Handling finances is one of those aspects of adult life that no one really formally teaches you about. It’s right up there with other adulting mysteries like filing your taxes and deciding what to eat for dinner. But nevertheless, it’s an important skill to have if you want to set yourself up for a good life. So, to help you get better at managing your finances, we’re going to deal with a pretty serious-sounding topic: investment. We know, we know, investing sounds like something only fancy Wall Street executives do in their high-end (pant) suits. But if you’re an adult with a source of income, there’s no reason why you shouldn’t invest. Moreover, if you’re at a stage where you want to find better ways of managing your personal finances, looking into investments is the way to go! So, here we go, let’s learn a little about investing!

Lessons in handling your finances: What are the basic types of investments?

If you’re new to the world of investing, everything probably feels overwhelming right now. And that’s okay. It will take a while before you can familiarize yourself with the different types of investment options available to you and if they’re a good fit or not. So, rather than throwing a bunch of jargon at you, we thought we’d make things a bit easier for you. Which is to say that today we’ll be looking at three basic types of investments that are best suited for beginners handling their finances. Maybe you’ve heard some of these before, maybe you haven’t. But by the end of this, you’ll definitely get a better understanding of the different options available to you and how each of these will help you in managing your personal finances! So, let’s start with the most basic one.

Related: Financial Planning Basics: The 6 Golden Rules To Save Money

The easiest way to start handling your finances: retirement account

You probably weren’t expecting 401(k) to show up on this list, but here we are. Investing through your employer is a great, low-risk way of handling your finances. For most employees, a retirement account is the first investment they make. Especially, if your employer matches a percentage of your contribution towards your fund. What’s more is that there isn’t generally, a minimum amount you need to contribute towards the fund. Pay whatever amount you’re comfortable with. Though it is recommended that you contribute at least enough to be able to claim the full employer match. So, if you’ve just started managing your personal finances, definitely look into retirement funds. If you already have one, great! If you don’t, reach out to HR to find out what your options are!

Roomi tip: If your employer doesn’t offer a retirement plan (or if you’re self-employed), don’t worry! You can open an IRA account on your own. Go here to learn more!

Fixed-Income Investments

As the name might suggest, this is one of the safest investments for beginners out there. A fixed-income investment is generally known as a bond. These bonds allow the investor to get a fixed-rate payment over a specific period of time. Bonds are offered by both companies and governments and is one of the largest markets out there. You can actually look at bonds as a loan that you are giving out to the government or a company. And you get a specific amount of interest back, called the coupon rate, in exchange for this loan. This interest is generally paid once or twice a year till the whole amount is paid off i.e. the bond reaches its maturity.

If you’re planning on holding onto the bond till it reaches maturity, you don’t have to worry about your return on investment. You’ll be fine. But if you want to further buy or sell your bond before its maturity, then the market fluctuations will affect you. Just remember this simple rule and you’ll be fine- when interest rates increase, the price of the bond decreases, and as interest rates decrease, the price of the bond increases. If you’re looking for a low-risk way of managing your personal finances, we definitely recommend fixed-income investments! So, if you’re just starting to think about handling your finances better, this could be your best bet!

Equity investments or Stocks

This is probably what you were looking for when you clicked on this blog. Everyone’s mind always goes to stocks when they hear the word “investment”. Which is just as well because equity investment is great for beginners. If you’re not quite sure what they are, don’t worry, you’ve just started managing your personal finances! In a nutshell, equity investments is the buying and selling of stocks of publicly traded companies. Which means, public trade companies sell shares to investors as a way to raise capital to expand their business. In return, the investors get equity interest in the company. Some companies also offer dividends to their investors for every stock they own. If you’d like to research and compare the companies that pay dividends, go to Dividend.com!

Of course, if you want to invest in stocks, you need to have an adequate understanding of the stock market. After all, if the company you’re invested in is doing well, only then can you make a profit from the stocks you own. If you’re thinking of equity investments, we recommend doing some market research beforehand. Yahoo Finance and Morningstar can be really helpful to better understand how the market is behaving and what companies you should invest in! The more you understand the stock market, the better you’ll get at equity investment. Trust us, before you know it, you’ll be a master of handling your finances!

D’you know what else Roomi does outside of helping its readers understand investments and handling their finances? With our ever-increasing lists of rooms and roommates across the world, we help you find your perfect match! Download the app here and hop on the easiest ride home, ever