If you’ve been spending your January formulating your New Year’s financial resolutions, the chances are you’re not going to stick to all of them. We know that. You know that. Everyone in the world knows that New Year’s resolutions are a mix of feasibility and fantasy. But in 2024, we think it’s a good idea to change that.

Investment, for instance, is a resolution that often falls on the back burner. Whether it’s due to fear or time management, there are plenty of people who want to invest, but never actually get around to doing it.

It’s true that some of us are more naturally ‘open’ to investing than others. We’re not all willing to bear the same level of risk. But, for beginners, there are plenty of investment types that can alleviate these concerns. We’re going to look at the best type of investment for complete beginners below, but before we do that, let’s look at what investment actually is.

What is Investing?

Investing, quite simply, is the act of buying something that you can sell at a higher price later down the line. There are conservative investors – those who tend to put a small amount into fixed-income instruments – and there are aggressive investors – those who make large investments in equity and equity-oriented mutual funds. 

What’s the Best Type of Investment for Beginners?

As a complete beginner, you need to work out what the best investment will be for your personal situation, including your monetary status, your risk tolerance, and your end goals. As a financial advisor in Bristol, we come across a lot of similar people who require different investment strategies due to their circumstances. That’s because there’s no one investment type for everyone. But having said that, certain kinds of investment have proved to be a hit for beginners. 

These include lowest-risk options, such as a high-yield savings account and a money market account, and more popular options like shares, bonds, and real estate.

For beginners, the right strategy can not only lead to higher returns, but also help to protect your finances from inflation, and – if your shares pay dividends – earn a regular passive income.

It can also allow you to start small. Technically, you can begin purchasing stocks & shares with less than £100, and if you hold investments that trade on a stock exchange, they are far more of a liquid investment than something like real estate. 

What are the Best Investment Strategies?

As a beginner, it’s important not to put too much stock – if you’ll excuse the pun – into ‘trading instinct’. While intuition can be a strong investor trait, passion investing is never as reliable as strong, strategic insight. One of the best trading techniques for beginners is simply buying and holding. This involves purchasing investments and keeping it in the back pocket indefinitely – at least 3 to 5 years. 

This can help you to avoid the active trading process of other investors, which often hurts returns, and allows you to be less focused on the market, rather than watching it all day every day. Other good investment tactics for beginners include utilising index funds, owning dividends stocks, and pound-cost averaging – adding money into your investments at regular intervals to spread out your buy points.

Why Should You Invest?

There are plenty of good reasons to invest in the stock market, especially if you are sitting on currently idle finances. Historically, stocks and shares have outperformed finances that sit in savings accounts, and with numerous investment strategies, it’s possible to enter the stock market without putting yourself at too much risk. 

Again, this is where a financial advisor will prove invaluable. With independent insight into your available finances and expert, technical advice, you can find an investment type and strategy that works for you.

Notes on Investing as a Beginner

All of this being said, investing isn’t a sure-fire way to make money. If you’re nearing retirement, or you’re looking to put a deposit on a new property, the stock market is not a fixed income stream – and as a beginner, capital appreciation is not going to be reliable enough to achieve those goals. 

There are always risks involved when investing, and but we can help to ensure that those risks are matched to the level you’re comfortable and capable of living with. 

Risk Warning: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.