6 Best Investments For Beginners | Bankrate (2024)

The idea of investing can be intimidating if you’re just starting out, but it’s an important part of saving for various financial goals and building wealth. You’ll encounter many different market environments throughout your investing life, so don’t get too caught up in whether or not now is the perfect time to get started.

But before making any investment, it’s important for new investors to know what their tolerance is for risk. Certain investments carry more risk than others and you don’t want to be surprised after you’ve made the investment. Think about how long you can do without the money you’ll be investing and whether you’re comfortable not accessing it for a few years or longer.

Here are some top investment ideas for those just starting out.

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Best investments for beginners

1. High-yield savings accounts

This can be one of the simplest ways to boost the return on your money above what you’re earning in a typical checking account. High-yield savings accounts, which are often opened through an online bank, tend to pay higher interest on average than standard savings accounts while still giving customers regular access to their money.

This can be a great place to park money you’re saving for a purchase in the next couple years or just holding in case of an emergency.

2. Certificates of deposit (CDs)

CDs are another way to earn additional interest on your savings, but they will tie up your money for longer than a high-yield savings account. You can purchase a CD for different time periods such as six months, one year or even five years, but you typically can’t access the money before the CD matures without paying a penalty.

These are considered extremely safe and if you purchase one through a federally insured bank, you’re covered up to $250,000 per depositor, per ownership category.

3. 401(k) or another workplace retirement plan

This can be one of the simplest ways to get started in investing and comes with some major incentives that could benefit you now and in the future. Most employers offer to match a portion of what you agree to save for retirement out of your regular paycheck. If your employer offers a match and you don’t participate in the plan, you are turning down free money.

In a traditional 401(k), the contributions are made prior to being taxed and grow tax-free until retirement age. Some employers offer Roth 401(k)s, which allow contributions to be made after taxes. If you select this option, you won’t pay taxes on withdrawals during retirement.

These workplace retirement plans are great savings tools because they’re automatic once you’ve made your initial selections, and allow you to consistently invest over time. Often, you can even choose to invest in target-date mutual funds, which manage their portfolios based on a specific retirement date. As you get closer to the target date, the fund’s allocation will shift away from riskier assets to account for a shorter investment horizon.

4. Mutual funds

Mutual funds give investors the opportunity to invest in a basket of stocks or bonds (or other assets) that they might not be able to easily build on their own.

The most popular mutual funds track indexes such as the , which is comprised of around 500 of the largest companies in the U.S. Index funds usually come with very low fees for the funds’ investors, and occasionally no fee at all. These low costs help investors keep more of the funds’ returns for themselves and can be a great way to build wealth over time.

5. ETFs

Exchange-traded funds, or ETFs, are similar to mutual funds in that they hold a basket of securities, but they trade throughout the day in the same way a stock would. ETFs do not come with the same minimum investment requirements as mutual funds, which typically come in at a few thousand dollars. ETFs can be purchased for the cost of one share plus any fees or commissions associated with the purchase, though you can get started with even less if your broker allows fractional share investing.

Both ETFs and mutual funds are ideal assets to hold in tax-advantaged accounts like 401(k)s and IRAs.

6. Individual stocks

Buying stocks in individual companies is the riskiest investment option discussed here, but it can also be one of the most rewarding. But before you start making trades, you should consider whether buying a stock makes sense for you. Ask yourself if you are investing for the long-term, which generally means at least five years, and whether you understand the business you are investing in. Stocks are priced every second of the trading day and because of that, people often get drawn into the short-term trading mentality when they own individual stocks.

But a stock is a partial ownership stake in a real business and over time your fortune will rise with that of the underlying company you invested in. If you don’t feel you have the expertise or stomach to ride it out with individual stocks, consider taking the more diversified approach offered by mutual funds or ETFs instead.

Why should you start investing?

Investing is crucial if you want to maintain the purchasing power of your savings and reach long-term financial goals like retirement or building wealth. If you let your savings sit in a traditional bank account earning little or no interest, eventually inflation will decrease the value of your hard-earned cash. By investing in assets like stocks and bonds, you can make sure your savings keeps up with inflation or even outpaces it.

Short-term investments like high-yield savings accounts or money market mutual funds can help you earn more on your savings while you work towards a big purchase such as a car or a down payment on a house. Stocks and ETFs are considered better for long-term goals like retirement because they are more likely to earn better returns over time, but they carry additional risk.

Important considerations for new investors

  • Risk tolerance: Before you start investing, you’ll want to understand your own tolerance for risk. Volatile investments such as stocks can make some people very uncomfortable when they decline, which can cause you to sell at the worst possible time. Knowing your risk tolerance will help you choose which investments are best suited for you.
  • Financial goals: Establish both short- and long-term goals that you want to achieve through saving and investing. Understanding your investment goals will help you develop a solid plan.
  • Active or passive: You’ll also need to decide if you’d like to be a passive investor or an active one. A passive investor typically owns an asset like diversified mutual funds or ETFs that charge low fees, while an active investor might choose individual investments or mutual funds that aim to outperform the market. Studies have shown that passive investing tends to outperform active investing over time.
  • Do-it-yourself or hire someone: You can also choose to manage your own investments through an online broker, or hire a financial advisor (or robo-advisor) to help you out. You’ll likely incur lower costs if you do it yourself, but an advisor can be helpful for those just starting out.
  • Taxes: If you own investments in an individual or joint account, you’ll likely need to pay taxes on the interest, dividends and capital gains you earn. You can avoid these taxes by owning investments in tax-advantaged retirement accounts such as an IRA.

How much money is needed to start investing?

The good news is that you don’t need much money to start investing. Most online brokers have no account minimums to get started and some offer fractional share investing for those starting with small dollar amounts. For just a few dollars you can purchase ETFs that allow you to build a diversified portfolio of stocks. Micro-investing platforms will even let you round up purchases made through a debit card as a way to get started with investing.

Bottom line

If you’re just starting out in the investment world, make sure to consider your risk tolerance and what your financial goals are before committing money to an investment. Some investments, like high-yield savings accounts, allow for quick access to money if emergencies come up. Meanwhile stocks should probably be part of a long-term investment plan instead.

Many beginning investors also turn to robo-advisors, where an algorithm automatically selects and manages a diversified portfolio of exchange-traded funds for you, based around your individual financial needs and appetite for risk.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.


As an expert in investing, I can provide you with valuable information and guidance to help you navigate the world of investments. I have extensive knowledge and experience in various investment concepts and strategies. Let's explore the concepts mentioned in the article you provided and delve deeper into each one.

Risk Tolerance

Before making any investment, it's important to assess your risk tolerance. This refers to your ability and willingness to endure fluctuations in the value of your investments. Understanding your risk tolerance will help you choose investments that align with your comfort level. Some investments carry more risk than others, and it's crucial to be aware of the potential upsides and downsides. Consider how long you can do without the money you'll be investing and whether you're comfortable not accessing it for a few years or longer [[1]].

High-Yield Savings Accounts

High-yield savings accounts are a great option for beginners. They offer higher interest rates compared to standard savings accounts, allowing you to earn more on your money. These accounts are often opened through online banks and provide regular access to your funds. They are ideal for short-term goals or emergency funds. By parking your money in a high-yield savings account, you can boost the return on your savings [[2]].

Certificates of Deposit (CDs)

Certificates of Deposit (CDs) are another investment option for beginners. CDs offer higher interest rates than regular savings accounts, but they require you to lock up your money for a specific period. You can choose different time periods for CDs, such as six months, one year, or even five years. However, accessing the money before the CD matures may result in a penalty. CDs are considered safe investments, especially if purchased through federally insured banks [[3]].

401(k) or Workplace Retirement Plans

A 401(k) or another workplace retirement plan is an excellent way to start investing. Many employers offer matching contributions, which means they will contribute a portion of what you save for retirement. This is essentially free money, so it's wise to take advantage of it. Traditional 401(k) contributions are made before taxes and grow tax-free until retirement age. Some employers also offer Roth 401(k)s, where contributions are made after taxes, and withdrawals during retirement are tax-free. These plans are automatic and allow for consistent investing over time. Target-date mutual funds are often available within these plans, which adjust the asset allocation based on your retirement date [[4]].

Mutual Funds

Mutual funds provide an opportunity to invest in a diversified portfolio of stocks, bonds, or other assets. They are managed by professionals and offer a convenient way to access a variety of investments. Index funds, a type of mutual fund, track specific market indexes and come with low fees. They are a popular choice for investors looking to build wealth over time. Mutual funds are ideal for long-term goals like retirement [[5]].

Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) are similar to mutual funds but trade throughout the day like stocks. They hold a basket of securities and can be purchased for the cost of one share. ETFs are a flexible investment option and do not have the same minimum investment requirements as mutual funds. They are suitable for both short-term and long-term goals. ETFs and mutual funds are often held in tax-advantaged accounts like 401(k)s and IRAs [[6]].

Individual Stocks

Investing in individual stocks can be rewarding but also carries more risk. It's important to consider your investment horizon and whether you have the expertise to evaluate individual companies. Stocks represent partial ownership in a real business, and their value can fluctuate daily. If you're investing for the long term and have a good understanding of the business, individual stocks can be a viable option. However, if you prefer a more diversified approach, mutual funds or ETFs may be a better choice [[7]].

Importance of Investing

Investing is crucial for maintaining the purchasing power of your savings and achieving long-term financial goals like retirement or building wealth. By investing in assets like stocks and bonds, you can ensure that your savings keep up with or even outpace inflation. Short-term investments like high-yield savings accounts can help you earn more while working towards specific purchases. Stocks and ETFs are better suited for long-term goals due to their potential for higher returns, although they come with additional risk [[8]].

Important Considerations for New Investors

When starting out as an investor, there are several important considerations to keep in mind:

  1. Risk Tolerance: Understand your own tolerance for risk and choose investments accordingly.
  2. Financial Goals: Establish both short-term and long-term goals to guide your investment strategy.
  3. Passive vs. Active Investing: Decide whether you want to be a passive investor, relying on low-cost index funds, or an active investor, aiming to outperform the market.
  4. Do-it-yourself or Hire Someone: Choose between managing your own investments through an online broker or seeking the assistance of a financial advisor or robo-advisor.
  5. Tax Considerations: Be aware of the tax implications of your investments and consider tax-advantaged retirement accounts like IRAs.
  6. Starting with Small Amounts: You don't need a large sum of money to start investing. Many online brokers have no account minimums, and fractional share investing allows you to get started with even small dollar amounts [[9]].


Investing is a crucial part of building wealth and achieving financial goals. By understanding your risk tolerance, considering different investment options, and aligning your investments with your goals, you can make informed decisions and set yourself up for long-term success. Remember to conduct your own research and seek professional advice when needed. Happy investing!

6 Best Investments For Beginners | Bankrate (2024)


Which type of investment is best for beginners? ›

10 ways to invest money for beginners
  1. High-yield savings accounts. A high-yield savings account enables you to earn far more interest than you could with a traditional savings account. ...
  2. Money market accounts. ...
  3. Certificates of deposit (CDs) ...
  4. Workplace retirement plans. ...
  5. Traditional IRAs. ...
  6. Roth IRAs. ...
  7. Stocks. ...
  8. Bonds.

How much money do I need to invest to make $1000 a month? ›

Reinvest Your Payments

The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets. And that's okay.

How to invest $100 dollars to make $1 000? ›

18 Best Ways to Invest 100 Dollars Right Now
  1. Invest in Rental Homes. ...
  2. Invest in Local Businesses. ...
  3. Invest in Real Estate Investment Trusts. ...
  4. Micro-Invest. ...
  5. Invest in Crypto. ...
  6. Build a Blog. ...
  7. Buy Quality Books. ...
  8. Invest in Relationships.

What to invest $100 a month into? ›

  • Invest in index funds or ETFs.
  • Robo-advisor platforms.
  • Dividend-paying stocks.
  • Multi-asset funds.
  • Pick a portfolio of shares.
  • Invest with a tax-efficient account.
  • Investment tracker.
  • The risks of investing a £100 monthly amount.
Dec 5, 2023

What is the safest investment right now? ›

  • Treasury Inflation-Protected Securities (TIPS) ...
  • Fixed Annuities. ...
  • High-Yield Savings Accounts. ...
  • Certificates of Deposit (CDs) Risk level: Very low. ...
  • Money Market Mutual Funds. Risk level: Low. ...
  • Investment-Grade Corporate Bonds. Risk level: Moderate. ...
  • Preferred Stocks. Risk Level: Moderate. ...
  • Dividend Aristocrats. Risk level: Moderate.
Mar 21, 2024

How can I double 50k? ›

  1. Open a brokerage account.
  2. Invest in an IRA.
  3. Contribute to an HSA.
  4. Look into a savings account or CD.
  5. Buy mutual funds.
  6. Check out exchange-traded funds.
  7. Purchase I bonds.
  8. Hire a financial planner.
Nov 29, 2023

How to make $2,500 a month in passive income? ›

  1. Idea 1: Invest in Dividend Stocks. Dividend stocks are one of the most common ways to earn passive income. ...
  2. Idea 2: Invest in Real Estate. ...
  3. Idea 3: Rent Out a Property. ...
  4. Idea 4: Invest in Peer to Peer Lending. ...
  5. Idea 5: Build an Online Business. ...
  6. Idea 6: Create an Online Course. ...
  7. Idea 7: Invest in Mobile Home Parks.
Jul 25, 2023

How much will I have if I invest $500 a month for 10 years? ›

What happens when you invest $500 a month
Rate of return10 years30 years
Nov 15, 2023

Is investing $200 a month enough? ›

As long as you commit to investing $200 per month or whatever you can afford, you'll put yourself into a much better financial position by the time you retire.

How to turn 10k into 100k fast? ›

How To Turn $10k Into $100k
  1. Invest in Real Estate. ...
  2. Invest in Cryptocurrency. ...
  3. Invest in The Stock Market. ...
  4. Start an E-Commerce Business. ...
  5. Open A High-Interest Savings Account. ...
  6. Invest in Small Enterprises. ...
  7. Try Peer-to-peer Lending. ...
  8. Start A Website Blog.
Jan 4, 2024

How to make a fast $10,000 dollars? ›

Here are ten ways to make $10k quickly:
  1. Become A Freelancer. Freelancing is one of the most popular ways to make money quickly. ...
  2. Invest In Cryptocurrency. ...
  3. Participate In Online Surveys. ...
  4. Become A Virtual Assistant. ...
  5. Do Odd Jobs. ...
  6. Create An Online Course. ...
  7. Become An Affiliate Marketer. ...
  8. Sell Your Stuff.

What if I invest $1 dollar a day? ›

Data source: Author's calculations. As you can see, over time, the money really starts to add up -- and the returns you earn become pretty impressive. Over 30 years, for example, if you invested $1 a day, you would have contributed a total of $10,950 of your own money -- but you'd have more than $66,000 to show for it!

What happens if you save $100 dollars a month for 40 years? ›

Your Retirement Savings If You Save $100 a Month in a 401(k)

If you're age 25 and have 40 years to save until retirement, depositing $100 a month into a savings account earning the current average U.S. interest rate of 0.42% APY would get you to just $52,367 in retirement savings — not great.

What is the best investment to get monthly income? ›

Some of the investment schemes offering monthly income are Senior Citizen Saving Scheme, Post Office Monthly Income Scheme, Government Bonds, Pradhan Mantri Vaya Vandana Yojana, and Life Insurance Plus Saving, mutual funds, and systematic withdrawal plans.

How can I invest $100 for quick return? ›

What are some low-risk ways to invest $100?
  1. High-yield savings accounts. Compared to traditional savings accounts, these accounts offer higher interest rates, which can help your money grow faster.
  2. Certificates of deposit (CDs). ...
  3. Treasury bonds.
Jan 10, 2024

Is $1,000 enough to start investing? ›

Investing can help you turn your money into more money, even when you start small. A $1,000 investment—whether you pay down debt, invest in a robo-advisor, or get your 401(k) match—can help lay the foundation for a prosperous financial journey.

What is the safest investment with the highest return? ›

Here are the best low-risk investments in April 2024:
  • High-yield savings accounts.
  • Money market funds.
  • Short-term certificates of deposit.
  • Series I savings bonds.
  • Treasury bills, notes, bonds and TIPS.
  • Corporate bonds.
  • Dividend-paying stocks.
  • Preferred stocks.
Apr 1, 2024

What are the 3 things you need to start investing? ›

Below, CNBC Select shares three tips for any beginner investor just starting out.
  • Audit your finances before you even start to invest. ...
  • Utilize retirement accounts as much as you can. ...
  • Know you don't have to be an expert.

How can I invest $10 and earn daily? ›

If you want to invest $10 and earn daily, opening a high-yield savings account is a great option. High-yield savings accounts offer higher interest rates than traditional savings accounts, which means you can grow your wealth faster. These accounts are also a safe place to keep your emergency fund.

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