Finding the right investment can be tricky, especially since there are many different ways to invest in the stock market, and it’s very easy to get caught up in some investment strategy that proves to not work at all. So today I will go over the 5 best ways to invest in the stock market for an average investor.

5) Bonds…

To start the article off we have Bonds, probably one of the safest options out there, but also profitable over time.

These types of investments are for people who simply want to put their money somewhere safe where it can compound

Now, what is bonds and securities?

A bond is a debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time.

When you buy a bond, you are lending to the issuer, which may be a government, municipality, or corporation. In return, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal, also known as face value or par value of the bond, when it “matures,” or comes due after a set period of time. Bonds can provide a means of preserving capital and earning a predictable return. Bond investments provide steady streams of income from interest payments prior to maturity.

The interest from municipal bonds generally is exempt from federal income tax and also may be exempt from state and local taxes for residents in the states where the bond is issued.

There are many types of bonds, like treasury bonds, treasury securities, mortage backed securities, long term bonds, short term bonds, and so on.

But before you go invest in bonds, please do your research or talk to your financial adviser and find the best bonds to invest in for you.

Even though bonds are great investments, they can sometimes be to secure. And if you are looking to get a greater return than there are better options, but if you are looking at retirement or want somewhere to put your money where it can be safe and grow, than bonds and securities are great. But either way bonds and securities are investments everyone should have in their portfolio, for the more return hungry investors, you should look at this as a safety net for whenever there comes a market crash or recession.

4) Dividend investing.

If you have been inside of the investing space then you have probably heard about dividend investing, and all the benefits, but there are some misconceptions when people bring up dividend investing, especially in stocks, which is that people assume the will make lots of passive income no matter what dividend company the invest in, this is not essentially true. Even though you get dividend payments from a company, the company stock could easily said be shit, and not worth investing in because you will eventually lose money because the company stock will go down. So, before I get into dividend investing, I just want to say this, which I probably have said a lot of times before which is DO YOUR RESEARCH BEFORE INVESTING…

Now, what is dividend investing

Dividend investing is a method of buying stocks that pay dividends, in order to receive a regular income stream from your investments. This income is in addition to any growth in your portfolio as its stocks or other holdings gain value.

But nonetheless you should go for companies that are solid, like Caterpillar, PepsiCo, JPMorgan and so on… As I said earlier, it’s pointless to invest in a company stock that pays dividend, if the company stock itself is shit.

Essential knowledge

Dividend investing is great because it pays a regular dividend to stockholders. So easy said, you will get paid for owning a company because you own stocks of the company. And what makes this even better is if the company you invest in is a solid company which rarely fluctuates in share price, and if the company grows over time. Some examples of companies like this, is Coca Cola, McDonalds, Broadcom and so on.

I think dividend investing is great for people who love investing and doing company research, and people who want to earn money/dividend while investing for a good return.

The reason I put long term single stock investments over Bonds… is because, 1 they tend to give a much higher return at a much higher rate, and because for those people who love investing than it will be exiting even fun evaluating and watching a company, the news etc. Moreover, it will be fun to buy in for the long term, but of course if you are not interested in investing, and just want to put your money somewhere it can compound than Bond and securities is probably a better option.

3) Value and growth investing in singular stocks

This one may be my personal favorite on this list. This was the first real investing strategy I implemented into my portfolio, and it has not disappointed me yet.

But what is value and growth investing when it comes to singular stocks?

Value investing is the art of buying stocks which trade at a significant discount to their intrinsic value. Value investors achieve this by looking for companies on cheap valuation metrics, typically low multiples of their profits or assets, for reasons which are not justified over the longer term.

Growth investing is a stock-buying strategy that looks for companies that are expected to grow at an above-average rate compared to their industry or the broader market. Growth investors tend to favor smaller, younger companies poised to expand and increase profitability potential in the future. But it also works well with big companies who still have a lot of potential to grow.

Now, the main difference between growth and value stocks is that value stocks are company’s investors think are undervalued by the market, and growth stocks are companies that investors think will deliver better-than-average returns.

But the best strategy to do here is to combine these to when investing, for the best return possible. And by combining growth and value, you will tend to have a portfolio made up of a lot more stable stocks that still are expected to grow.

2) Index Funds, Compound investing.

Obviously Investing in index funds is one of the best ways to invest in the stock market, and when you invest in low-cost index funds using one of the most powerful investment strategies that exists (Compound investing) then your portfolio will almost be invincible, based on which markets/Funds you invest in obviously…

Now, what is an index fund.

Index funds are investment funds that follow a benchmark index, such as the S&P 500 or the Nasdaq 100. When you put money in an index fund, that cash is then used to invest in all the companies that make up the particular index, which gives you a more diverse portfolio than if you were buying individual stocks.

Easy said, investing in an index fund is basically buying a basket of stocks from one market, an example may be an index fund that tracks the S&P500.

Now, the index funds I would recommend, I have listed below. These index funds are covering every major market that are the most important for investors when it comes to index funds…

US total stock index, Or Top 500 US (S&P-500)
Developed (foreign) Markets Index
US REIT Index (Real estate)
Long-Term US Treasuries Index
US TIPS Index (Treasury inflation-protected)
Emerging Markets Stock Index

Just to let you know, the reason I have index funds as the second best is because, with index funds you get a good diversification over companies and markets. And you usually don’t have to have a great deal of capital to get started investing. Moreover, when you start investing you could just set up a recurring investment plan with your broker, and then just sit back and watch your money compound over the years.

1) A Combination of them all

This one was maybe a bit controversial, you were probably expecting some magical investment strategy, but hate to break It to you but that don’t exist. Anyway, a combination of all the investment strategies listed in this article will make a bullet proof portfolio. And the best about this is that you can adjust your asset allocation based on how young/old you are, what you expect from your investments and so on. Basically, combining them all will make a sort of all-weather portfolio designed for you based on your intentions. The only thing that’s missing is probably commodities, so commodities are a strong number 6, but didn’t quite make this list. (I will go through commodity investing in one of my future articles).

Every investment I have mentioned today are great investments, and you should combine them all in a mix the favors you and your lifestyle. For example, if your young and want a greater return then you should have more capital invested in stocks and companies, and on the other hand if you are old and facing retirement, then you should probably have more capital invested in Bonds, Securities and treasuries.

Anyhow, the rules you should follow regardless of which option of long-term investing you chose is 1) Don’t sell, 2) Don’t sell, 3) Don’t sell. You only sell a long-term investment if you need the money, if you can find a much better investment elsewhere or if the company or fund goes to shit (Bankrupt).

The idea of long-term investing is for you to eventually be able to quit your job and live of the yearly returns of your investments, so you can spend your time doing what you want. Because time is your number 1 asset.

The objective of the game is not to win, but to stay in it as long as possible…

Now, if you are looking for a book to educate yourself on Investing than I would suggest, The Intelligent Investor by Benjamin Graham. The reason I would suggest this book is because the book offers sound advice on investing from a trustworthy source – Benjamin Graham, an experienced investor who flourished after the financial crash of 1929. Having learned from his own mistakes, the author lays out exactly what it takes to become a successful investor in any environment.

You can get “The intelligent Investor” by clicking on this link…

Thanks for reading…