Get Started Investing

How to Invest Money: A Newbies Guide to All Types of Investments

Updated on March 21, 2024 Updated on March 21, 2024
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When many people think about how to invest money, what often comes to mind is a chaotic Wall Street stock market floor. Afterall, the ups and downs of the stock market can be invigorating, and terrifying!

However, there’s so much more to successful investing than what we see portrayed in movies and on TV. Everyone from seasoned professionals to self-proclaimed newbies can get involved in making financial investments in a variety of ways.

Creating an emergency fund, retiring, buying a home, having a child are all wonderful financial goals but you need to be prepared financially. By creating a simple investing strategy you can make sure you and your money are on the same path for your future long-term goals.

Let’s take a look today at some of the best ways new investors can invest their number in some of the more common investment types so you can start investing.

Hold off on your parent’s basement apartment…for now.

Investing in the stock market

Through the stock market, many people have managed to secure returns that are exponentially greater than the amount they would be able to get from putting their money into a savings account.

Check out this killer chart from Best Market to illustrate this point of letting money sit in a savings account versus putting it in safe stocks:


Now, the stock market is notorious for its ups and downs—and its inevitable bear market.

Nope, not nearly as cool as it sounds. A bear market simply means a prolonged down stock market, one where investors can lose a chunk of value in their holdings.

Although you may be hesitant to invest in the stock market for fear of losing your hard-earned money, the odds are actually on your side. While we’ve all heard stories of people who have lost it all on the stock market, these individuals often sustain losses because of risky investment choices that simply do not pan out. It’s far from the norm.

When you choose to invest in the stock market, you don’t have to assume risk to maximize your returns. Instead, simply keep your head down and aim for average and think about the longer-term.


The stock market grows by about 7 percent annually, so all you have to do is make sensible investments and avoid unnecessary risks.

At a 7 percent annual rate of growth, you will double your investment in just 10 years. You’d never see that return from a typical savings account. Ok, are you on board?

When getting started investing, education is key. One of the best education and investing tools for the stock market is Betterment.


Perhaps the most significant disadvantage of investing in the stock market is the fact that it is unpredictable.

And, as you see the value in your holdings drop, it’s hard not to slam that sell button to cut your losses. As Warren Buffet, and my future Grandpa (I haven’t asked him yet, but as soon as I get the chance), always says:

“Unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market”

A stock that is on the rise one day, could always tank the next. The key is to ride the wave and weather market fluctuations. The stock market is not a short-term game.

Creating your portfolio

As a first-time investor, you don’t want to go ahead and choose individual stocks. Your first course of action will be to an online broker, brokerage firm, robo-advisor to help you sell and buy stocks.

Different brokers have varying requirements when it comes to opening accounts, so it’s a good idea to search around until you find one who is a good fit for your investment goals.

Financial advisors usually set a minimum account balance to open your brokerage account, which may range anywhere from $500 to $10,000 or more.

Consider using an online investment platform like Betterment, a leading service for investing, to get the most out of the stock market and they have no minimum initial investment. They also have a few investment options. They offer both of the most popular retirement accounts – the traditional IRA and the Roth IRA as well as an individual taxable account.


They will pick funds for you, recommend an asset allocation, and automatically do the things like rebalancing, reinvesting your dividends, auto depositing so you don’t have to worry about it.

If you want to dip your toes into the stock market with a little less upfront investment, you can invest in a mutual fund, (or index funds) in which a number of investors pool their money into a diversified investment portfolio that’s professionally managed.

If you are new to investing, let the professionals do the stock trading.

You can also invest in EFT’s. Like mutual funds, ETFs invest in a variety of companies but they are passively managed so the fees are low-cost. The fund just follows the market index.

You may also invest in the stock market by purchasing bonds.

Bonds are a type of credit or debt sold to investors by corporations that need financing. Over the course of the time that you hold a bond, you will accrue interest that will be paid to you at predetermined intervals. After the bond term is up, your principal will be paid back.

What you choose depends on your risk tolerance and Betterment can help you figure that out. It really depends on your age, when you will need the money, what your personal finance goals are, and how much risk you are comfortable with. And with more risk comes higher returns.

Beginners micro-investing with Acorns

If you want to know how to invest money, but you don’t have much capital to work with, micro-investing can be a solid option.

Just like its name indicates, micro-investing involves the investment of small sums of money over time.

The idea is that a small contribution of capital will grow and expand over time to create a sizeable return. Micro-investing is especially popular among Millennials, partially because they can be made quickly and conveniently through mobile apps.

There are several popular apps out there for micro-investing, but they all have some basic similarities. You can connect your savings account, checking account or debit card to make automatic investments.

You can program the app to round up your purchases and put the difference towards investments, enabling you to put some money into the stock market without much risk.


Among all the micro-investing apps available for download, one of the most popular is Acorns. You can get started without any upfront investment and start saving immediately, all from a streamlined and easy-to-use platform.

What’s more, students can invest with Acorns for free, making it an even more appealing choice among young people.

Getting started with Acorns is easy. All you have to do is set up your account and connect it to a credit or debit card. The app will automatically round up your purchases to the nearest dollar and invest the difference. You can view your portfolio from the app in real time. There are some downsides to using Acorns for investments.

For one, you are limited when it comes to the types of stocks in which you invest and you don’t have the option to select each stock yourself.

In addition, you obviously won’t see the same results from micro-investments that you would from larger principal investments in the stock market. If you have more capital to work with, it’s wise to pursue investments that will give you a larger return.

But, for beginners looking for ideas on how to invest money, this micro-investing platform is a no-brainer.

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How to invest in your retirement

Everyone knows that saving for retirement is important, but knowing how to invest money towards your retirement savings can be tricky. If you are contributing toward an employer-sponsored 401(k) plan, you are already on the right track.

But, there are certain things that you can do to optimize your contributions and maximize retirement funds.

Before you can begin to strategize your investments for retirement, you should have an idea about just how much you need to save to live comfortably once you retire.

Fortunately, there is a tried-and-true formula you can use to estimate your savings needs. This formula, called the 4 percent rule, was developed in 1994 by financial planner William Bengen.

How to invest money

The rule essentially states that a person can only withdraw a maximum of 4 percent of his or her retirement savings annually to avoid running out of money for at least 30 years.

The way you invest in your 401(k) account is crucial to your long-term financial well-being, especially if this account is your only source of retirement savings.

You can improve the outcomes of your 401(k) savings by using a management tool like M1 Finance. This web-based platform is designed to provide people with financial and investment advice regarding their 401(k) portfolios.

To get started, you can open an account and provide information about your 401(k) account. The downside to this platform is that you won’t receive advice or support for any other investment accounts you may have.

How to invest in real estate, the easy way

Many people want to know how to invest money in real estate. It’s an excellent way to build wealth and make passive income or fixed income.

There are several different ways to make profitable investments in various types of properties. You can purchase multifamily residential properties to rent out, invest in condos, buy single-family homes to fix up and put back on the market for a higher price, or purchase now and hold a property until the market becomes more favorable to sell.

Many investors who are getting started to choose to pursue real estate investment opportunities through crowdfunding.

It is one of the most common ways and to invest in real estate and there are numerous services and platforms out there to make it easier to do so.

Using a platform like Fundrise allows investors to enter into an opportunity with many other investors.

Then we have turnkey rental properties.

A turnkey property is a fully renovated home or apartment building that an investor can purchase and immediately rent out. Turnkey properties are typically purchased from companies that specialize in the restoration of older properties.

So basically no flipping, no break fixes, no hassle – just a property ready for move-in. So where do you find such an easy investment?

We use a platform called Roofstock and have purchased two successful investment properties through them.

In fact, we created a course, Rental Properties for Passive Investors, documenting our entire process that goes into insane detail about our approach and experiences.

Rental Properties for Passive Investors

Our proven, data-driven approach to building a portfolio of income-producing rental properties that perform in the long-term.

See the course here.

Roofstock is a single-family home investment platform that enables users to view a complete profile of different properties.


This is the target market for Roofstock, busy professionals who want high yielding successful rental properties without the time commitment or the need to put work in themselves. Since we’re investors and not real estate professionals, we only look at turnkey solutions.

Unlike most places you’d go to find turnkey rental properties, Roofstock does not own any of the properties listed in their marketplace. Instead, their expertise is in evaluating, negotiating and closing property transactions.

So they aren’t trying to sell you anything but instead are looking to add value to an existing and usually convoluted process.

Perhaps the biggest advantage of using Roofstock is the fact that listed properties are already occupied by tenants, or Roofstock will tenant them after closing.

Roofstock will also screen the property manager for you which means you can invest in real estate without going through the hassle of managing it and finding tenants.

How to invest in business

As technological startups continue to boom, it’s no wonder why so many investors are looking at how to invest money into businesses.

Unfortunately, making a shrewd investment in a business is not always easy, as lots of startups that seem promising turn out to be duds (and vice versa).

To successfully invest in a business, it’s not enough to see the company’s market history on paper. You should have an understanding of and an interest in what a business is doing before you choose to invest. A great way to find startups is by using AngelList, a platform that lists thousands of startups looking for investors.

Investing in businesses can be advantageous because it gives you the opportunity to diversify your portfolio and put your money toward a business endeavor about which you are passionate.

However, you should be wary of concepts that sound great, but don’t have a solid business plan behind them.

As with any type of investment, be sure to educate yourself, read a book, and make sure you don’t invest anything you can’t afford to lose.

How to invest in debt

Some people are able to make quite a bit of money by investing in debts.

Although we often relegate the concept of debt investment to banks and major financial institutions, peer-to-peer lending is an increasingly popular alternative.

With peer-to-peer lending, individuals can submit a pitch that a community of potential investors may choose to help finance. Through this form of lending, hundreds of people may contribute to the financing of a single pitch.

Essentially, you become the bank.


As a debt investor, you profit from making these contributions by collecting a set rate of interest. The rate of interest you receive increases based on the level of risk you assume.

It’s relatively easy for people to get started with this type of investment, as there are lots of peer-to-peer investment platforms available—including Lending Club.

Although there is always a risk of payment defaults, the rate of default among users of some leading peer-to-peer lending platforms is less than that of major credit card companies.

What are you waiting for?

As you can see, there are a number of smart ways you can invest money.

Whether you have a huge nest egg and want to buy a rental property, or can only afford small micro-payments, there are tons of opportunities for you to create a better financial future.

The bottom line is the right investment choice for you is largely based on your specific circumstances.

Finding out more about how to invest money allows you to make the best decision about where to put your extra assets so that you can reap the greatest returns possible.

What are you waiting for?

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Glenn Carter - Contributor
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