In this article, we will take a look at the 5 best investments for beginners according to experts. To see more investment advice from money gurus, go to 10 Best Investments for Beginners According to Experts.
5. Real Estate
Whenever a list of the richest people in the world is compiled, you will almost always see a lot of individuals on the list who got rich investing in real estate or at least started on their path to success and wealth by buying their first piece of land or apartment. Here are some quotes from experts and people who got rich via real estate that motivate beginners to consider investing in real estate:
“Most millionaires I know made more money from owning real estate than any other investment. Real estate consistently increases in value over time and outperforms other investments. It’s always a good time to buy real estate. In fact, the real wealth is made by buying when everyone else is selling and vice versa. While many are talking about a recession, the market is strong, with increasing prices and transactions.” [Peter Hernandez, president of the Western Region at Douglas Elliman, founder and president of Teles Properties]
“There’s an inherent demand for real estate, whether the land produces a product like coffee or is home to an apartment or retail space; so it will always be a good investment. No matter what kind of business you run, you need land.” [Marcello Arrambide, founder of Day Trading Academy]
4. Invest in Big, Stable Companies
The market crash of 2022 and extreme volatility in stocks highlighted the importance of investing in stable, blue-chip companies. Many investment gurus and hedge funds time and again repeated the importance of staying away from risky, low-quality stocks and investing in big companies. Jim Cramer calls these companies “best of breed” stocks. The famous American investor and author Peter Lynch once said:
“Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.”
Bill Ackman of Pershing Square, Joel Greenblatt, Michael Price, and many other legendary investors, often talk about applying strict filters to choose stocks and going with a handful of high-quality companies. Bill Ackman’s portfolio has for years included only a few names but the fund has outperformed the broader market for several years. Ackman once said:
“Occasionally we’ve diverged … There’s a certain discipline that comes with investments and there always seems to be a countervailing quality that caused us to diverge, but in really each case we’ve either compromised on either business quality or complexity we’ve been harmed from an investment standpoint.”
3. Broader Market ETFs
More and more money managers and experts are recommending beginners to avoid investing in individual stocks and instead go for ETFs, index funds and broader market funds. If you put your money in the S&P 500 index, you are almost guaranteed to get a 6% to 7% return annually since that is the average return of the index adjusted for inflation. We could quote many experts and financial gurus who believe investing in broader market funds is one of the best ways to invest for beginners, but we decided to quote Warren Buffett who is also a big fan of this investing approach.
Talking to CNBC, the Oracle of Omaha advised people to consistently buy an S&P 500 low-cost index fund.
“I think it’s the thing that makes the most sense practically all of the time,” Buffett said.
Buffett also said:
“The temptation when you see bad headlines in newspapers is to say, well, maybe I should skip a year or something. Just keep buying. American business is going to do fine over time, so you know the investment universe is going to do very well.”
2. Emerging Markets
Famous money managers are extremely bullish on emerging markets and they urge beginner investors to look beyond just the developed stock markets and take advantage of the growth potential of nations outside of the North American or the European continent. For example, Ray Dalio earlier this year reiterated his bullish stance on India in a tweet.
“I am pleased to be able to help PM Modi as he is a man whose time has come when India’s time has also come. He and India are in an analogous position to Deng Xiaoping and China in the early 1980s–i.e., at the brink of the fastest growth rates and biggest transformations in the world. Additionally, the challenges both between and within China and the US are putting PM Modi in a unique position to influence the complexion of the world order via influencing the non-aligned world ‘s dealings with these two leading world powers. I believe that Modi has what it takes to have the greatest impact on the largest number of people in the world at a time that the risks of harmful impact are greater than at any time in our lifetimes.”
According to a report from Lazard Asset Management, after a decline seen in 2021 and 2022 for earnings growth expectations for emerging markets, estimates for earnings growth for these countries moved higher compared to the US.
1. Skills
Topping our list of the best investments for beginners according to experts is an investment that is often recommended by highly wise financial gurus and money managers. The advice might sound cliché but it is certainly true. Learning skills and knowledge which you can sell to make money is one of the best investments in life. This advice is often given by Warren Buffett. Here’s how he sums it up:
“The best thing you can do is to be exceptionally good at something. [People] are going to give you some of what they produce in exchange for what you deliver. Whatever abilities you have can’t be taken away from you. They can’t be inflated away from you. The best investment by far is anything that develops yourself, and it’s not taxed at all.”
You can also take a peek at 11 Undervalued Mid Cap Stocks To Buy According to Analysts and 12 Most Important Holidays in the US.
