Beginner Investors Should Start By Buying SPY Or VTI

For most people exploring the stock market for the first time, it is probably best that they steer clear of individual stocks. It takes time and effort to pick the companies that you think will do well in future years. In addition to that, it takes more time to monitor how your stock picks are doing. You will need to periodically evaluate whether things have gotten worse or better for the companies you choose and figure out whether you should continue to hold or perhaps sell.

In other words, learning how to successfully invest your money in the stock market by buying and selling individual stocks takes commitment and is something that is learned over years, not weeks or months.

Is There A Better Way?

I suggest a better, safer, and easier way for beginners to get started: just invest in the whole market which you can do by buying either the SPY or VTI exchange traded funds (ETF). 

ETF's are traded just like individual stocks: you can buy or sell any amount of shares at any time the market is open. They cost the same to trade as a stock (there are no hidden fees like mutual funds) and give you exposure to many stocks all under one ticker symbol.

1) SPY closely tracks the S&P 500 index which is many/most of the big companies in the United States. In other words, when the market goes down so does SPY. And similarly, when the market goes up, so does SPY.

2) VTI is another ETF that closely mirrors the market. It trades just like a stock and is super easy to buy and sell.

ETF's Are Best For Beginners

These are just a couple of the ETF's you can find that mirror the market or mirror part of the market. ETF's have become so popular that there are many to choose from and you can find a lot more with just a little research. But the important thing to understand is that you get exposure to the stock market without having to fret over what individual stocks to buy. You also get instant diversity that you don't get when you buy only individual stocks.

Beginners have a lot to learn when entering the world of stocks and can often get intimidated. This leads to many potential investors quitting before they ever get started. By buying a market tracking ETF, you get a simple and trustworthy way to put your money to work in the stock market without getting sidetracked and overwhelmed. Oh, by the way, Warren Buffett (legendary investor) also recommends ETF's over individual stocks for most investors.

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