As a beginning investor, the idea of buying stocks and bonds may have you shaking in your boots; however, your investment portfolio can't grow unless you bite the bullet and make some purchases. According to the Securities Exchange Commission, or SEC, stocks can be risky ventures but offer the biggest payoffs. Bonds are more secure but have a lower return. With a little know-how and preparation, you can venture into the investment world and buy some of each.
Buying stocks or bonds is a grown-up game. Have some money put aside to use for your purchases. You should be able to live without the amount you are investing for an extended period. Your investments need time grow and produce returns without being tampered with constantly. That said, you'll also need to learn about the benefits of rebalancing and occasionally updating your investments.
Having money to invest won't do you much good if you lose it all. Study the history of the market and understand basic accounting concepts so when you manage your portfolio you will have an idea of what you are doing. Decide on your investment goals, suggests the Center for Personal Financial Education.
Stick With Reputable Investments
As a beginner, you should stick with blue chip stocks and Treasury bonds or bills. A blue chip stock is a stock that has a history of yielding a fair return. Government securities are backed by the full faith and credit of the U.S. government and are considered the safest of bonds.
As a beginner, you don't want to jump into investments by choosing high-risk stocks or bonds. It takes time to understand the markets. You are better off investing your money in blue chip stocks that have already proven their abilities to go the distance. As you gain experience, you can invest in more high-risk products.
Choose Multiple Asset Classes
Professional investment houses, such as Fidelity, recommend that investors diversify their funds. As a beginner, you will probably make a few mistakes as you learn about investing. Rather than have all of your available investment funds tied into one stock and one bond portfolio, spread the money over several products so mistakes will not be as costly to you.
Consult With a Professional
If you have concerns about your stock or bond choices, sit down with a licensed investment counselor and ask questions. If you engage an advisor, be sure to ask about the fees you'll be charged.
Candace Webb has been writing professionally since 1989. She has worked as a full-time journalist as well as contributed to metropolitan newspapers including the "Tennessean." She has also worked on staff as an associate editor at the "Nashville Parent" magazine. Webb holds a Bachelor of Arts in journalism with a minor in business from San Jose State University.