Investing for Beginners .EU, investing Money often costs too much.
Ralph Waldo Emerson

How to Invest if Don’t Know Anything about Investment

2012 Feb 27


Well, it is easy to invest if you know everything about investing. It is easier if you perfectly know all the possible investments and what they are capable of. Yes, it is much easier when you know how to analyze stocks and perfectly understand their risk and return potential. Everything is easier when you are professional at the field. But investment takes a lot of time.


Yet, this investment website is not for professionals, it is for investing beginners. So what to do, if you have some savings but don’t know how to invest it? As keeping it at your saving account is not a choice because money will be eaten by inflation


Rules for Beginner Investors

Well, there are many choices, and the easiest one is to choose some investment manager or investment consultant. But there is a problem. If you don’t have enough of capital personal portfolio managers will not work with you, and investment consultants might simply cost too much to you. So what is left for you is to invest by yourself. But as long as you don’t understand much, you should be very careful and follow these rules:



  1. Avoid too risky investments. If you are beginner at investing, there is no doubt that you don’t need any derivatives, currencies or any other fancy and risky asset classes. All the investment classes that you need are stocks and bonds. Your needs will be fully covered by these two. 
  2. Don’t invest money that you don’t have. Use only your own funds for investing. Don’t take any debts and forget about buying stocks on margin. It may bring you down faster that you could imagine.
  3. Don’t invest in securities directly. There is no reason for you to pick securities directly by yourself. If you don’t have experience in this field, you won’t create any value by doing this. It is more probable that you will destroy value and spend a lot of time on this purpose. What you should do is to choose some index funds as ETF or non-traded index funds and invest those. 
  4. Choose low cost investment products. When you are choosing investment funds, always look at the total expense ratio or other investment management fees. Do not overpay on those. 
  5. Don’t try to predict the stock market. Don’t try to jump from one asset class to another. Don’t try to predict when stocks are going decrease or when the bull market is coming. All you need to do is to hold on to your investment strategy and asset allocation
  6. Diversification is the key. Diversify your investment portfolio very widely. Diversify not only among different asset classes but also try to expand your investment area. Invest globally, in different regions of the world. It won’t be hard with a help of funds, just watch out that the large part of a portfolio would not go to the most risky investment zones as BRIC markets. 



Of course, if you want to invest large cash amounts, you should hire some investment professional for help…



Read next article: When Is The Best Age For Beginning of Investing?


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