If you are new to investing you should know what are the best stocks to buy for beginners. They are special and if you are new you need a hand to get in.
Do you know why many people avoid investing? Fear.
Fear of making some huge mistake, losing all their money, and going bankrupt. So what do they do instead?
Instead of doing some research and finding out what are the best stocks to buy for beginners, they put their money into some low-interest saving accounts that decrease their money’s value rather than increasing it.
If that sounds terrible… it is! But I can always sleep peacefully knowing that since you’re one of my readers, that would never happen to you. Aaagh!
Wealth is a one-way road and investing is your only vehicle. You want to become rich? Invest. And yeah this might sound cliche but it’s a cliche for a reason. It works!
Considering that you’re here, looking for an answer to the eternal question “what are the best stocks to buy for beginners?” I assume you’re new to the game. You probably haven’t invested in the stock market before and even if you have, it probably was unsuccessful. Am I right?
Well, fear no more because I’m here to boost you on your journey to the investing world. But first some Myth Busting!
But before we find out what are the best stocks to buy for beginners, make sure you have your trading account all set up! My favorite platform is M1 Finance for its low fees and simple automation, but I review all the top platforms here.
Myth #1: Investing is complicated
I won’t lie to you. Buying groceries is probably easier than investing your money. Should that scare you? Absolutely not! Here’s why…
First of all, you have to discard some investing stereotypes. Investing isn’t for the ultra-savvy financial experts. It’s actually for everyone. Including you! Finding out what are the best stocks to buy for beginners, is not even that hard at least.
It’s also not that complicated. I mean sure you can go down some deep rabbit holes but with the right guidance, you can happily stay above ground and watch your money grow.
We’ll keep it very simple and safe. No long research nights, no catastrophic mistakes that cost you a fortune, and no question marks in your head. Everything can be smooth and simple.
Seriously though, apart from the sunshine and rainbows, there are actually a few things that you’ll be called to deal with.
Firstly, when you start investing your money, always remember that there are bills, debt and rent that you need to pay. So don’t go all in. Always have money to cover your basic needs no matter how into investing you get.
Second of all is knowledge. If you were educated by the same school system I was, you don’t have a single clue about investing or even saving.
Don’t blame yourself though. Millions of people deal with the same problem. Instead of agonizing over how unlucky you are, you should take matters into your own hands and read this whole article. What’s investing? How you can get into it? What are the best stocks to buy for beginners? How to invest safely and effectively? We’ve got it all.
A financial-terms dictionary could also come in handy if we were being complicated. But you can skip that. We won’t use hundreds of different acronyms. We keep this simple and fun. It’s not school!
If you’re still hesitant, I have to let you know that you are the luckiest person in the world if you compare yourself to someone 50 or 60 years ago. Back then you didn’t have a chance without having the right connections and huge capital.
That’s not the case today you have me!
First lesson. Do you think it’s the right time to jump into the stock market?
Whether you answered yes or no… it’s incorrect. No offence but there is no “right time to join the market”. Timing the market? Good one. HA!
Myth #2: You should try to time the market
Don’t fall for it. Timing the market is not possible. At least not reliably. You or a friend might be correct once but that doesn’t mean you will be again.
I’m not the only one saying this. There are experts and surveys out there that have proved my words. The market can’t be timed. If you watch the big short you know, even when the market is built on lies it can take years to fall apart. The timing of it is completely random.
And here’s where I ask you… “Why would you even want to try timing the market?” Believe me, you don’t want to. The benefits to doing a good job would be so minimal that it’s just a waste of time, energy, and brain cells.
That being said, there are 2 things you can do to make yourself as immune as possible to the market’s recessions.
- Have a steady 70%/30% asset allocation of stocks and bonds, most of the time if not all the time. ONLY post-recession you can go all-in on stocks if you really want to. I wrote an article on my simple hack to kinda time the market without losing your sanity!
- Make sure to find the best stocks to buy for beginners as well as the best bonds. The point of this article!
Best stocks to buy for beginners
Okay, it’s time to see what are the best stocks to buy for beginners.
Index funds are perfect for beginners
Let me start by saying the two magic words “index funds”. That’s all you’ll need in the investing world as a beginner. I get more in-depth as to why they are awesome in my beginners investing article but for now just know that are perfect for beginners.
They remove any desire for timing, research and they remove trading fees. Perfection! It lets you focus on the logistics of getting your trading accounts moving with what is actually the best investment.
Really quickly, since this is a beginner’s guide, I’ll mention what index funds are.
Index funds are usually collections of stocks. A stock index includes every stock of it’s kind in one purchase-able item. So when you buy a share of an index fund, you basically buy a small piece of each stock out there that it’s representing.
For example, The S&P500 index represents the 500 biggest companies in the US. Buy it and you’ve bought a tiny piece of all 500. Simple!
But there’s not only one index. There are different types of them actually and it all gets very complicated. So I will point out the best ones for beginners.
Also, there are different kinds of indexes that you buy in different places. I like index ETFs ( Exchange Traded Funds…since you can very easily buy them on the stock market) instead of index mutual funds (which you have to buy from a special place).
The 2 best stocks for beginners
1 – VTI
VTI is by far the best index to buy to get your stock representation in. It has incredibly low management fees baked into its price and it doesn’t just own the top stocks on the US, it owns ALL of them.
VTI was created by Vanguard the company who were some of the early pioneers in index indexing. The founder, Jack Bogle, invented the phrase:
Don’t look for the needle in the haystack. Just buy the haystack!
Jack Bogle
and since they are a forerunner in the index investing world they are often known for having the lowest fees around (which get absorbed into the price of the thing you buy).
VTI stands for Vanguard Total Stock Market ETF which as I mentioned means it includes the total US stock market. Owning all of them has some advantages but I get into the nitty-gritty of comparing it to another big name in index investing VOO in my VOO vs VTI article.
If you’re curious about some of VTI’s competitors in your what are the best stocks to buy for beginners research, there’s also VTSAX – but it’s a mutual fund – which I put head-to-head in my VTI vs VTSAX article.
And if for whatever reason you do like VTSAX better I do a head-to-head of its competitor VFAIX in my VTSAX vs VFIAX article.
#2 – BND
BND is basically the same thing as VTI but with bonds instead of stocks.
It’s the Vanguard Total Bond Market Index Fund ETF. So again, it’s vanguard so it’s always the lowest fees around.
It’s also a total market so it’s all the bonds. No selection or brainpower is needed to determine what types of bonds are the best to buy these days. You just get ALL of them.
Side note about bonds: You want some bonds to balance out the ups and down of investing and give you something to spend/liquidate when markets are down.
The combo made in heaven
With VTI and BND as a combo, you have some great abilities to lean on:
- Complete freedom to sell and buy whenever you want.
- Low to no trading fees.
- Way lower management fees than an advisor will give.
- Statistically proven to out-perform most fancy investments.
- The freedom to ignore market timing and automate your investments
Do you have some Gambling Desires?
Have you ever heard of the mythological creatures, Sirens? I’m talking about the ones that were attracting sailors with their heavenly voices and then they would eat them alive.
That’s what will happen to your money when you start hearing the investing Sirens. I’m referring to Bitcoin, Tesla, NFTs and whatever trendy investment is out there. These are exactly the opposite of the best stocks to buy for beginners.
They suck! I’m not being overdramatic here, just saying things as they are. If you ask me, you shouldn’t bother playing that game. Here’s why…
The biggest thing pushing them forward is the world’s hype. That is a very fickle thing.
Bitcoin as an example has no reason to hold up over time like the US economy (which you get by buying the index). I’ve tried crypto investing and it just didn’t work. In my opinion, Bitcoin sucks.
A plan for the gamblers
But don’t worry because you can still invest in cryptos and all these kinds of schemes if you really want to. You just have to do it the right way.
First things first, we can all agree that there’s a charm in gambling. The idea of making a huge amount of money in a minimal amount of time is just exciting. And a lot of people fall for it.
Do you know what’s not exciting? Betting all your money (or even your house) and losing it. It happens. So don’t think that’s impossible that it would happen to you as well. That’s why I don’t promote speculative investing like bitcoin.
But if you really want to gamble a bit to get it off your chest there is a technique to still continue “gambling” without having to meet insolvency face to face.
If you really feel the need to, you can allocate a small amount of money (I say 5% max) and invest that in cryptocurrency, NFTs or whatever other crazy stuff you lust after.
I don’t think gambling or speculative investing is ever good. But if it’s just a tiny amount of money, it’s not that bad.
If I can’t gamble how do I step it up?
Investing with indexes might be so efficient they leave you feeling like you should do more. But instead of trying to do better with risky investments there are better, more stable, beginner friendly ways to improve your finances.
If you want to really put your mind to something hard here are the places to put that brain power that can help your finances.
1 – Real estate
First things first, you’ll hear me talk about real estate a lot. Real estate is amazing and I wouldn’t be the same person if I haven’t bought the properties I currently own.
It opens up an amazing long term path for you. You want passive income? You got it. Just rent out your properties. You want quick cash? Add your house to Airbnb.
There are so many opportunities so definitely keep real estate in mind.
2 – Save aggressively
The other thing I would strongly suggest if you want to become wealthy is to start saving super aggressively.
And no I’m not talking about eating noodles all day like a 20-year-old student, I’m talking about saving money fast by cutting out all the unnecessary expenses.
3 – Improve your work income
And last but not least, I’ll talk about something that a lot of us are too afraid to do. Ask for a raise. I don’t think I have to explain why this is good. I mean more money coming in consistently can only lead to better things.
So if you really want to become wealthy, get over your fears and ASK for that RAISE.
The Bottom Line – What Are The Best Stocks To Buy For Beginners?
Investing is one of the best ways to become wealthy, and what are the best stocks to buy for beginners? Indexes. Low risk, low fees, low dedication… you have it all. Set up a trading account and focus on VTI and BND and become one of those stealthy rich people that have it all.
I am glad to see that your best stocks for beginners aren’t technically stocks, but rather ETFs that track indexes. Your post is great advice for anyone, regardless of their investing knowledge and age.