Certificates of Deposits (CDs) are a good safe way of investing for beginners, and are offered with various maturity dates and interest rates by banks and brokers.
Money Market Accounts are also a safe bet. They are offered by banks, and are therefore FDIC insured. They are also very liquid. They usually come in two flavors: tax-free and traditional accounts. Look around for the interest rate that will come closest to meeting your investment goal.
Mid-term and long-term goals usually involve working with a broker to invest in the stock market and/or taking advantage of various opportunities offered by your State or employer.
Every state now offers a 529 Prepaid Tuition Program
The Coverdell IRA (formerly known as an Educational IRA) can be opened through a brokerage firm.
401K's are offered through employers.
Traditional IRAs and Roth IRAsare both available through brokers.
Stocks on the stock market involve more risk than other methods of investment for beginners. It is therefore recommended to start with mutual funds or work with a broker under a managed account.
Mutual Funds are lower risk because they are diversified. They are made up of many different stocks. If one stock goes way down in price, the overall mutual fund only goes down a fraction of the amount. Mutual funds are divided into numerous risk categories such as: Capital, Income, Growth, and Aggressive. You would choose one based upon your goals. Research and compare the various funds in that category through either your broker, or online. You’ll also want to read the fund’s prospectus for an overview of the mutual fund’s risks and performance history.
Art and Collectibles Investing For beginners, art or collectibles is very risky, therefore invest in something that you are either passionate about or that you truly like. Maintain a narrow investment focus, get involved in your investment’s community and follow a trend. You will be in it for the long-term with no guarantee of certain returns.
Hopefully this short stock market for beginners guide has made a few things more clear for you. Whether you are investing in bond funds, art, or stocks, it will always be important to do your research and know what you are buying. Learn as much as you can from books or articles, and then do specific research on each individual investment. It may seem like a lot of work. As you probably know though, success with anything involves lots of small amounts of practice or learning that adds up to a champion athlete, or in this case, a successful investor. I have been looking to invest in the stock market pretty soon and I just wanted to share what I've learned through research.