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Why should you start online investing? A beginner’s guide

date September 8, 2021 time 7 min read 204 views

Investing. It’s something that we should all be doing, but life gets in the way sometimes, and there’s always an excuse to push it off. However, it might be a lot easier than you think to get started today and build a valuable portfolio. Our short guide on online investing for beginners will show you why it pays to invest online and how you can get going.

Overview of online investing

Investing is a concept that has been around for hundreds of years, but with the emergence of the internet, you have more options than ever before. Even as a novice investor, you can build your own portfolio online with a bit of research.

There are many routes into online investing for beginners that suit your budgets and requirements – whatever they may be. It is time to smash the notion that investing is a game reserved only for the rich.

Why should you start online investing?

The appeal of online investing is its flexibility. You can get started with minimal investments and gradually build your portfolio over time, even if you are on a tight budget.

There's no better time to start building your savings with online investing
There’s no better time to start building your savings with online investing (Source: Pixabay)

For example, you could commit a small percentage of your monthly income – be it 1 percent or 5 percent – as a start. Apps like Acorns automatically invest your change from shopping, which can build into a significant amount over time. With MyConstant, you have to set up an account, set the term you want to invest, and let us do the work for you.

The idea is to follow an investment strategy that lets you compound your returns over several years. The more you invest, the greater your returns. This is one of the main reasons why you should start right away and develop your investment portfolio.

Want to learn more about online investing for beginners? Let’s get started.

Online investing for beginners – where to start

The key is to start by setting your budget and goals. What do you want to achieve, and how much can you commit per year/month/week? Here are some things to think about before you jump in.

Research different investment products

Given the wide variety of online investment products, it is always wise to do your research before choosing the right ones for you. Some companies hype up their projected returns and leave more realistic figures in the small print.

The days of needing a calculator and paperwork to invest are behind us
The days of needing a calculator and paperwork to invest are behind us (Source: Pixabay)

Additionally, some platforms have other conditions attached to their investments, such as:

  • High minimums: Certain platforms require high capital to begin investing with them, which may be beyond your budget as a novice investor.
  • Lengthy terms of investment: Some investment firms require you to invest for several years before you can touch your money again. While this can return strong returns, in the end, you need to consider whether you can afford not to have access to your cash for the time period.
  • Fees: Another one to look out for in the small print. While we are completely upfront about our fees, plenty of other platforms are not so transparent. Pay attention to the fee structure and try and work out how much it will cost you overall. If you don’t understand the structure, then investigate until you do. Here are some fees you should keep in mind:
  • Commissions
  • Custodian fees
  • Management fees
  • Matching fees

The individual fees are usually low – between 1% and 5% – but they can add up.

  • Risk: Here’s the big one. You will need to work out your risk tolerance before you get going. Some platforms pursue a high-risk/high-return model, which may be a bit too much for you to stomach as a beginner investor. While other options may offer you lower returns, the risk involved is also likely to be lower. 

When looking for online investing for beginners, the key is to align the investments with your goals and budget. There will be options suited for you but take the time to do your research. Once you’ve covered the basics, you can see what types of products you want to work with.

Types of online investments for beginners

Given recent market events, you might be wondering what the best online investing options are for beginners. 

As we’ve mentioned already, there are many online investments for beginners on the market. They cover all kinds of budgets and goals, so it is very likely that there is an investment made for you. If you can, it would be a good idea to pursue a diversified investment strategy that can help maximize your returns.

Online trading platforms

Online trading platforms have been among the more visible and popular forms of investments for investors worldwide. They take the role of brokers and make it easier for you to trade stocks, currencies, and commodities. 

With lower fees and more accessibility than the traditional model, this is a good place to find online investments for beginners and begin your investment journey.

To get started, we recommend you use some of the well-known and reputable platforms like eToro and Ally Invest. By going with these platforms, you can be assured that you are not getting ripped off or confused and potentially losing out. They also have relatively low minimums and low fees.

Mobile investment apps

When you start with online investments for beginners, mobile apps can be a convenient option. The right investment app can make it that much easier to achieve your financial goals

The rise of mobile investing has been fueled by the likes of Robinhood and MyConstant
The rise of mobile investing has been fueled by the likes of Robinhood and MyConstant (Source: Pixabay)

Robinhood is a market leader in mobile investment apps, and for good reason. The platform is easy to use and gives customers instant access to funds after closing positions. For new investors, it is a good option to get started with.

However, it has run into some issues with industry regulators. In June 2021, Robinhood had to pay out $70 million to settle claims relating to the misleading of customers, approving ineligible traders for risky investment strategies, and repeated outages that affected access to the platform.

As always, particularly with online investments, it pays to do the homework before you invest. Look out for the factors outlined in the previous section.

Cryptocurrency – Binance 

Unless you’ve been living under a rock for the past decade, you will have heard about bitcoin and other cryptocurrencies. You should be ready for a ride as far as investments go because it is a volatile market. Prices can crash as fast as they go up, so as an online investment for beginners, this is a riskier option.

Before you even dive into bitcoin, ethereum, or doge, you need to understand crypto and how it works. There are many factors to look out for, such as:

  • Market cap: This describes how much of the crypto has been mined. It is a good indicator of how dominant a particular crypto is in the market. Bitcoin, for example, has the highest market cap by far.
  • Usability: Each cryptocurrency will be designed for a purpose – to be used. However, some cryptos have a specific function, for instance, to support their host network. This does have an impact on its future value and demand.
  • Price history: If you look at the price of cryptocurrencies, they will invariably be volatile, but it can still guide you towards a buy or sell position.

The next question is where to buy cryptocurrencies. One of the most popular ways is through crypto exchanges, and there are hundreds of them on the market. The key is to go with a reputable platform like Binance.

Binance is a one-stop-shop for cryptocurrency and even has its own network coin (BNB). It is a relatively safe platform where you can buy, sell, and short crypto, as well as hold crypto in a Binance wallet.

If you would like to explore more, there is a platform that allows investors to get a crypto-backed loan against multi-coin collateral.

Peer to peer lending

One of the best online investing options for beginners is peer-to-peer (P2P) lending with MyConstant. Our platform offers a number of investment products that you can use to get started, earning up to 7% APR in interest. 

What sets us apart from other P2P lending platforms is that we use cryptocurrency as collateral for loans. This means we require no credit checks, and it’s an excellent way for borrowers to unlock the value of their crypto assets without having to sell them. It also removes the need for credit checks, adds flexibility for both borrowers and lenders, and transactions can be made within minutes.

With 30-day, 90-day, and 180-day investment terms on our Lend USD product, you can choose how long you want to stash your money away, earning between 6-7% APR. With our platform, all loans are over-collateralized, which means the borrower backs each loan with 150% of the loan amount in collateral to secure the loan. 

Therefore, if a borrower defaults, we instantly sell their collateral to repay your principal plus earned interest. And since launch, not a single investor has lost a cent, proving the efficacy of our collateralization model. 

If you are based outside the United States, you also have the option to use our riskier products – such as Short-Selling and Futures

It is important to note the last two products are riskier than our Lend USD package. You will need to have a higher tolerance for risk and be prepared to lose as well as profit. 

Investing online is easier than you think

The key lesson is that investing online is not an impossible puzzle for you to solve. There are plenty of products out there that make it easier to build your investment portfolio than ever before. And at times, it might feel like there is too much choice.

By doing your research and finding suitable options for your financial goals, you will be able to find the best online investing options for beginners. It is always a good idea to diversify and build a portfolio rather than putting all your eggs in one basket. 

MyConstant’s P2P lending platform could be an ideal component of your investment portfolio, providing you with steady returns on your terms.

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George Schooling

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Eric Smith

Very interesting read, I’m currently looking into how to maximize my return on my investments between my accounts and wallets, but it’s not easy to research or get a good well defined guide because everyone has different needs and account balances. But guides like this sure do give a clearer picture of how to manage one’s self.

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