I could use some basic guidance in investing. I’m a senior getting ready to graduate in May with a degree in political science. I’m planning to move to DC soon after graduation to work for a think tank or political consulting firm. I have extended relatives who have established careers there, which I’m hoping will help me launch my own.

 

In the meantime, I have another big task ahead of me. I’ve saved a mini fortune working throughout high school and college. Now that I’m about to graduate, I wanted to take some of it and invest. When my roommate realized how much I’d saved up, he said I was crazy not to have begun investing some of it sooner.

 

I don’t want to get too specific, but it’s in the range of five figures. With that in mind, would be the best way to get started with investing? Are there tips for beginners trying to get a decent return on investment within a few years?

 

The first thing to know is that you shouldn’t take investing lightly. While it’s certainly one of the wisest things you can do with your financial capital, you shouldn’t make the mistake of starting for the wrong reasons or proceeding with unrealistic expectations. Those are rookie mistakes very easily avoided with some simple research and honest self-reflection. Don’t underestimate the value of doing so. Those suggestions aside, the next sound strategy is understanding your options and the different investment approaches available to you and everyone else.

 

Writer Kathleen Elkins at Business Insider published a salient article that covers twelve things everyone should know before investing. She begins by dispelling some common misconceptions that tend to undermine a beginner’s mindset. Chief among them are the notions that one has to be rich or an expert to start investing and eventually become successful. That’s simply not the case. Another important highlight is the fact that the sooner you begin, the better off you’ll be. A lot of people fall prey to these misconceptions and wait years to begin investing only after accumulating large sums of capital. Unfortunately, the very nature of compound annual interest means that early movers almost always have the advantage, even when they begin with lower sums of capital investment.

 

Consider taking time to fully investigate what types of investments you want to make. You might not even realize the fact that there are several different options. Joshua Kennon at The Balance explains your choices in his piece about investing for beginners. Stocks, bonds, and real estate, are all examples of unique investment vehicles. Each choice has a different risk threshold and possible return rate that you’ll want to assess carefully. That’s where strategy really comes into play. Other investors choose more “tangible” goods, such as gold, which they consider to be more stable. With something like this, it’s important to research top gold stocks before you make a decision.

 

Forbes contributor Jeff Rose highlighted eight strategies that offer high returns with low risk, which should appeal to almost everyone. You’ll notice his immediate recommendations include stock investments in lieu of bonds. In fact, only one of his key points involves making investments in bonds. Ultimately, bonds take much longer to mature into profitable sums of capital, but that doesn’t mean you shouldn’t explore them.

 

One newer approach worthy of consideration is something called socially responsible investing. As the name would suggest, this method involves taking certain ethical values into account when creating an investment portfolio. Younger generations find this to be very appealing when compared to more conventional tactics. It’s difficult to say that there’s a wrong way to invest, but there’s certainly an unprofitable way. People choose to invest for different reasons. What is most crucial is that your investment strategy fits your personal situation and long-term goals. Don’t make the mistake of using someone else’s strategy.

 

“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch