlace, our goal is to provide the world-class investment and financial advice you need to become an educated financial leader. Look through the investment articles we have to offer – it could be the most profitable decision you have ever made!

How to Invest For CollegeHow to invest when you are trying to pay off student loan debt.

How to Invest for Retirement401k, Roth IRA, Annutities, taxes, target date retirement funds, saving, and more.

How to Invest in Stocks

how-to-invest-in-stocksIf you’re new to the investment game read InvestorPlace’s stock investing articles. You’ll learn how to buy and hold stocks and how to determine which stock picks are right for you. Learn about stock trading, penny stocks, and how to invest in dividend stocks.

How to Trade Options

How to Trade OptionsOptions can also help you earn larger profits with a smaller amount of cash outlay and option strategies can help you hedge your portfolio and limit potential downside risk. Read InvestorPlace’s Options Trading Guide to quickly learn the basics of options and get ready for trading.

How to Invest in Funds

how-to-invest-in-fundsIf you are looking to become an effective investor, arming yourself with knowledge about how to invest in funds is one of the best ways to get there. Learn how to invest in Mutual Funds, Index Funds, Hedge Funds, ETF’s REIT’s, Managed funds, index funds like Vanguard Funds, and more.

Watch Video: The 4 Best Investments to Make Right Now

Best Investments to Make Right NowInvestorPlace is your best resource when it comes to preparing for successful, well-informed investment strategies. Even if you happen to be an experienced investor, it pays to refresh your personal knowledge on investment topics you might not have come across in a while. Who knows – you might even learn something new.

What Is an Investment?

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You definitely know the word investment, but do you know what it actually means?

Ironically, the word investment has become kind of misunderstood because the word is so overused. People might refer to “investing” in a sofa, for instance.

The easiest way to define it is that an investment is a situation where you give a person or an entity some of your money in exchange for potential profits. Potential is the key here: profits are not guaranteed.

Investments come in different shapes and sizes. Here are some key types of investments:

  • Entrepreneurial/business investments: If you start or put money into a business, this is an investment. Being an entrepreneur is no joke, as I can tell you from past experience. It takes a ton of effort, and sometimes it can take a long time to reap the returns, if any.

However, when you do see opportunities that others don’t and add a service or product to the market that has an impact, it can pay off big time. Just ask the founders of little businesses like Amazon or Netflix.  

  • Real estate investments: In general, real estate as an investment isn’t the house you live in. It’s a home or apartment that you purchase and rent out for income, or flipping houses by repairing and then reselling them.
  • Object, art, or collectible investments: The rare baseball card from the World Series. An original Andy Warhol. Gold or jewelry from Tiffany. These are examples of items that you might buy and hope to resell at a later date for a profit.
  • Stocks: This is my bread and butter and the primary type of investment we’ll talk about in this post. A stock is a certificate denoting your ownership in a company. When you buy shares of a stock, you have certain rights to that company’s value.

Stocks have a value that is dictated by supply and demand in the market. This is tied to news, company developments, and other factors that cause demand in the stock. If there’s high demand, the price per share goes up, and your profit potential increases.

  • Bonds: When you invest in shares of a company via stocks, it is equity. Bonds, on the other hand, focus on debt. Basically, a company will issue the bond in hopes of raising money. In return for that, they agree to pay a specified amount of interest back to anyone who becomes an investor.  Bonds typically aren’t a high or quick return investment. However, they are fairly reliable and tend to be low in risk, though high-risk bonds do exist.
  • Cash and cash-equivalent investments: This category of investment includes checks received that have not been deposited, checking accounts, and money market accounts.

Where Should I Invest Money to Get Good Returns?

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That’s the universal question, isn’t it? Figuring out how to identify the best investment to reach your goals can be intimidating, and there isn’t a clear-cut answer.

The good news is that none of the aforementioned investment types are generally considered bad ideas. But in terms of delivering “good” returns, that depends on your individual constitution, goals, and risk tolerance.  

Plenty of people will start with lower-risk investments. While the returns are lower, they’re also a lot less scary.

However, if you’re like me, you don’t like waiting, and you don’t like small returns. When I started as a trader, I didn’t have a huge account — and most of my students don’t, either. So for me, the best method of investing has proven to be investing in the stock market, particularly in penny stocks.

The risk level is higher, but so are the potential returns. This is why low-priced stocks are what I focus on in my career and in my teachings.

Key Tips on The Best Way to Invest Money Short Term for Newbies

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Now that you’ve gotten the scoop on long and short investment styles, what’s it gonna be? If you want to go short term like me, here is my thought process:

My Preferred Investment Strategy

Penny stocks are where I’ve focused most of my career. I take advantage of the volatility of the penny stocks by making short-term investments. I have made profits through trading, swing trading, and plenty of short selling.

But I’m not necessary married to one type of position. I’m married to finding profits, and am willing to follow what my market research tells me will yield the best results.

My preferred investment strategy? Identifying market patterns and using them to make educated guesses about the best times to invest. I’m not necessarily looking for companies that I believe in. Rather, I am trying to identify trends and take advantage of the fluctuations.

Control Your Mind

How can you get in the right mindset to invest? Here are some tips:

  • Don’t expect things to happen overnight. This is particularly true with long-term investments, for obvious reasons. But even relatively short-term investment strategies like day trading take time because you need to overcome a learning curve and learn what you’re doing.
  • Think in the long term. Yep, even if you’re day trading. Investments can ebb and flow. For instance, a mutual fund might go up and down on a daily basis. You don’t need to get lost in the minutiae of it, but rather, look at your progress in the long term. If it goes up and down from month to month but is gaining profits overall for the year, that’s a good thing.
  • Consider your goals. It’s important to consider your goals before you start investing. This can help you choose the investment types that are best aligned with your desires.
  • Understand your options. Knowledge is power, and this is especially true in investing. Knowing what options are best suited to your needs and understanding how they work will make you a more informed investor.

It’s Not Easy to Make Money

You didn’t like reading that headline, did you? Few people do, but this is an important topic to address because it will help you respect the hard work and risk that is part and parcel with investing.

Investing Involves Risk

I truly believe that a big part of why I have been able to gain success as a trader is that I have a healthy respect for the risk involved in the process.

I’m very motivated to keep losses small. Many of my Trading Challenge Students might even accuse me of cutting losses too quickly or taking too few profits, but I’d rather be safe than sorry.

After all, a stock that you think is a sure thing can take a nosedive in minutes. A surefire short sell could bottom out in moments.

The bottom line is that in spite of your best efforts, there’s no amount of studying that will prepare you for everything. However, you can take certain safety measures.

For instance, it’s good to never risk too much of your portfolio in a single play (the percentage will be different for every trader; stick with what makes you comfortable and don’t exceed it).

The position you take should also never be too big to affect the price action of the stock.

Also, always look for good liquidity. A stock should have at least a few hundred thousand shares traded daily. A good amount of volume is an important indicator that can help you determine that you can get in and out of your position easily.

Invest in Your Education

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It’s understandable. People don’t want to spend money to become day traders. They want to earn money, right? So it may seem backward to invest in day trading classes. However, it’s important to look at the big picture here, as the cost of a lack of education is often infinitely greater than that of a proper education.

Still on the fence? Consider this: Many of my students started out believing they didn’t need day trading classes, either. But then they got into the market and started losing money. For many, this was the realization that made them see the value in the classes.

In a delayed fashion, they realized it was a worthwhile investment. What about you? Are you willing to invest in your knowledge now, and prevent potential losses in the future?

Join My Trading Challenge

As a budding day trader, day trading classes can offer many benefits, often including a much quicker learning curve. My Trading Challenge offers ease and flexibility with online lessons that can be tailored to your schedule.

The Bottom Line

As a brand-new investor, it can be difficult to know how to invest money and where to get started. There are many directions you can go, and none of them are right or wrong — it’s about finding what works for you.

By educating yourself about how to invest money and the many investment options available to you and choosing the ones most aligned with your personal goals, you’ll be taking a powerful first step on your investment journey.

What types of investments interest you the most?

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