If you don’t want to read the rest of the posts on this website then make sure you read this one. For any beginner investing in the stock market, this might be most important post I’ve written especially for you stock market beginners out there. So let me set the scene. You’ve got a bit of cash, might be savings, might an inheritance and you want to get into the stock market and you’re trying to find out the best shares to buy. Where should you start? My advice from my own experiences is certainly with an index tracking mutual fund. I’ve posted a bit about this in the past but I really want to hammer this point home. An index tracker is the safest way you can invest in the stock market. If you set up a monthly amount say even as little as $50, it will build up in time and you’ll have a nice little nest egg when the time comes to cash in your chips.

I’m not saying this is the only way to invest. I’d recommend starting with this and leaving it running in the background. If you get to the stage where you have $50 a month to spare for an index tracker and you still have a bit of spare cash then invest that in the stock market looking for undervalued stocks. You can be a little riskier because you know you have this solid platform from which to build on. The sooner you start paying into an index tracker the better. Sure I know it’s not that exciting. If you’re looking for the investing buzz you won’t get it from paying into this type of fund. That’s not what it’s all about though, surely you’re in this to make some cold hard cash. There’s no reason why you can’t do this and minimize your risk at the same time.

I didn’t do this when I started out and made a few bad investing decisions. But then for those of you out there who trade shares I’m sure you’ve experienced something similar. I’ve had to build my portfolio up several times because of bad choices and the market crashing. If I had the index tracker to fall back on my losses wouldn’t have been so bad. So take my advice, security comes first. Then you can go into the stock market and take a few risks. Have a look at the morning star website which will give you a breakdown of how each of the funds perform. You’re specifically looking for all market index trackers which essentially means you’ll own the whole market. So if the price goes up the value of your holdings go up. If the price comes down it just means you’ll be able to get more for your money. You’re spending $50 a month regardless of what the price is so it’s a win win situation. There are lots of companies out there who offer this type of fund. Personally I’ve always been with Fidelity as I love the online options they give you. It’s great logging into my account once in a while to see how much my holdings have grown. It simply builds up in the background with me having to get involved at any point.