How to Invest Essentials for Beginners & Intermediates

Joseph Meyer
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Why You Need To Invest

This is the classic story of the stock market. Companies are creating value and have the potential of increasing in value and some go on to create tremendous wealth for their share holders.

When you start out in the stock market, it is very difficult to pick the right stocks at the right price. It is easy to choose from a list of great companies listed on the stock market, but investing in these companies is difficult as their share prices are unlikely to increase significantly.

However, there are ways to increase your odds of picking the right stock at the right price. There are ways to minimize your mistakes and maximise your chances of profit. For those who prefer to play it safe, you can, of course, choose mutual funds instead … but in the long run, you might end up being very disappointed with the results.

Have a Goal and a Time Horizon

Before you start looking at stocks for investment, stop and think about what your strategy is. Decide on an asset allocation ” the percentage of your portfolio you want to put in stocks and the percentage you want to put in bonds and cash.

Are you after high income?

Do you want to target a particular amount of money after a certain period?

Moving Beyond Savings to Unlock Higher Earnings

We’re taught from a young age that saving your money – putting it into a bank or the stock market – is the ideal way to grow our wealth. The problem is, most banks and financial institutions pay very low interest rates (which are often below the rate of inflation). The same holds true for stocks, since not only do they have wild price swings but they have also been quite volatile. If you’re in your 20s or 30s, you may think that you can do better over the long-term.

There are certainly ways to earn better returns from your assets but you’ll generally need to take on more risk. It’s important to remember that the majority of people will probably not have enough savings to retire on. Hitting 7-8% growth and earning those numbers on a few hundred thousand in assets can change things quickly, but you have to have that eight-figure net worth to start with. If you’re just building your savings, this may not be enough to retire on. It’s better to have more conservative growth numbers and have enough money for retirement than have seven or eight million dollars and be forced to work past retirement.

How To Start Investing: The Top 7 Things You Need To Know

One of the hottest topics these days is investing. When I ask people what they are interested in talking about, I often hear investing. It seems to be the latest buzz word.

It may seem confusing at first, but investing seems so simple. I know this may sound odd, but you should try it. From the day I started, I haven’t looked back. This may sound weird, but it’s true.

I know there are a lot of books on the subject of investments, but I’m going to keep this simple. I will illustrate some of my points with stories about my friend Mitch. I know you are wondering who the heck Mitch is. I’ll get to Mitch in good time.

Types Of Investments To Get You Started

In this section, we’re going to discuss some of the essential investments that you should invest in. Once you know the amount of money you will be investing, you will need to know the type of investment you will be making.

For instance, if you want to be a passive investor who just has to check on their investments every now and again, then you need to consider the different investment types like:

  • Exchange Traded Funds (ETFs)
  • Commodities
  • Direct Stock Purchases
  • Real Estate
  • Forex
  • Options

In this section, we are going to focus on the first four that we mentioned. Real Estate and the rest of the investment types mentioned above can be considered more as long-term and therefore, hard for a beginner or intermediate investor.

Therefore, in this section, we are going to focus on investment types that are ideal for beginners and intermediate investors.

Exchange Traded Funds (ETFs): These are the easiest investments to get into and the most highly preferred by most beginner investors. All you need is money and a brokerage account to get started.

Once you have an account, you can invest in variety of ETFs that can be used for trading and as a long-term investment.


Your grandparents' investment strategy might not work for you. In the 1980s and 1990s, U.S. Treasury bonds were popular among conservative investors due to their high yield.

However, recent interest rate cuts mean investors are earning so little on their bonds that they might as well keep their money under their mattresses. The average return on a U.S. Treasury bond is about 0.1% in 2016.


The first thing you need to do is gather all your financial information. Find out what your current investment situation is like and how you are going to obtain enough funds (any idle cash, an inheritance, or maybe a soft loan from your parents) for your investment activities.

You will also need to register yourself with a brokerage firm. This should be pretty simple as there are a lot of brokerage firms around these days and they are coming up with innovative ways to attract more customers.

You can register online, or if you are old school then you can still register at your local brokerage firm’s branch office.

The next step is to decide on the type of brokerage firm to register with. Depending on your financial situation and your desire or need to earn a certain amount of return from your investment, you can choose to register with a retail service firm, a discount service firm, or both.


Commodities are the building blocks of the economy. They are physical goods that can be found almost anywhere. These are raw materials that go into almost every product you find at the store. Commodities can include anything from precious metals to spices to basic food items to textiles.

Like any type of investment, understanding how to invest in commodities is the first step to success. These are complex investments, and there are a lot of factors to consider. Take the time to read up on the economy and the fundamentals of commodities to make sure you are investing in commodities in the best way possible.

Where do you find places to invest in commodities? One of the most common places is a commodity futures exchange (such as the CME Group or NYMEX) where the risk of price fluctuation is lower.

Exchange-Traded Funds (ETFs)

Mutual Funds

In this post, we’ll cover the basics of mutual funds, the main benefits being diversification and a professional investment manager. If you have a long time horizon, this may be the way to go.

What is a Mutual Fund?

Mutual funds are a relatively easy and popular way to invest. They are similar to a stock-market index fund, but there are some key differences.

The goal of a mutual fund is to pool investors’ money together in order to help cover trading costs and provide a reasonable potential for market growth. Since a mutual fund uses cash from many investors, it can afford to invest in more and riskier securities. In other words, it can achieve better diversification than if an individual investor had to cover the costs of purchasing a single security. Therefore, if an investor buys shares in one or multiple mutual funds, he or she has spread the investment risk and increased the total diversification of his or her portfolio.

An investor’s risk is limited in two ways: the funds are diversified by investing in multiple securities, and the securities in which the funds are invested are reasonably diversified among different types of industries. Ideally, the funds invest in multiple securities over many different industries, so that even if one industry collapses, the remaining securities in that fund should still provide the investor with a reasonable rate of return.


Investing can be a daunting task to take on, especially if you don’t have a clear idea of what you’re doing. If you’re a beginner investor, you’re probably asking, “Where do I start?” or, “What do I need to learn?” The answer, of course, is that there’s no need. If you’re starting out with your investing career, you’ll need to learn the basics. You may already have a lot of important lessons worth sharing with your sister, brother, nephew, nieces, or even just your friends, but realize that there are some basics that everyone must know. You’re going to learn them here. There’re also a few things to keep in mind.

P2P Lending

Peer-to-peer lending has been growing in popularity for a while now. If you’re new to this way of investing, here’s what you need to know.

Peer-to-peer lending most often refers to Lending Club or Prosper.

These platforms connect individual lenders with individual borrowers. Anybody can request a loan through Lending Club or Prosper, and anyone can buy into these loans.

The difference is that with a bank loan, you have a single pillar of repayment, but with peer-to-peer lending, you have multiple pillars of repayment.

There are a few extra risks involved. If a borrower defaults, you have to choose between investing in another borrower’s loan or receiving a partial repayment … which could end up costing you a lot if the borrower defaults again.

However, there are also certain advantages to peer-to-peer lending, including low interest rates.

There is a low interest rate available for investors at the moment, but please don’t just invest without fully understanding it, as there are still risks.

Peer-to-peer lending is a useful way of investing if you’re looking for a way to use extra money, but keep in mind that you’re taking extra risk.

Real Estate

Real Estate is a popular investment vehicle for beginners and intermediates. This list is not exclusive, but it includes a high number of reliable retirement investment options you should consider including in your portfolio. Anticipated return on investment (ROI) % is against 15-25 years of capital growth. You can expect lower ROI on the market in the short term and higher ROI on the market in the long term.

Helps in building equity.

Great long-term investment.

Helps in building wealth.

Average ROI of 6-12%.

Helps in building equity.

Great long-term investment.

Helps in building wealth.

Average ROI of 6-12%.

Helps in building equity.

Great long-term investment.

Helps in building wealth.

Average ROI of 6-12%.

Helps in building equity.

Great long-term investment.

Helps in building wealth.

Average ROI of 6-12%.

Helps in building equity.

Great long-term investment.

Helps in building wealth.

Average ROI of 6-12%.

Helps in building equity.

Great long-term investment.

Helps in building wealth.

Average ROI of 6-12%.

Helps in building equity.

Small Business Investing

As you might know by now, the methods for profiting in the stock market are endless. There are so many ways to invest in stocks that it can be overwhelming to choose the right one. However, you don’t have to know every single method.

The first step to becoming a good small business investor is to choose a few methods that are right for you. There is no one size fits all method when it comes to the stock market. You’ll find the methods that fit your needs and goals the best. Quick tips on investing:

{1}. Take the time to research the methods you’re interested in.
{2}. Set a small but still realistic goal for the first year you’re investing.
{3}. Make sure you’re comfortable with the risk level of the method and stock you choose.


Stocks are shares of companies which may or may not pay dividends on the yearly profits of a company. Basically, by owning stocks of a company you are a part owner of that company. The stock market value of a company is the current value of all outstanding stocks in the company.

Investing in stocks is more risky than investing in bonds because stocks do not guarantee a set return. However, they tend to have a more sustained return than bonds and other passive money instruments. They are not highly liquid, meaning that large amounts cannot be suddenly sold.

Recent years have demonstrated that volatility in the stock market is much greater than volatility in the bond market. In other words, the potential loss from stocks can be as high as the potential return.

Although equities have greater risk, stocks have greater potential for larger returns.

Stock prices go up and down based on the collective actions of investors. The buying and selling of stocks changes the prices of these securities, and the changes are based on supply and demand. A lot of media attention is given to the reasons for buying and selling stocks, but the only thing that determines the value of a stock is what investors are willing to pay for it.

Set Aside Some Investment Earnings for Taxes

As tempting as it may be, don’t spend your investment earnings. Although these earnings are not subject to income tax when you invest, you have to pay income tax when you withdraw the funds.

Plus, your investment earnings may have incurred capital gains tax, meaning you’ll be subject to taxes when you withdraw the funds. And as you’ll see, the taxes go up as your investment earnings jump.

Here’s how it works: You’re in the 15% tax bracket, but you have a sizeable return on your investments.

You withdraw the entire amount and spend it, you’ll be taxed at your ordinary income tax rate, which could be as much as 25%. Now you have a higher tax bracket, because your return is higher.

So your regular income tax plus your capital gains tax will be about equal to your 25% tax bracket. If you assume your regular income tax bracket is 25%, your capital gains tax will also be about 25%.

If you decide to invest the money you just withdrew, you will probably need to invest in a fund that’s generating a much higher return to make it worth your while.

Investing Specifically for Retirement

Here are some basics you need to know [2] about retirement investing. In the next few years, you’ll start to think about retirement, and the amount of money you’ll need is going to start increasing.

You’ll have to set some money aside to live on, and you’ll have to think about all the unexpected things that come up in life. Things that will eventually happen, like emergency room visits and car repairs. You’ll want to take care of that, but it’s also time to think about your long-term future.

If you’re not investing yet, and you find yourself talking about retirement planning with your parents, grandparents, or other relatives, you should consider investing. Having a retirement account allows you to save for your future. Money deposited in a retirement account accumulates and it can be withdrawn without penalty once you retire.

You can open an IRA account by going to a brokerage firm, a mutual fund, or a bank. I’ll focus on IRAs since they are more flexible.

IRA accounts are savings instruments and you can invest your contribution in stocks, mutual funds, bonds and CDs, but you cannot withdraw your money without being penalized.


Are Essential for Your Mid-to-Long-Term Financial Goals.

If you're the type who thinks in long-term financial terms (and we hope you are), then your retirement is a pretty important thing to think about. '

And that's why we encourage you to keep on planning ahead, in case you've already retired. Regardless, the IRA is one of the most essential investments out there.

The great thing about IRAs is that you don't have to be rich or even near retirement to open one. They're also available to everyone from any state, income level, and age group. In fact, if you're over 70-1/2 and getting a salary, you additionally qualify to their required minimum distribution.

Here's how it works: open up an IRA, open a taxable account for your liquid cash, throw in some bonds, and eventually your stock investments will do the rest.

Just make sure you don ' t invest in anything like stocks or bonds that will cost your income to be taxed in the IRA with ordinary income rates, which would increase the amount of money you will have to save.

The major problem with IRAs is that it's easy to lose out on your potential growth because you can't move around with them. If you choose an IRA provider that isn't necessarily competitive with other IRA providers, then you might end up paying too much for your investments.

Employer-Assisted Funds

Employer-assisted investing simply means you can tap into your company’s 401k contribution to lower your taxable income. Sounds like a good deal, right?

It’s true that this can help lower your federal income tax burden, but if you’re in a higher tax bracket (28-33%), you’re only saving a few hundred more bucks by not paying federal taxes. In addition, you also lose out on the power of compounding interest.

The biggest flaw with employer-assisted retirement investments is that participants don’t have full control over which investment they’re placed into. It’s common for an employer to automatically place their employees into a conservative fund since that’s the default option.

That’s not to say that you can’t build a winning portfolio in a conservative fund, but there’s limited upside when you’re automatically placed there. In comparison, you’ll get to choose all your investments when you invest on your own in an IRA, SEP, or Solo 401k plan.


Let’s talk about one of the most instrumental topics in all of investing:

What are annuities and what are the major benefits attached to them?

You may have heard a lot of talk about the word annuities in the press or in media, but you are not certain of how they fit into your portfolio or if they are the right kind of investment for you.

Annuities are retirement vehicles that provide a stream of income in a number of different ways, such as:

  • Immediate Annuities
  • Deferred Annuities
  • Guaranteed Lifetime Income
  • Hybrid Fixed/Indexed Annuities

The thing most people use annuities for are to lock down a rate of return on their investments in exchange for income they can count on. These days, the name annuities is often used synonymously with fixed indexed annuities (FIA) and fixed indexed universal life contracts (FIUL).

You likely have heard of them or seen advertisements for them on TV.

Fixed Income Annuities are considered to be the safest investment in the world (with FIUL and FIA being the same thing).

You would be hard pressed to find any kind of investment that offers such a low risk, and when the market is low, it’s the best time to lock down your rate of return.

Social Security

Other Tools for Retirement

When you craft an investment strategy, you should diversify your investments. That means putting money into stocks, bonds, and cash. That way, when one market or one investment goes down, the other picks up the slack. You should also rebalance on a regular basis, in case your allocations get skewed by the changes in the market or changes in your financial situation.

Don’t let a bear market put you off investing in stocks; you just need to be smarter and more strategic when you do it. If you’re looking for ideas about how to invest for retirement beyond stocks, bonds, and cash, here are a few other ideas that may work for you at various stages in your investing life.

Investing: Not a One-Size-Fits-All Activity

Different people have different investing needs and hopes. If you are like me, you start out with an idea of how much money you would like to have at a particular age.

Maybe you want to have $ X at age Y. When you reach that age, you want to be able to maintain your current lifestyle or make a few upgrades. Equally important to me is the sense of peace and security that comes from knowing I have this coming.

As a beginner and intermediate investor with expenses that include a home, child’s education, and mutual funds for my family, I don’t see any benefit in reaching my goal of achieving financial peace much earlier. I am not against someone who chooses to aim for this, I just believe with the age I am and the financial responsibilities I carry, my time horizon should be a bit longer and my investments should be more diversified.