Investment Strategy For Beginner Investors

In my humble opinion, I think that all of us should invest our savings.

In fact, the sooner we start investing, the better our results will be.  Often the problem is that investment language sounds like Chinese and there are more products that you can find in a Dollar Store.  The key point to remember when you are a beginner investor is to start with a simple investment method.  Then, along the path to becoming a knowledgeable investor, you will be able to implement more complex investment theories.

Before starting to invest, the very first step is to know your asset classes and determine how you want to invest your money at the beginning.  You can put most of your investment in the same account or work with investment buckets as suggested by Anthony Robbins.  So how do you start investing?  Here are a few guidelines:

Set up the investing habit

All right, you are all pumped up and you want to make money.  At the same time, you are a bit scared of the markets (remember, the great depression is about to come… tsss) and you don’t know how to start your investment strategy.

The very first thing you need to do is to open an investment account.  At first, I’d suggest you do it with a good financial advisor.  Usually, bankers or independent advisors have decent investment products for the masses and they will be able to help you set up your account.  For more advanced investors, opening a brokerage account will be the best thing to do but I’ll talk about that later on.  Don’t forget to shop around and I would also suggest not investing in funds with high MER’s (management fees) or load fees (penalties when cashing your money prematurely).

Some great places to open investment accounts are ShareBuilder and TradeKing.

Once your investment account is opened, you need to determine a monthly or bi-weekly investment amount.  The easiest way to succeed as a beginner is investor is through systematic investments. Start with a small amount and increase it over time.  If you consider your investment as another payment, you will make it on time and will simply get used to living with less disposable cash in your pocket.

One last note for investment beginners; if you start with systematic investments, you can start as low as $25 a month or lower!

Select an investment strategy for beginners

My favorite investment solution for investment beginners is packaged mutual funds.  They offer a variety of levels of risk (from very safe to extremely volatile) and they are low in transaction costs.  While it is far from being the most sophisticated investment solution, I think it is perfect for someone who wants to get familiar with the world of investing.

This is why I am suggesting to go with a banker or a financial advisor.  He will complete an investor profile and will make sure to invest your money according to your goals, the time horizon the money will be invested for and your risk tolerance.  He will then offer you a mutual fund where your money will be invested among the stock markets, fixed income as well as other asset classes.

This kind of mutual fund is managed by a team of portfolio managers and they rebalance your portfolio to make sure you always have a consistent proportion of each asset class in your investment account.

So, just to keep things simple, I’ve gathered the Investment Beginners Baby Steps:

 Investment Steps for Beginners

Remember, investing is a long path to financial freedom.  It’s not a highway!

What do you think of Mike’s investment strategy for beginners?

This post has been written by Mike from Green Panda Treehouse.  He is a financial planner and runs several finance blogs within his online company.  If you like this post, make sure to stop by Green Panda Treehouse and subscribe to his RSS feed.

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Published or updated January 24, 2014.


  1. In the US, I’d steer clear of investing via a bank. In almost every case, you’ll be dealing with a commission-paid advisor (which creates unnecessary conflicts of interest) and high-cost mutual funds. On top of that, if the bank is affiliated with an investment management company, the advisor will probably push you toward their own funds, even if they’re not particularly good.

    Independent advisors are the way to go, IMO.

    • I actually agree with you here. I once went to a large bank, back in the day, to ask about investing and the first thing they pushed on me was loaded mutual funds. Still, it was an interesting experience and confirmed for me that I need to do my own research.

      This was years ago so I couldn’t say if this would still be the case or not.

      It’s alwasy good to get different opinions from different places then make an educated decision. Even for a beginner, things can be confusing, but you need to get your feet wet and start to understand what investing is all about.

      • I guess it depends on where you live.

        In Canada, independant advisor are mostly 100% commission based and sell the funds with the highest MER’s.

        Advisors working for banks are not necessarily better but at least, they sell funds with lower MER’s and no load fees.

        I guess the bottom line is that it’s pretty hard to start investing when you don’t know finance 🙁

  2. I don’t think I’m personally quite ready for this step… a lot of my funds are tied up elsewhere. I’d say paying off loans might be more important than investing your money prematurely.

    • It really depends on what loans we are talking about though. If it’s a low-interest student loans or a mortgage then I think you should consider investing. If you have high-interest credit cards that aren’t paid off every month then you may be better off attacking the credit cards first.

  3. i wouldnt agree with this very much in terms of looking for a bank. the mosr important point here is that invest systemicallly and slowly in mutual funds initially as you learn.

  4. I’d think the best investment strategies for beginners is 401(k)’s and Roth IRA’s or regular IRA’s. Within each of these accounts, a person can either invest in specifics or even things as simple as target date mutual funds. As Mike said, the real key is to invest regularly, the rest is just icing on the cake. 🙂

  5. I’m totally agree with the 5 basic steps, never expect to grow your investment in short term, IMHO I prefer to let my investment to grow at least 5 to 10 years for maximum profit.
    In my country mutual fund and stocks still the best

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