Go big or go home isn’t exactly the strategy you want to employ when you first dive into investing. Instead, stick with small, low-risk investments that grow your portfolio gradually but safely. Nowadays, however, there are countless potential investments that make it difficult for a novice investor to select the right asset. To help narrow it down, here are three small investments:
Successful investors, such as Warren Buffett, strongly advocate index funds as a low-cost, low-risk investment. Index funds, as the name implies, move based on an underlying market index. A market index is a basket of assets that embody a segment of the market. A popular example of a market index is the S&P500, which contains around 500 of the biggest companies in the country. An index fund that mirrors the S&P500 will attempt to mirror it by purchasing stocks in that particular index.
For beginners who prefer to buy individual company stocks instead of index funds, a relatively safe bet is Qualcomm, one of the largest chip manufacturers in the US. QCOM’s stock price was previously hit by its drawn out litigation with Apple, but the company is slowly bouncing back. Beginners can take advantage of the stock’s currently cheap price point. With earnings per share of 2.36, a market cap of more than $130 billion, and a forward dividend yield of 2.60 percent, QCOM is a strong candidate for long-term, low-risk investment options.
Real Estate Investment Trusts
Unarguably one of the safest assets you can invest in is housing. Everyone needs a roof over their head. As the human population only continues to increase at a staggering rate, the demand for housing is only set to grow. For novices with limited ammo, REITs come as a more practical alternative to buying actual physical properties. REITs allow you to buy into a property, usually commercial property, and profit from its earnings, either through value appreciation over time or rent income.
These are only the tip of the iceberg when it comes to beginner-friendly investments. As you learn more about market attributes, risk management strategies, and your own risk profile as an investor, you can begin to branch out to more complex investment products.