Investing for the First Time? 15 Things to Know

Investing might seem like a tricky thing if you've never done it before. If you're a new investor, here are a few important points to keep in mind as you go about the process of growing wealth.

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It's a big myth that you need thousands of dollars to your name to begin investing. Got $50? You can put it to work. The most important step you can take in the course of your investing career is to kick it off -- even if that means starting with a modest amount of money and working your way up.

When it comes to growing wealth, time is perhaps the greatest weapon in your arsenal. So if you're thinking of starting to invest in three months or six months -- invest today instead. Giving your money that extra time to grow could do a lot for you.

If you work for an employer that sponsors a 401(k) plan, you have a prime opportunity to invest specifically for retirement. The great thing about 401(k)s is that they often come with an employer match, which means you could end up snagging free money for your future.

ALSO READ: Lucky Enough to Have a 401(k)? 3 Ways to Make the Most of It

IRAs are a great tool for first-time investors because they give you a tax break on the money you put in (assuming you fund a traditional IRA). And from there, you won't pay taxes on investment gains in your account until you take withdrawals during retirement.

IRAs and 401(k)s are great tools for investing for retirement. But they also come with restrictions, such as having to wait until age 59 1/2 to withdraw your money. If you want more flexibility, you may want to start investing in a regular brokerage account.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

You shouldn't invest in stocks at random. Rather, it's important to establish a strategy and do your research. Your strategy might include buying stocks with strong growth potential. Or, you might seek out stocks that are undervalued. But either way, it's important to go in with a game plan.

ALSO READ: The Ultimate Growth Stocks to Buy With $100 Right Now

A diverse mix of investments could help you grow wealth and shield you from losses during periods of market turbulence. There are different options for diversifying your holdings, but an easy way to go about that is to load up on exchange-traded funds (ETFs).

If you're the risk-averse type, you may be thinking of staying away from stocks and focusing your money on bonds. But while bonds may be less volatile, they also tend to deliver much lower returns. That's something that could hurt you in the long run.

Many brokerages these days allow you to buy fractional shares of stock if full shares aren't affordable or desirable to you. So, let's say you have $500 to invest with. If there's a company you like whose shares are trading for $1,000 apiece, you can simply scoop up half of a share with the money you have.

ALSO READ: Best Brokers for Fractional Share Investing

Index funds are a great long-term investment because they take a lot of guesswork out of investing. Rather than research individual stocks, you can instead fall back on index funds that track a broad index like the S&P 500.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

When you think about investing, it's not just stocks and bonds you should focus on. It also pays to look at branching out into real estate, whether by investing in income properties or loading your portfolio with real estate investment trusts (REITs).

ALSO READ: 3 Reasons to Load Your Portfolio With REITs

A good approach to investing is to plan on keeping your money in place for a decade or longer. It can take time for investment portfolios to gain value, so it's important to be patient and not anticipate immediate results.

Stock market crashes can be nerve-wracking, but they're something that just tends to happen. The good news is that the stock market has a strong history of recovering from downturns, so that's something to keep in mind if your portfolio takes a hit.

One of the worst mistakes you could make during a stock market crash is sell off investments out of fear. If you leave your portfolio alone, you might get through an extended downturn without losing so much as a dime.

Stocks that pay dividends are a great way of securing a stream of passive income. REITs are a good bet in this regard, since they're required to pay 90% of their income to shareholders in dividend form.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Investing can be daunting when you’re doing it for the first time. Use these tips to set yourself on a solid path -- one that, ideally, makes you very wealthy over time.

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