Starter Investments: A Complete Guide for Beginners
Intro
Entering the financial market can be a daunting task, especially for those just beginning their investment journey. Many people often find themselves lost in a sea of jargon and uncertainty, unsure of how to take the first step. However, understanding the foundational concepts of investing is crucial for building a successful portfolio. In this comprehensive guide, we will break down essential investment terms, explore various asset classes, and provide strategies tailored for newcomers to help you navigate the financial waters with confidence.
By becoming familiar with fundamental concepts and terms, you're setting yourself up for success. The language of finance can feel like a separate dialect at first, but by the end, we aim to equip you with enough knowledge to converse fluently in the world of investing.
Essential Investment Terms
Overview of Common Investment Terminology
Understanding investment terminology is vital to making informed decisions. Many beginners overlook this step, but imagine trying to read a map—without knowing the terrain features, you're bound to get lost. Common terms to familiarize yourself with include:
- Asset: Anything of value that can be owned and used to generate income.
- Equity: This refers to ownership. If you own stock in a company, you hold equity in that business.
- Returns: The money made or lost on an investment over a period.
- Portfolio: A collection of investments owned by an individual or an institution.
- Diversification: Spread risk by investing in various assets; don't put all your eggs in one basket.
Importance of Understanding These Terms
Grasping these terms helps demystify the investment process. It’s a bit like learning to fish; once you understand how your rod works and what bait to use, you're much more likely to catch something substantial. Moreover, having a solid vocabulary allows you to communicate effectively with financial advisors and other investors.
Even basic misunderstandings about key terms can lead to poor investment choices that may have otherwise been avoided. As they say in the finance world, knowledge is power. If you're going to dip a toe into the stock market or a mutual fund, knowing the lingo means you're not stepping in blind.
Detailed Glossary
For even clearer understanding, a detailed glossary of essential financial terms can guide your learning:
- Bull Market: A period during which securities prices rise, encouraging buying.
- Bear Market: The opposite of a bull market; a period where prices fall and encourage selling.
- Mutual Fund: An investment vehicle made up of a pool of money collected from many investors to invest in securities.
- Index Fund: A type of mutual fund designed to replicate the performance of a specific market index.
- Risk Tolerance: The degree of variability in investment returns that an individual is willing to withstand.
Understanding these terms can significantly enhance your financial literacy and empower you to make informed choices as you begin investing. It's the small things that often lead to big changes, and in the world of finance, having the right vocabulary is just one of those small changes that can lead to substantial success.
"Financial literacy is not an option; it is a necessity in today’s economy."
As we proceed, we'll explore different asset classes and strategies tailored for novices. This journey will arm you with the knowledge and confidence needed to venture into the financial market, ensuring that your initial steps are both informed and strategic.
Understanding Investments
Investing is a cornerstone of financial growth and security. The world of investments can seem overwhelming at first, especially for those looking to dip their toes into financial waters for the first time. However, grasping the fundamental concepts of investing is essential. It allows individuals to not only preserve their wealth but to actively grow it over time. As we delve into the nuances of investments, it's crucial to recognize that every investment is essentially a vehicle for generating returns, but the road can differ depending on the type of asset involved.
Understanding investments will equip you with the requisite knowledge to make informed decisions that align with your financial aspirations. Moreover, it frames the context for various investment paths available while shedding light on potential pitfalls one might encounter along the way. Knowledge is power, especially in the realm of finance, where missteps can lead to adverse outcomes.
What Constitutes an Investment?
At its core, an investment can be defined as the allocation of resources, usually money, with the expectation of generating an income or profit. This can encompass a wide array of assets, such as:
- Stocks: Buying shares in a company, which gives you a stake in its future profitability.
- Bonds: Lending money to an entity in return for periodic interest payments and the return of principal at maturity.
- Real Estate: Purchasing property to earn rental income and profit from appreciation in value.
- Commodities: Investing in physical goods like gold, oil, or agricultural products.
While diverse in nature, all investments share the common goal of growing wealth, albeit under different risk-return profiles. When assessing whether something is an investment, consider its potential to generate income or appreciate in value over time. The fundamental element is the prospect of return, often balanced against the risk of loss.
Importance of Investment for Wealth Accumulation
The significance of investing cannot be overstated, especially for individuals eager to build their financial future. Investing acts as a hedge against inflation; as prices rise, the value of cash can erode, but well-chosen investments typically outpace inflation over the long term. Here are a few reasons why investing is pivotal for wealth accumulation:
- Compounding Growth: The earlier one starts to invest, the better. Compounding can drastically increase returns over time, provided investments generate earnings, which are then reinvested. Even a modest return can snowball into substantial wealth given enough time.
- Creating Passive Income: Through dividends, interest payments, or rental yields, investments can provide a steady stream of passive income. This enables one to attain financial independence, allowing them to focus on what truly matters.
- Portfolio Diversification: By spreading investments across various asset classes, investors can mitigate risks associated with market volatility. This diversification strategy not only protects one's wealth but also maximizes the potential for returns across numerous sectors of the economy.
- Retirement Security: As individuals work towards retirement, investing becomes vital in creating a financial cushion. Relying solely on traditional savings or pensions is often insufficient to maintain one's lifestyle in retirement years. Investments serve as a complementary source of income during one's golden days.
"Investing is not about timing the market; it’s about time in the market."
In essence, investing is not merely an option; it’s a necessity for anyone looking to secure a prosperous future. By understanding the fundamentals, individuals can embark on their investment journey with confidence and clarity.
Types of Starter Investments
Understanding different types of starter investments is crucial for anyone venturing into the financial markets. With a variety of options available, beginners need to know which methods align with their goals and risk tolerances. Each investment type carries its own characteristics, benefits, and potential downsides. Grasping these elements empowers investors to make strategic decisions and build a solid foundation for their financial future.
Stocks as an Entry Point
Investing in stocks is often viewed as the gateway for many first-time investors. Stocks represent ownership in a company. When you purchase shares, you’re essentially buying a small piece of that firm. This ownership can yield significant returns, especially if the company thrives and its stocks appreciate over time.
However, entering the stock market isn’t without its risks. Prices can be volatile, driven by market trends and company performance. It's important for beginners to conduct thorough research on companies before diving in. The goal is to find stocks that are undervalued or poised for growth. Analyzing market reports and financial statements can aid in making informed decisions.
Consider some essential points:
- Long-Term Growth: While stock prices can fluctuate, over the long term, equities have historically outperformed many other asset classes.
- Dividends: Some stocks pay dividends, which provide a steady income stream.
- Diversification: Investing in a variety of stocks can help mitigate risks associated with individual companies.
Bonds: A Safer Alternative
Bonds offer a contrasting investment option, often seen as a stabilizer in a portfolio. When you buy a bond, you're essentially lending money to an entity, such as a corporation or government, in exchange for periodic interest payments and the return of the bond's face value at maturity. This characteristic makes bonds inherently less risky than stocks.
Here's what to keep in mind if you're considering bonds:
- Fixed Income: Most bonds provide predictable income, which can be appealing for conservative investors.
- Lower Risk: Government bonds, for instance, are backed by the full faith and credit of the issuing government, making them relatively safer.
- Diversification: Bonds can balance the volatility of stocks in an investment portfolio, offering a cushion during market downturns.
Mutual Funds and ETFs: Diversification Without Complexity
For those who prefer a more hands-off approach, mutual funds and exchange-traded funds (ETFs) are excellent choices. Both investment vehicles pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. This diversification reduces risk by spreading investments across various assets.
Key aspects to understand:
- Ease of Investment: Mutual funds and ETFs are quite user-friendly for beginners. With just one transaction, investors can gain exposure to a broad array of securities.
- Professional Management: Many mutual funds are managed by professionals, which can relieve investors of the burden of constant monitoring.
- Liquidity: ETFs can be traded like stocks on an exchange, allowing more flexibility in buying and selling.
In summary, selecting the right type of starter investment can dramatically influence your investing journey. Stocks potentially offer high returns, while bonds provide security and consistent income. On the other hand, mutual funds and ETFs present an easy path to diversification. Each choice has its place, depending on your individual financial goals and risk tolerance.
"Understanding your options is the first step to confident investing. Don't rush; take your time to learn."
By weighing these investment types carefully, newcomers can adopt a strategic approach and position themselves for success in the financial market.
Evaluating Risk and Return
When stepping into the world of investments, understanding risk and return becomes as essential as your very first pair of running shoes—without proper sizing and fit, you might end up taking a misstep. Evaluating risk involves not just realizing the potential for loss but also recognizing the unpredictable nature of markets. Return, on the other hand, measures the gains you can expect as a reward for assuming some risk. Both elements are intertwined; they carry weight in guiding your investment decisions.
A novice investor should grasp that higher risk can lead to higher returns. However, this does not always ring true in the real world. Sometimes, it can feel like chasing a mirage. Therefore, striking a balance is key. By assessing these elements properly, you can navigate through the financial landscape with better confidence.
"Investing without understanding risk is like driving blindfolded; you may get there, but the odds aren't in your favor."
Risk Tolerance: Assessing Your Comfort Level
Before you dive into investments, you must understand your risk tolerance. This concept varies widely from person to person, influenced by factors like age, income, and personal disposition toward risk. Picture your cousin, who feels at ease paragliding off cliffs; they might have a higher risk tolerance than you, who feels jittery just riding a roller coaster.
It's wise to evaluate how much fluctuation in your investment's value makes you uneasy. Think of a bumpy car ride—some find it exhilarating while others grip their seats in terror. To assess your risk tolerance:
- Reflect on Financial Goals: What are you aiming to achieve? Short-term needs like buying a car may ask for a cautious approach.
- Consider Time Horizon: Are you investing for retirement in 30 years or saving for a house within the next 5? Longer horizons usually allow for more risk.
- Examine Past Experiences: Have your previous investment experiences caused you sleepless nights? This history shapes your future decisions.
Coming to grips with your comfort level allows you to align your investment strategy with what feels right. It’s your compass, guiding you to appropriate assets that won’t have you second-guessing every market dip.
Analyzing Potential Returns
Now that you’ve pinpointed your risk tolerance, it’s time to roll up your sleeves and analyze potential returns. Understanding what kinds of returns you can expect from various investments can help you make well-informed decisions.
When getting into investments, familiarize yourself with concepts like:
- Historical Averages: Looking at past performances of assets can give you a ballpark figure. Stocks, long-term, offer about 7-10% annual return on average. But remember, averages hide a lot of noise.
- Investment Duration: The longer you hold onto an investment, chances are, the better your returns. Compounding—where your earnings generate their own earnings—can be a game changer.
- Types of Investments: Different asset classes—stocks, bonds, or real estate—carry different levels of potential returns. Stocks are typically more lucrative over long spans, while bonds provide more stability.
To break it down clearly:
- Consider that in volatile markets, short-term returns can vary wildly, often making stock investments a high-stakes gamble in the short run.
- Real estate might not yield quick returns but has proven to build wealth over time.
In summation, assessing risk and potential returns involves a nuanced understanding that requires you to combine emotional readiness with analytical thought. You don’t have to juggle these considerations perfectly from the get-go, but you should aim to cultivate an approach that feels both comfortable and stimulating.
Basic Investment Strategies
When it comes to stepping into the world of investment, grasping the underlying strategies is fundamental. Basic investment strategies serve as the building blocks for both new investors and those looking to brush up on their financial game. They provide a framework that helps individuals navigate the often turbulent waters of the financial markets. Understanding these strategies gives investors a clearer path toward not just preserving their capital, but also growing it over time. With a sprinkle of knowledge, these tactics can turn an uncertain novice into a savvy investor.
Dollar-Cost Averaging: A Steady Approach
Dollar-Cost Averaging (DCA) is a strategy where an investor divides up the total amount to be invested across periodic purchases of a target asset. This approach reduces the impact of volatility, as you'll be buying more shares when prices are low and fewer shares when prices are high. For beginners, this strategy feels less overwhelming; instead of trying to time the market, which can often lead to costly errors, you simply invest a set amount regularly.
For example, let's say you decide to invest $100 every month into a stock. If the price is $10 this month, you’ll get 10 shares. But if the price rises to $20 next month, you’ll only buy 5 shares. Over time, this averaging out can lead to a lower average cost per share in your investment. The magic here is in consistency and discipline, allowing you to steadily build your investment portfolio, without succumbing to the highs and lows of market fluctuations.
"Slow and steady wins the race" is the essence of DCA. It embodies the principle that time in the market trumps timing the market.
Value Investing: Finding Hidden Gems
Value investing is all about identifying undervalued stocks that are likely to rise in price over time. This strategy requires patience, as it often involves looking at the fundamentals of a business rather than the hype that often swirls around certain stocks. Investors who adopt this strategy need a keen eye for detail. They meticulously analyze aspects like earnings, dividends, and revenue growth, then compare these metrics to the company’s stock price.
Take a classic example: a company might currently trade at $50, but if its book value is $70, it signals undervaluation. The goal here is to purchase such stocks when they’re trading below their intrinsic value, banking on the eventual market correction that will align the price closer to that true worth. This type of investing is often championed by experts like Warren Buffett, who famously said, "Price is what you pay. Value is what you get."
In a world full of fast-paced trading and speculative bets, value investing is a foot on the brakes approach. It’s thorough, requiring both research and an understanding that not all stock movements are logical. Investors fortify their portfolios with these "hidden gems," ultimately leading them toward increased long-term profitability.
Setting Financial Goals
In the realm of investing, navigating the myriad options without a clear destination is akin to sailing without a compass. Setting financial goals serves as the backbone of any investment strategy, shaping decisions and steering efforts towards meaningful outcomes. The process involves defining what you aim to achieve—whether it’s saving for a home, retirement, or funding education. This clarity can not only increase focus but also boost your motivation. With goals in place, every dollar you invest transforms from a mere figure on a balance sheet to a stepping stone toward your aspirations.
When embarking on this journey, consider the timeline for achieving these objectives. Short-term goals might include saving up for a vacation, while longer-term goals could pertain to retirement or wealth accumulation over several decades. Importantly, recognizing the distinction between these types of objectives can help in aligning investment choices appropriately and efficiently. In essence, setting financial goals is about understanding your personal circumstances and the investments that can best serve your needs.
"A goal without a plan is just a wish." It’s vital to transform aspirations into actionable steps.
Short-Term vs. Long-Term Objectives
When defining your financial goals, differentiating between short-term and long-term objectives is crucial. Short-term goals generally pertain to needs that are to be fulfilled within a few months to a couple of years. These might include saving for a new gadget, emergency fund, or perhaps a quick getaway. Investments for such goals usually favor liquidity; thus, keeping funds in easily accessible accounts or considering low-risk options, like savings accounts or short-term bonds, can be beneficial.
On the flip side, long-term objectives span a longer horizon and commonly involve serious financial commitments. Think retirement savings or a child's education. For these goals, embracing a growth-oriented strategy may be the key. Investing in stocks or diversified index funds can pave the way for substantial capital appreciation over time. Comprehending the timeline of your aspirations can not only shape your investment strategy but also help manage your expectations and risk tolerance effectively.
Aligning Investments with Personal Goals
Once you've delineated your short-term and long-term objectives, the next step is to align your investments accordingly. This alignment ensures that each investment you make is working toward your intended financial outcome.
For instance, if you’re aiming to buy a new car in three years, consider allocating funds to a more conservative investment vehicle, prioritizing safety over growth. On the contrary, if you envision building a robust retirement portfolio in twenty years, historically higher-yielding assets like stocks or equity mutual funds may suit you better, despite the accompanying volatility.
To facilitate this alignment:
- Evaluate your risk tolerance. Recognize how much uncertainty you can handle without succumbing to stress.
- Diversify your assets. Spreading investments across various avenues can mitigate potential losses.
- Review and adjust periodically. Life is dynamic. Regularly assess whether your investment approach still aligns with your goals and financial status.
Ultimately, setting financial goals isn't just about the numbers; it’s about crafting a roadmap for your life's aspirations and ensuring each investment resonates with what you truly value.
Navigating Investment Platforms
Understanding how to navigate investment platforms is essential for new investors. With an abundance of options available today, choosing the right platform can feel like finding a needle in a haystack. There’s a lot at stake. From managing funds effectively to ensuring that you have the best tools at your fingertips, the right platform can significantly influence your investment journey. The platforms you choose can affect everything from transaction costs to user experience, potentially impacting your returns.
One of the first considerations is understanding the features that different platforms offer. Some platforms provide basic trading functionalities, while others offer advanced tools for analysis and planning. Moreover, fees are a critical factor—some brokerages might entice you with low trade costs but hide fees in account maintenance or withdrawal processes. It’s wise to dig deep and not just skim the surface.
Choosing the Right Brokerage
When it comes to selecting a brokerage, several factors come into play. Do you need a platform geared toward self-directed trading or one that offers robust support? Here are some aspects worth considering:
- Fees and Commissions: These can vary widely. Keep an eye out for hidden fees like account inactivity charges or costly withdrawal fees.
- User Experience: A user-friendly interface makes a world of difference for beginners. Look for platforms that offer intuitive navigation and educational resources.
- Research and Tools: Quality brokerages provide insightful research and analytical tools. This can help in making informed decisions.
- Customer Support: Reliable customer service can save heartaches. Assess whether the brokerage provides support through multiple channels like chat, phone, and email.
A few reputable brokerage firms include Charles Schwab, TD Ameritrade, and E*TRADE. They’re well-regarded for their customer service and range of tools, making them excellent choices for beginners.
Utilizing Robo-Advisors for Guidance
Robo-advisors have emerged as a game changer, offering a simplified way for new investors to manage their portfolios. They leverage algorithms to build and manage investment plans tailored to individual investors, often at a fraction of the cost of traditional advisors.
Here’s what makes robo-advisors appealing:
- Affordability: Typically, they charge lower fees compared to traditional advisors, which means more of your money stays invested.
- Simplicity: The onboarding process is usually straightforward. After answering a few questions about your risk tolerance and goals, the robo-advisor curates a portfolio for you.
- Automatic Rebalancing: Robo-advisors automatically adjust your portfolio as necessary. This means you don’t have to keep an eagle eye on your investments.
- Tax Optimization: Many of these platforms offer tax-loss harvesting, a strategy that can potentially boost your after-tax returns.
As with any investment approach, it’s essential to do your homework before choosing a robo-advisor. Betterment, Wealthfront, and M1 Finance are some examples that have gained traction for their user-friendly interfaces and competitive fees.
To wrap it up, navigating investment platforms is foundational for anyone looking to step into the financial arena. Each factor you consider, be it the choice of brokerage or the potential use of robo-advisors, layers into a broader strategy that aligns with your financial objectives.
Building a Diversified Portfolio
When it comes to investing, the old saying, "Don't put all your eggs in one basket," rings particularly true. Building a diversified portfolio can be one of the smartest moves you make as a new investor. The idea is simple: by spreading your investments across various asset classes, you reduce the risk associated with a single investment tanking.
Understanding Asset Allocation
Asset allocation is the bedrock of any robust investment portfolio. This practice involves strategically dividing your investment portfolio among different asset categories, such as stocks, bonds, real estate, and cash. Each asset class comes with its own set of risks and returns. For instance, while stocks provide the opportunity for high returns, they can be quite volatile. In contrast, bonds tend to be more stable but usually offer lower returns.
To illustrate, consider an investor who allocates 60% of their portfolio to stocks, 30% to bonds, and 10% to cash. In a strong market, the stocks may flourish, boosting the overall portfolio performance. However, if the market takes a nosedive, the bonds can help cushion the fall since they typically behave differently than stocks in bearish conditions.
Effective asset allocation offers two main benefits:
- Risk Management: It cushions against market fluctuations.
- Return Potential: By including a mix of high-growth and stable assets, you position yourself for better overall returns.
Rebalancing Your Portfolio
Once your portfolio is established, the work doesn’t stop there. Rebalancing is an essential process that involves periodically reviewing your portfolio and making adjustments to ensure it stays within your desired asset allocation. Over time, market movements can shift your initial allocation percentages, which means you could inadvertently find yourself over-exposed to certain asset classes.
For example, say your target allocation was 70% stocks and 30% bonds. After a bull market, the value of your stocks skyrockets to 80%, leaving you over-exposed to equity risk. If you don’t rebalance, you might later face increased risk if the stock market enters a downturn.
The common methods for rebalancing include:
- Time-based Rebalancing: Set a specific timeframe (e.g., quarterly, semi-annually) to review your investments.
- Threshold-based Rebalancing: Adjust your portfolio whenever a specific asset class deviates from its target allocation by a predetermined percentage.
Rebalancing helps maintain your investment strategy and keeps risk in check, ensuring that your portfolio continues to reflect your investment goals.
In essence, building a diversified portfolio is about understanding how various investments interact and impact one another. It requires ongoing attention and adjustments to align with both market changes and your financial aspirations.
Educating Yourself About Financial Markets
Understanding financial markets is crucial for anyone dabbling in the realm of investing. The importance of education in this sector cannot be overstated. Knowledge serves as a cornerstone for making informed decisions, honing one's strategy, and ultimately achieving financial goals. The more you educate yourself, the less likely you are to fall prey to common pitfalls that can derail novice investors.
Educating oneself about financial markets provides several benefits. Firstly, it lays a foundational understanding of how various financial instruments operate. Different asset classes, from stocks to bonds, have unique characteristics that influence their behavior in the market. Grasping these nuances enables investors to navigate their options with confidence. Secondly, a well-informed investor can adapt to changing market conditions. Economic news, geopolitical events, and other factors can sway market performance. Staying updated can provide insights into necessary adjustments to one's investment strategy.
Another consideration is the ability to critically analyze investments. With the right educational tools, investors can delve deeper into financial news and pick apart what's relevant. This level of insight allows for strategic decision-making rather than relying on hearsay or market sentiment alone.
"An investment in knowledge pays the best interest."
— Benjamin Franklin
Moreover, a continuous commitment to learning builds resilience. Financial markets can be unpredictable. Understanding the principles of market fluctuations, investment cycles, and the role of economic indicators can equip an investor to better handle uncertainty.
Additionally, by situating oneself within a well-educated framework, it becomes easier to engage with professionals—financial advisors, analysts, or even seasoned investors. A contextually rich knowledge base facilitates more meaningful conversations, allowing for the exchange of insights that can be beneficial for individual growth.
Reading Financial News and Analysis
Keeping abreast of financial news and analysis is paramount. This encompasses a variety of sources, from reputable newspapers to specialized investment blogs and dedicated financial news networks. The key here is to discern which sources provide reliable, actionable information, which can guide investment choices. Consuming a diet of quality news helps in identifying trends and potential opportunities. This intelligence is akin to having a compass; it gives direction and helps navigate through the economic landscape.
Moreover, analysis goes beyond mere headlines. It's vital to understand what implications arise from specific news events. For instance, a rise in interest rates can have differing repercussions on stocks and bonds. By digesting analysis from multiple viewpoints, investors can develop a well-rounded perspective.
Engaging with Investment Communities
An often undervalued aspect of learning about financial markets is engaging with investment communities. Participating in discussion forums or social media groups can add immense value to your understanding. Platforms such as Reddit or specialized Facebook groups provide real-time discussions and a plethora of ideas that can broaden your horizons.
Networking is a significant benefit of engaging with these communities. Communicating with others in the field allows one to learn from their experiences—successes and failures alike. It serves as a reminder that investing is not only about individual choices but also about the shared knowledge of a broader community.
Additionally, these communities often discuss practical insights and share strategies that you may not find in textbooks or formal courses. This grassroots level of learning is vital in grasping the market’s ever-evolving landscape.
Common Pitfalls for Beginner Investors
Entering the world of investing can feel like jumping into the deep end of a pool without knowing how to swim. There are many pitfalls that novice investors often stumble into, which can derail their financial journeys even before they start. Understanding these common mistakes is crucial for laying a solid foundation for future growth and avoiding missteps that can lead to loss of money and confidence.
One significant aspect is emotional decision-making. When people first start investing, they can become easily swayed by their feelings rather than adhering to a well-thought-out strategy. This emotional roller coaster can lead to impulsive reactions during market volatility. For instance, when markets dip, panic might push an investor to sell their holdings at a loss, fearing further decline. On the flip side, during market booms, euphoria could tempt investors to chase high-flying stocks without proper analysis, ultimately leading to a crash in their portfolios when reality sets in. Staying level-headed can greatly influence the outcome of one’s investment journey.
Another prevalent issue is overtrading. The excitement of investing can trigger novice investors to trade more frequently than is wise. Overtrading often comes from a desire to chase profits or to react excessively to market events. The consequences can be severe, including hefty brokerage fees, increased tax liability, and the potential to incur significant losses if trades do not go as planned. Identifying signs of overtrading is essential. Typically, an investor might feel the need to constantly check their portfolio, making trades almost daily without considering whether they align with their long-term goals. This can lead to fatigue and misjudgment.
Common signs of overtrading include:
- Frequent buying and selling of assets
- High transaction costs impacting returns
- Increased anxiety or stress related to investing
