3 tips for investing in ASX 200 shares for beginners

Investing in ASX 200 shares can be exciting. Here are a few tips I wish I had known before I started on my investing journey.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing in ASX 200 shares as a beginner is exciting. There are endless companies to research and a lot of media content to read.

The S&P/ASX 200 Index (ASX: XJO) has rebounded strongly since March and many investors want in on the action.

However, amidst all the market noise, it can be hard to know the dos and don'ts with ASX 200 shares.

Here are a few top tips I wish I had known before I began my investing journey.

1. Diversify across ASX 200 shares

It's easy to see a hot stock like Afterpay Ltd (ASX: APT) and be tempted to go all-in. However, this is not a wise, long-term strategy.

There are always hot ASX 200 shares but this growth will come and go. It's best to spread your risk across a number of shares rather than putting all your eggs in one company's basket.

This can be done in a number of ways. For instance, you could buy a handful of top shares that you like in different industries or sectors.

Another approach is to gain instant diversification by using exchange-traded funds (ETFs).

ETFs invest in a portfolio of shares, and you can buy units in that diversified fund on the ASX.

A couple of examples are Vanguard Australian Shares Index ETF (ASX: VAS) or ETFS FANG+ ETF (ASX: FANG). These funds seek to track the S&P/ASX 300 Index (ASX: XKO) and the NYSE FANG+ Index, respectively.

2. Invest, don't gamble

According to ASIC, many first-time investors were buying and selling ASX 200 shares in the March bear market.

On the one hand, that's fantastic news. That means more Aussies are investing their money and building their future wealth. However, that also means many are likely making short-term trades.

To be clear, good investors like Warren Buffett buy and hold companies for the long term. Short-term investors are essentially gambling on each day's ASX 200 share price moves.

Be more like Buffett and less like the gambler.

3. Trust your strategy

Once you've decided on your strategy, try not to worry too much. It's easy to stress about the daily moves in your portfolio as a beginner.

However, you have to remember that you're investing in your long-term future. That means you can ignore the day-to-day noise and focus on buying high-quality ASX 200 shares that can perform for the decades ahead.

Don't waste money trying to time the market, or buying and selling out of your positions. That will cost you a lot of time, effort, taxes and transaction costs.

Instead, just sit back, relax and enjoy the ride.

Motley Fool contributor Ken Hall owns shares of Vanguard Australian Shares Index. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ⏸️ Shares for Beginners

toddler in business attire surrounding by floating money representing asx shares beginner investor
⏸️ Shares for Beginners

2 top notch ASX shares for beginners

Woolworths Group Ltd (ASX: WOW) is one of the 2 ASX shares that I think would be perfect for a…

Read more »

toddler in business attire representing asx shares beginner investor
⏸️ Shares for Beginners

2 ASX shares perfect for beginners in 2020

Argo Investments Ltd (ASX: ARG) is 1 of the 2 ASX shares that I think is perfect for a beginner…

Read more »

⏸️ Shares for Beginners

How mum and dad investors are beating fund managers at their own game

Retails investors can give themselves a pat on their back as they are besting most fund managers in the COVID-19…

Read more »

⏸️ Shares for Beginners

Ready to invest your first $1,000? Try these 2 ASX shares

Here's why I think Magellan High Conviction Trust (ASX: MHH) and 1 other ASX share are perfect choices for a…

Read more »

⏸️ Shares for Beginners

Here's how I would put $10,000 to work on the ASX

You work hard for your money, so why not make your money work hard for you? Here's how to put…

Read more »

⏸️ Shares for Beginners

2 ASX shares for a first-time investor

Here's why I would choose Magellan Global Trust (ASX: MGG) as one of my ASX shares for a first-time investor

Read more »

⏸️ Shares for Beginners

3 ASX shares to buy as a beginner

It can be hard to know where to invest in ASX shares as a beginner, so here are a few…

Read more »

⏸️ Shares for Beginners

Invest your first $10,000 in these cheap ASX shares today

Here's why Macquarie Group Ltd (ASX: MQG) and other cheap ASX shares are a great way to invest $10,000 for…

Read more »