Investing can be a great way to grow your wealth and achieve financial goals, but it can be overwhelming when you first start. There is so much you can do with a few hundred dollars. By understanding how to start investing, you can create a strong and valuable portfolio.

Open An Account

If you want to start investing, the first step is to open an investment account. This account is where you hold all of your assets. The assets inside of the account will fluctuate depending on what you want to buy or sell at a specific time and how well an investment is doing. There are a couple of different types of accounts you can open when starting to invest.

Brokerage Account

This type of account is where you can keep investments that you can withdraw at any time, not just for retirement. This is a good option if you want to be making an income while investing or have already started a retirement account. You can open a brokerage account by yourself or with assistance from a bank or other financial institution. A few popular accounts you can look into are TD Ameritrade, Fidelity, and J.P. Morgan Chase.

Retirement Account

Many people start their investment journeys by opening up a retirement account. This is an account that holds assets to save up for retirement. If you are interested in this kind of account, you can open up a 401k or IRA.

A 401k account is an employer-matching contribution account. Many employers offer you the chance to open a 410k account, and it's a great place to start. Employers will match any contributions you make, essentially doubling your money.

An individual retirement account (IRA) is a retirement account that is not matched by employers. There are a few different types of IRAs that you can invest in, each with different regulations about how much you can contribute, when you can contribute, and when you can withdraw.

Determine Your Goals

You have an account set up and are ready to start making investments… now what? The next step is to figure out what your goals are.

Short Term Goals

Short-term goals are usually ones you want to accomplish within a two to five-year period. For this timeline, you want to put your money into low-risk investments. Bonds are a good investment for these kinds of goals. If you want to buy a new car in the next couple of years or plan a month-long European vacation, this should align with your short-term investments.

Long Term Goals

Long-term goals are usually anything that you want to accomplish in the next ten or more years. This may include retirement savings or college funds. For these goals, you want to put your money into riskier investments. This is because if the investment fluctuates up or down, you won't have to panic. After all, you are in it for the long run.

Understand Your Options

After you have set up an account and determined your goals, you're ready to start investing. There are a lot of options as to where to put your money when you invest. Understanding your choices will help you receive the maximum amount of returns.

High-Yield Savings Accounts

Also called a high-interest account, this account compounds your money faster than your average savings account. It has a higher interest rate which allows your money to sit and grow.

Because this account functions similarly to a savings account, high-yield savings accounts are typically used to save for future short-term purchases or emergency funds. People looking to start investing in this account can find programs through their bank or online.

Individual Stocks

Stocks can earn you higher returns than other assets, like savings accounts. However, they also come with more risks. When you buy a stock, you buy a small fraction of ownership in a company, known as a share. With these shares, if the company succeeds, so does your fortune. If the company takes a hit financially, then you have a high chance of losing money as well.

Before buying a stock, research and evaluate the company's potential to be sure of your investment. It is usually better to invest in stocks to accomplish long-term goals, as you can let your investments sit and generate returns for a longer period.

Electronically -Traded Funds

These funds, also known as ETFs, pool together investors' money to buy a collection of securities. This provides a more diversified portfolio all in one place. This type of investment is similar to mutual funds.

These funds are best for long-term investments and work especially well for people who are looking for a less expensive way to participate in investing funding with others.

These are just a few of your investment options. A more in-depth list can be found here. The most important thing to remember when deciding what to invest in is to diversify your portfolio. Don't invest all of your money into one place because if that investment takes a hit, you're out of luck.

Review Investments Regularly

Once you invest, don't think you're all done and can ignore your portfolio. Make sure that you frequently check back in to make sure that your investments are doing well. Review how your liquidity needs, risk tolerance, and timeline match up with your portfolio.

As the market expands and evolves, your priorities and investments may change. You may have to buy or sell your assets to stay on target.

Takeaway

Getting started on investing can be intimidating, especially if you're a beginner. However, if you follow this advice, you can develop a beginner investment plan that earns you the money to fulfill your goals. In no time, you'll be well on your way to ensuring yourself future financial prosperity.