In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool One analyst Jason Moser takes a question from a reader who asks:
I'm just getting started investing. I have $1,000 to start to investing. I want to max out my returns in at least two or three years minimum, and I don't want to lose my money. What's your Foolish opinion on the best way to get started?
The names you know might not always be great investments. Understanding how a company makes its money and why it will succeed against its competitors are key questions to answer. Something like the Vanguard 500 Index Fund will give you exposure to all 500 companies that make up the index, which is basically instant diversity, but the real secret is to invest regularly. If you can allocate a certain amount of money each month toward your holding, buying in the good times as well as the bad times will greatly improve your chances of success. It's called dollar-cost averaging, and the idea behind it is to smooth out your cost basis over time and take a lot of the thinking out of investing. Above all, make sure to check out the 13 Steps to Investing Foolishly. Go through those steps in order to better understand our investing philosophy. They're guaranteed to help steer you in the right direction.
So what's the right investing approach?
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report, "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.