Getting started with investing can feel overwhelming, especially with so many options like stocks, bonds, commodities, funds, and ETFs.

Here’s a simple guide to help you understand these investment types and determine where to begin.

Stocks

Stocks represent ownership in a company. When you buy a stock, you become a shareholder, meaning you have a claim on a part of the company’s assets and earnings. Stocks can offer high returns, but they also come with higher risk due to market volatility. If you’re comfortable with taking on more risk and have a longer time horizon, stocks can be a great starting point.

Bonds

Bonds are essentially loans you give to governments or corporations in exchange for periodic interest payments and the return of your principal at maturity. Bonds are generally considered safer than stocks, but they usually offer lower returns. They’re a good option if you’re looking for more stability in your portfolio.

Commodities

Commodities are physical assets like gold, oil, or agricultural products. Investing in commodities can be risky due to price fluctuations influenced by global events, but they can also provide a hedge against inflation. Commodities are typically recommended for more experienced investors.

Funds and ETFs

Mutual funds and ETFs (Exchange-Traded Funds) pool money from many investors to buy a diversified portfolio of stocks, bonds, or other assets. They are ideal for beginners because they offer instant diversification, spreading risk across many different investments. ETFs are particularly appealing because they combine the diversification of mutual funds with the flexibility of stocks, as they can be traded throughout the day.

Where to Start?

If you’re just starting, consider investing in a diversified ETF or mutual fund that aligns with your risk tolerance and investment goals. These options provide exposure to a broad range of assets with lower risk compared to individual stocks or commodities. As you become more comfortable and knowledgeable, you can gradually explore other investment options like individual stocks or bonds.

In conclusion, the best place to start investing depends on your risk tolerance, financial goals, and how much time you’re willing to spend managing your investments. Begin with low-cost, diversified options like ETFs or mutual funds, and then explore other asset classes as you gain confidence and experience.