The Best Investment Strategies for Novice Investors

The time-tested strategies will simply guide your investment decisions. You can easily accomplish your set financial goals and ensure financial security for your life. Some of the investment strategies ideal for beginners who are willing to take risks and amass wealth are given below:

Beginners need to follow a disciplined approach to investing to maximize their returns and reduce their losses. You should be aware that there are chances of losing money in the short term if you park your funds in market-based securities like bonds and stocks. So, you need to decide what you should and should not do.

Purchase and hold

Purchase and hold is one of the best investment strategies to make money. The time frame for your investment could be between 3 and 5 years. According to an investment adviser, Joseph Audia, the buy-and-hold strategy offers rich dividends in the long term. Therefore, you should avoid active trading and invest for the long term to create wealth using your surplus funds.

The success of your investment depends on the performance of the underlying business. You could get several times your investment back by investing prudently. You should have a strategy that says you will never sell the stocks. You can save on capital gains taxes. On the other hand, traders watch the markets daily and need to spend a lot of time. The gains through daily trading are minimal. So, you can focus on long-term investing in quality stocks with the advice of a stock analyst.

You should be patient and avoid the temptation to sell when the market goes in the opposite direction. The stock may lose 50% of its value in the short term. In such cases, you should have funds to average your investment and maximize your returns.

Invest in index funds

You need to find the best stock index and park your funds in it. The best stock indexes for your investment, according to renowned stock analyst Joseph Scott Audia are the Nasdaq Composite and S&P 500. Each index comprises several high-quality stocks.

Index funds give you better returns if you have a buy-and-hold investment strategy. The returns will be based on the weighted average of the assets of the index. You can reduce the risk by owning a diversified portfolio. It requires less work because you do not own any individual stocks.

Allocate a small amount to stocks

You can allocate 90% of your money to index funds and 10% to stocks of good companies like Apple, Amazon, Microsoft, etc. These are the long-term bets. You can seek the advice of Joseph Audia to wisely allocate your funds for maximum growth and less risk. So beginners can invest a small amount in individual stocks for decent returns in the long term.

Invest in bonds and dividend stocks

Investing in bonds and stocks that offer excellent dividends is one of the best investment strategies for novice investors and expert traders. It is suggested to invest in high-dividend stocks and top-dividend exchange-traded funds for long-term returns.