7 Smart Investment Tips For Beginners to Start Their Investing Journey

smart investment tips for beginners

In today’s economy, it’s wise to find ways to grow your money. Investments are the best option, especially for young people who have plenty of time to weather the ups and downs of the market.

It does seem that young adults are more financially savvy nowadays. In a survey, Bankrate found that Gen Zers and Millennials are planning to increase their investments for 2022.

Meanwhile, only 8% of baby boomers want to add more to their investment accounts this year. This is likely caused by the highly volatile market and inflation.

Learning about investments and the benefits you’ll reap later on can be exciting. However, it can also be daunting to navigate through the variety of investment products available.

Nonetheless, you must take the time to study the assets you can put your funds in. Although you can hire financial consultants and robo-advisers to invest on your behalf, it’s best that you know the fundamentals since you’ll be taking risks with your money.

In this article, you’ll find beginner-friendly investment tips that you can consider as you start your investing journey. But, before that, you should know why you should invest.

Why You Should Invest

You can think of investing as a way to earn a profit from your money. The Federal Deposit Insurance Corporation (FDIC) reported that the national average interest rate on savings accounts is at 0.06% annual percentage yield (APY), with accounts that have a balance of more than $100,000.

While there are other banks that offer higher rates, they don’t cover the cost of inflation. As such, if you just leave your money in the bank, it’s actually losing its purchasing power.

With investing, you have the chance to overcome inflation through compound interest. It’s basically earning a profit from the interest you gained from your investments.


What Beginners Should Consider Before Investing

As you start your investing journey, you should be aware of the goals you want to achieve. Are you saving for retirement? Or do you want to grow money for your kids’ college funds?

Answering these questions can help you find the best type of investment product to reach your target. Aside from your goals, you should also check the time that you have.

If you’re still in your late 20s or early 30s, you still have about 30 years to grow your retirement funds. On the other hand, you’ll only have about 20 years or less for your kids’ college funds.

You should also be mindful of how much risk you’re willing to take. Additionally, it’s best to learn about different investment products so that you can diversify your portfolio.

This way, when the value of one investment product drops, you don’t lose everything in one go. Thus, it reduces investment risks.


Top 7 Smart Investment Tips for Beginners

As a beginner, it’s understandable to be overwhelmed with investments and the processes involved. Nonetheless, you have to do your research to learn how to navigate the market.

Here are 7 smart investment tips for beginners to help you:


1. Examine Your Finances Before Investing

Know where you stand with your finances. You have to know whether you have enough income to accommodate your monthly expenses while directing money to your investments and savings.

You want to be able to save consistently. To do this, you can start by saving with the goal of investing in mind.

Don’t forget to create an emergency fund as well. With this, you reduce the possibility of having to take funds from your investment during health crises and other types of emergencies.


2. Understand How Investments Work

Stocks, bonds, mutual funds, and annuities are examples of investment products. Money grows depending on the performance of these products.

You can earn by buying assets low and selling them for a high price. Another way is through interest rates or dividends, depending on the type of product you choose.

That’s just the basic premise of investing. There are plenty of nuances for each asset, so it’s best to take your time and research the best one for your goals and needs.


3. Know How Much Risk To Take

One of the downsides of investing is that there are always risks involved. It’s probably why many people are scared to make the jump and just stick to putting their money into savings accounts rather than investment products.

However, you shouldn’t be afraid to take calculated risks. This can mean different things to different people.

  • Your age, amount of debt, and family status play a significant role in determining how much risk you can take. As mentioned, younger investors can create riskier portfolios because they have the advantage of time.
  • If you still have many years before retirement, you have time to recover from a particularly bad year in the market. Your working years also allow you to add more to your investment accounts rather than using them for emergencies and the like.
  • Conversely, those who are nearer to retirement are more at risk for market changes. If you’re covering your living expenses through your investment accounts, you may need to take out all of your funds in case the market takes a dive.


4. Commit To Set Aside Money for Investment

You can also think of investing as a more efficient way of saving for retirement, your kids’ college fund, or any other financial targets you have. If you want to start with your investing journey, you should commit to direct money to buying and retaining assets.

That’s why we stated earlier that you should take an inventory of your finances and determine your income and expenses. Make sure you have your necessities down pat, along with an emergency fund, so that you can focus on your other financial goals.


5. Maximize Retirement Accounts

The government helps working adults save up for the future through dedicated retirement accounts. Your employer may also set up an account for you to direct your retirement savings while you still can.


Many American employers offer a 401(k) retirement savings plan. When you sign up for this, you consent to having a portion of your salary paid to the account.


Aside from the tax benefits, you can also enjoy more savings because your employer can also add to the account by matching part or all of your contribution. In a traditional 401(k), employee contributions are deducted from gross income, which is your pay before income taxes.

With this, your taxable income decreases. The account won’t get taxed either until you’ve withdrawn the money, which is typically during your retirement years.

On the other hand, a Roth 401(k) takes contributions from your after-tax income. As such, you won’t get a tax deduction in the year you contributed to the account.

Moreover, if you withdraw from the account, you won’t have to pay additional taxes, whether through your contribution or investment earnings.

Meanwhile, an Individual Retirement Account (IRA) is another viable retirement account option. It encourages people to save for their future.

It works just like a 401(k), except your employer isn’t bound to match your contributions. Your funds also can’t be withdrawn at least six months before you turn 60 if you don’t want to incur a tax penalty of 10% of the amount withdrawn.


6. Find Other Viable Investment Opportunities

Aside from retirement accounts, you can also look for other investment opportunities. These are the best ones to consider for beginners:

  • High-Yield Savings Accounts - A high-yield savings account is ideal as a starting point. With this profile, you can earn interest on your cash balance. At 121 Financial, we have the money market option, which allows you to enjoy competitive interest rates.
  • Government Bonds - Investing in the government is always a good idea. Government bond funds are mutual funds or exchange-traded funds (ETFs) that place your money in debt securities issued by the US government. They’re ideal for risk-averse investors and are considered one of the safest investments since they’re backed by the government.
  • Index Funds - Index funds need less monitoring and take a more passive approach to investing. These are mutual funds that track the market index. A market index is composed of investments that represent a part of the market. The S&P 500 Index, the Russell 2000 Index, and the Wilshire 5000 Total Market Index are some of the most well-known market indexes that your index fund can track. As such, you or an account manager won’t need to keep track to build and maintain the fund’s investment portfolio.
  • Target-Date Mutual Funds - Target-date mutual funds are a combination of stocks and bonds. The major difference from traditional mutual funds is that it considers your estimated retirement year. For example, if you want to retire in about 30 years, you can look for a 2050 or 2055 target-date fund. At first, it’ll take advantage of stocks, and then gradually shift to bonds as your retirement date draws near.
  • Robo-Advisors - Robo-advisors are also great tools for passive investing. If you’re daunted by the idea of choosing the best assets to buy, you can enlist their help and they’ll do the heavy lifting. Of course, you can always opt for human financial advisors. We offer financial planning services to create customized strategies for our clients.
  • Investment Apps - There are plenty of financial apps on the market nowadays, which makes the investing process simpler. You can just choose stocks and ETFs listed on the platforms and browse potential investment opportunities. Although these apps might not provide a lot of details for each investment product, it does help you get started and guide your trading decisions. - Additionally, some apps have a cryptocurrency trading feature for major cryptocurrencies if you want to dip your toes into this type of asset. These are also great educational resources, providing articles to help users learn more about investing.


7. Keep Learning

Vicarious learning is crucial to succeed in your investing journey. You have to be observant of the market and apply the knowledge you gained for each trade.

Investments always come with some sort of risk. You have to learn from expert investors to avoid making the same investing errors.


You also have to learn from your mistakes. You don’t want to keep making the same mistakes and incur more losses in the long run.


Learning and understanding the fundamentals can help you overcome the fear of investing. Don’t be afraid to make mistakes. Instead, learn from them and recalibrate your investment strategies for the better.



Investing is a great way to profit from your money. The process can seem daunting, especially when it comes to choosing the best assets to invest in.

As such, you should do your research and acquire knowledge so that you can navigate the market confidently. These smart investment tips for beginners can help you achieve your financial goals.

At 121 Financial, we are ready to help you start your investing journey. We provide financial planning and retirement services so that members can make the most out of their savings.

You should also check our high-yield savings account to earn competitive interest rates. Contact us today to learn more!

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