Beginner Investor? 5 Tips to a Successful Investment

Jeremy Biberdorf  |

Who doesn’t want to make some money? Imagine what you could do with an extra couple of hundred dollars in your pocket every month. Alternatively, maybe you’re planning for an early retirement through the Roth IRA Conversion Ladder, in which case you’ll need to contribute money to your IRA account while working. No matter what the reason is though, investing is one way to earn some extra money.

If you’re just starting though, you’ll want a bit of help. We have some investing tips that will be worth your while.

Invest in Quality

To quote Warren Buffet, “Time is the friend of the wonderful company, the enemy of the mediocre.” That sounds great, but what does this really mean?

When it comes to investing, going with something trusted and has a proven track record, you have a better chance of winning. It may feel like a good idea to put your faith in a small start-up that has a lot of potential, and you hear the stories of that sometimes coming true. However, that’s pretty risky business.

Instead, as a first-time investor, put your money in something that has proven to be successful. Investments that make other investors happy, there’s a good chance it will make you happy too. So, follow Warren Buffest’s investing tips of investing in quality, and you may find yourself making a decent profit.

Use an Investment Platform

No one said you have to invest by yourself, especially when you’re first starting. There is tons of help out there, so why not use it to your advantage to make some more money? An investment platform helps you buy stocks and build up your investment portfolio. They allow you to research and analyze trends and how particular stocks are acting.

One investment platform worth noting is Ally Invest. It’s an excellent platform for those who are just starting. With low investment fees, great customer service, and a community of investors ready to help you out, it’s a platform worth looking at. Take a look at this more in-depth Ally Investing review for more information.

Use the Graham Formula

Ever heard of the Graham Formula? It’s a method to value a stock which is essential for every investor, no matter what your skill level is at.

What’s the goal of investing? To make money in a lasting and sustainable way. One way of doing that is by investing in companies for less than what their intrinsic value is. The Graham Formula allows investors to find out what the actual fair stock price of a company is.

You use this formula to get an approximate true value of the stock, but it’s not perfect. There are still external factors that the formula cannot account for (like human judgement and global trends). So you take it with a grain of salt when you're researching.

Quality Matters, But So Does Quantity

So, even though the quality of stock matters,so too does the quantity. Ever heard the saying don’t put all of your eggs in on basket? Well, for investing, that also matters. That is because no matter how sure you are and how much research you did on a stock, you never honestly know what could happen.

Instead, have multiple options. That way, if one investment fails, you have the other ones to fall back on. It increases your chance of succeeding while also decreasing the possibility of losing a massive amount of money.

Check Out Index Funds

Index funds are part of a mutual fund (a mutual fund is when a group of individual investors pool money together). It mirrors an actual stock and follows how it performs on the market. If the index goes in one direction, the index fund is likely to follow suit.

Index funds are another way to diversify your investment portfolio. Going with an index fund can be a bit easier for new investors. That’s because it doesn’t require the same amount of research and prediction as you would need for an individual stock. If you’re looking for dividends though, then index funds would not be for you.

DISCLOSURE: N/A


The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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