8 Basics That Beginning Investors Must Know

2. Don’t put it all in stocks

Shopping cart with boxes labelled with financial products.
William Potter / Shutterstock.com

When markets are hot and your savings are growing nicely, there’s a risk — especially for beginning investors — of becoming overconfident. When returns are great, it’s tempting to pour all of your savings into stocks.

Don’t do it. It’s safer to spread risk among different types of investments. When one type of investment sinks, other types may rise, giving your portfolio a way to balance gains and losses.

How much of your savings should be invested in stocks? There are many approaches. Money Talks News founder Stacy Johnson suggests you subtract your age from 100, and put the difference as a percentage of your savings into stocks. For example, keep the following percentages of savings in stocks:

  • 60 percent if you are 40
  • 50 percent if you are 50
  • 40 percent if you are 60

What should you do with the rest of your money? Again, opinions vary. Stacy suggests dividing the rest of your savings in half, investing one half in a low-cost intermediate bond fund and the other half in a high-yield savings account that is FDIC-insured. You can find the best rates by visiting our Solutions Center.

10 Ways Anyone Can Earn More Income
10 Ways Anyone Can Earn More Income

Looking for additional cash? Here are a bunch of options that are accessible to anyone with internet access.

Marooned at Home? Earn Some Cash Playing on Your Computer
Marooned at Home? Earn Some Cash Playing on Your Computer

Earn cash by reading emails, taking surveys, playing games, shopping and signing up for offers through this website.

20 Surprising Things You Can Sell for Extra Money
20 Surprising Things You Can Sell for Extra Money

From your closet to the beach, the trash you find may be someone else’s treasure.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.