An Easy Investment Strategy for Beginners

Congratulations! Deciding to make investment decisions on your own is a big -- if intimidating -- step. Picking an investment strategy depends on a lot of personal variables. I hope to show you one easy strategy to help get you started on building a balanced portfolio with exposure to all of the market's major sectors.

The easiest way to invest in the market is to buy shares of SPDR S&P 500, a fund that includes shares of the 500 largest corporations in America. This isn't a bad way to go at all; but with the market trading for about 28% higher than its long-term average, there might be better options for your investing dollars. Furthermore, the dividend yield on the S&P 500 ETF is 2.03% -- less than half what the market usually offers.

By focusing on major conglomerates in each major sector, you can find better deals that give you similar exposure.

Basic materials and energy
Companies across the globe are becoming aware of the planet's dwindling resources. This being the case, beginning investors would be wise to invest in the biggest and best players in the industry, as demand for energy and materials will only grow as the global middle class broadens in Asia and South America.

ExxonMobil , the world's most valuable company in terms of market capitalization, is an excellent investment to cash in on this trend. Not only is Exxon North America's largest oil producer, but it is also the largest extractor of natural gas. So even if alternative fuels like natural gas start to gain share of the energy market, Exxon shareholders are poised to benefit. Currently, it trades for 9.3 times earnings -- a 52% discount to the market -- and offers a 2.8% dividend yield -- 38% higher than the S&P's average.

Consumer goods
Some of the safest bets are found in the consumer goods industry. No matter the economic climate, there are certain products -- like soaps, toilet paper, and shaving cream -- that people are going to need. This helps add a layer of protection for investors during global downturns.

The biggest player in the industry is also one the safest investments you can make: Procter & Gamble . The company produces everything from Tide laundry detergent to Gillette razors and Charmin toilet paper. Overall, P&G has 80 major brands, 13 of which average over $1 billion in sales per year.

Right now, the company sells for slightly less than the market's average, while offering a dividend yield 43% higher than you'd get from the average S&P 500 company.

Health care
Health care can actually be a volatile field if you're looking for a safe and steady investment strategy. Drug approvals, product recalls, and medicines coming off patents can all present significant challenges for companies. That's why I consider Johnson & Johnson to be the best bet of the bunch.

Johnson & Johnson has three divisions. The most recognizable is the company's consumer goods division, which sells Tylenol, Motrin, Neosporin, and Band-Aids, among many other products. These products are usually in demand no matter the macroeconomic climate. But to add icing to the investment-thesis cake, Johnson & Johnson also has pharmaceutical and medical equipment divisions that can offer outsize gains when new medicines or technologies are successful.

Right now, the stock is actually a little more expensive than the market average, but the dividend yield of 3% -- almost 50% higher than the market's average -- makes the stock worth owning now.

Industrial goods and technology
Technology, like health care, can be a dangerous place for beginners to invest. Disruptive innovations can surface and destroy total industries in the blink of an eye (witness the slow erosion of the telecommunications industry's landline business). That's why I think industrial giant GE is a great investment to provide exposure to technology.

Though GE might not always be the one developing brand-new technology, it incorporates it into its products. The industrial goods giant has eight different lines of business, ranging from Power & Water to Aviation, Healthcare, and even a financial wing: GE Capital.

Investors can buy into all of these fields while GE's stock trades at a slight discount to the market and offers a 3.2% dividend yield -- more than 50% higher than the market average.

Utilities
Finally, barring the apocalypse, utility companies will continue to be called upon to meet the electrical needs of our world's growing population. National Grid represents a safe way to gain exposure to this steady industry. The company, based out of England, distributes both gas and electricity to communities in the United Kingdom and northeastern United States.

In the United Kingdom, National Grid has a near monopoly in electrical transmission wires, and it is exploring several forms of alternative energy in the U.S. While regulators have some say in what the company can charge, this shouldn't stop you from investing in it. Shares today trade hands at a 37% discount to the S&P 500, while offering a 3.6% dividend yield -- far greater than the market average of about 2%.

Your next Foolish steps
Hopefully, these five companies can help get you started in designing your own investment strategy. But you shouldn't stop there -- we can assist in furthering your research.To help, we're offering comprehensive coverage for investors in a premium report on General Electric, in which our industrials analyst breaks down GE's multiple businesses. You'll find reasons to buy or sell GE today. To get started, click here now.

The article An Easy Investment Strategy for Beginners originally appeared on Fool.com.

Fool contributor Brian Stoffel owns shares of Johnson & Johnson. The Motley Fool recommends Johnson & Johnson, National Grid, and Procter & Gamble. The Motley Fool owns shares of General Electric and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. 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.

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