How to Invest for Beginners (2024)

How to Invest for Beginners (2024)

Probably not enough for our house but you decide, you should probably invest it in something. You could invest in stocks, shares, equities government, bonds, corporate bonds, real estate, foreign exchange crypto nfts Futures Fine, Art watches, that seems to be tons of stuff out there and you might have even seen those ads on YouTube from the gurus talking about day trading and trading foreign exchange, and how you can make money in that way, through investing. And on top of all of this confusion as the very real fear that you might lose all of that money, that you’ve worked so hard to save up. So in light of all of that, this is the ultimate Guide to investing for beginners. And we’re going to split this video up into four parts which are going to be timestamped down below. So you can skip around. If you like it, part one is going to be about the basics and the philosophy behind investing part two is about why and how to invest your money in stocks. And shares in part three, we’re going to be addressing common, fears, and questions and concerns about investing. Like, what if I lose all my money? And then in part, four, we’re going to talk about fast lane investing, which is an alternative approach to the traditional. Investing thing to build wealth, part one, the philosophy and basics of investing. So let’s start by talking about what is the point of investing? The point of investing is for your money to be able to make more money? So, Please start off with a thousand dollars that you’ve saved up through your hard and labor. Now, you could put that money under your mattress, or you could put it in a bank, current account. But the problem with that is that there’s this thing called inflation that you might been reading about on the news. And so, your thousand dollars might be able to buy you, a MacBook Air right now, but a few years from now when inflation goes up, that MacBook Air is going to cost a 1200. And so over time your money loses its purchasing power which is why you want to ideally invest in something because when you invest in something, your money grows magically on its own more on that later and that means you can combat the effects of inflation. And that brings us to the next question, which is, how does the money magically grow in the first place? And generally, the philosophy behind investing. Is that you buy something now? And that’s something makes you more money over time, and there are two ways in which the thing that you buy can make you more money. Let’s say, you buy a house, it costs a certain amount of money to buy a house right now but there’s two ways, the house makes you money. Number one, you can rent the house out and so you’re getting rental income every month and secondly hopefully in theory the value of the house will also rise over time if you hadn’t bought the house and you just had that money sitting in a bank account. And over time, you’re going to be losing money Because inflation is going to eat away at your savings. Now houses are an interesting example because you get rental income and it’s very easy for us to imagine what that looks like in like


everyone pays rent and so you’re making money but with most other asset classes you don’t have this equivalent of rental instead. A lot of these things you’re buying and then you’re hoping that you can sell them for a higher price over time. The main exception to this is some stocks and shares which we’re going to talk about a little bit later in the video. And these asset classes, is a long list of things that you probably have heard of. But you might not be entirely familiar with, you know, we’ve got stocks shares in equities, which are kind of the same thing. We’ve got hedge funds, we’ve got index funds. We’ve got bonds, government, bonds, corporate bonds. You might have heard some people investing in watches and then fine art. It probably heard of people investing in crypto and Evo, gaining, lots or losing lots in my case, losing quite a bit of money because crypto is crashed recently and a lot of this can get very complicated quite quickly. And so we’re going to simplify things. And for the rest of this video, we’re going to talk about investing in stocks and shares because that is the main kind of investing that normal people like, you and me can unlock fairly easily. You don’t need to have large amounts of money, which you need to invest in a house. You don’t need to take on huge amounts of risk and gambling and stuff. Like you need to do with crypto. Don’t need to be an accredited investor or anything. Like you need to invest in, like ancient investing companies or all this fun stuff. So, stocks and shares are kind of the basics of investing. And usually, when people talk about investing their money, what they’re referring to is, I want to buy some Tesla, or I want to buy some Netflix, or I want to buy some Amazon. And so, we’re going to talk about that part two. Why, and how to invest in stocks and shares. So when you’re investing in stocks and shares, for example, you’re basically buying a percentage ownership in the company that you’re investing in. So let’s say I wanted to buy shares in Apple. For example, Apple is a publicly traded company, which means the public can trade Apple stock. Now in a dream world, I would just be able to go to forward slash by. And I’d be able to buy a stock of Apple. And now I own some percentage of the company. In reality. I can’t do that directly. I have to go through a middleman, which we call a broker. But once I’ve gone through this middleman platform, I now personally, own a piece of Apple. Now, I can make money from stocks and shares in two different ways. Firstly, I can make money because I’m hoping the price of Apple or whatever stock I’ve invested in is going to rise over time. So, 10 years later, I could sell it for a lot more money than I bought, it fingers crossed, but the second way in which you can make money through And shares is similar to how you make a rental income on a house because certain companies will pay what they call dividends. So, for example, in the UK, there’s a company called BT British Telecom and they pay dividends. So when you own a piece of BT you’re not just hoping that the price will rise over time. They’re also literally paying out some of the profits that the company makes to their shareholders. And so if for example you were ridiculously rich and you owned 20 of BT. Then every time they declare a dividend which might be every three months you would get 20 of the profits that they are Distributing to


shareholders in reality. You and me will probably not going to own 20 of a huge company like that because you put that would cost absolutely billions. But instead we might get you know ten dollars fifteen dollars twenty dollars like five dollars, five dollars 47 here and there and if we invest in lots of companies that are paying out, dividends then it feels like you’ve got this free kind of rental income but really, it’s profits from these companies coming into your account every month and that’s pretty cool. So at this point, okay? Cool you can now buy stocks in these different companies, you can own a small percentage of set company. But how are you supposed to choose? Which companies should you put all your money in Apple or a Netflix or on Disney plus or should you go with a shell or British petroleum or Ralph Lauren or like I don’t know unilever or you know these brands that you might be familiar with. Now at this point people have varying different opinions on the master but I’m gonna cite Warren Buffett’s opinion on this which is also my opinion on this which is that if you’re a beginner to investing unless you are legitimately a financial who literally does this full-time for a living? You should not try and pick stocks the average person. Well not know enough to know which stocks to buy. They won’t know enough to know when to buy them but they don’t have to because they can buy all of America through an index fund because realistically, you and me were not really going to have an insight into. Oh, I reckon Apple’s going to do really well because, whatever, or I reckon Disney’s going to do really well because whatever their literally Financial professionals, who’s full-time day job, it is to do that kind of analysis and even then they don’t get it right a lot of the time and so what you can instead do is instead of worrying about stock picking what you should do probably not Financial advice at all, is invest in an index fund and that begs the question. What the hell is an index fund? Well, an index fund is a fund and a fund is a basket like a group of stocks and shares or other things, but stocks, and shares, for example, and the index component means that this fund tracks a particular stock market index. For example, in the US, there is a really famous index fund called the SNP 500 and this is basically the top 500 biggest companies in the US and you can see here, these are the components of the S P 500 right now. So Apple makes up 6.4 percent of the S P. 500 because it’s a big company. Then we’ve got Microsoft Amazon alphabet, which is Google Hathaway, which is War Company, alphabet class C, which is also Google Nvidia, Tesla X on mobile. You might be familiar with quite a lot of these companies, but if we scroll all the way down to the 500th company, we’ve got, I don’t know, Ralph Lauren and Hasbro and didn’t realize Hasbro was in the S P 500, but you can see that Hasbro makes up the 0.21 of the S P, 500 compared to Apple’s 6.4 because those companies are hugely different in, I guess, market cap or valuation. Right? So the point of the S P 500 is that it gives you a single number that you can graph over time of like how valuable the US stock market is Because to be honest, most of the value of the US stock market is in these 500 companies and so if the value of these 500


companies are slowly increasing over time which are generally does. That means the U.S stock market is doing well. In these companies are doing well and life is all good. If, for example, you’re in a recession where the stock market is going down, or if for example, covet has just become a thing in the stock market has gone down. That means that collectively people have decided that the value of the stocks is lower than it once was. And so the graph will go down in those moments. So what is this all mean for you and me as normal retail investors? Well basically what it means is we can invest in an index fund. So let’s say I put a thousand dollars into the S P. 500 Index Fund that’s very good because it means that my thousand dollars is now split between 500 of these companies. And crucially is split based on the waiting in the S P. 500. So of my one thousand dollars that I’ve just put into the S P 500, 6.4 would be in Apple stock. And so now, I own 64 worth of Apple stock, and that’s pretty cool. I now own a bit of Apple 5.4 of that would be Microsoft. So I now own 54 worth of Microsoft stock and 0.0 To five percent. Going to be Ralph Lauren, which is 498th on the S P 500. And so I now own 14 worth of Ralph Lauren stock. Now, this is a very good thing and this is what Warren Buffett recommends my view for most people are saying to do, is not only S P 500. He said that. Hey, if you had an extra 100 000 to invest, you should just put it straight into the S P 500 or some other big index fund because over time your money is going to track. The market. You’re not trying to say, hey I have a crucial insight into the market and I know that Apple is going to outperform all these other companies. Instead you’re thinking you know what, I’m just a normal person. I don’t have time to spend 80 000 hours a week trying to research the shit out of all this stuff. I’m just gonna kind of diversify my money across, all these top 500, big companies in the US. I think overall US companies are going to go up over time and therefore I don’t have to think too hard about this so what’s the alternative? Well, we talked about how you could, theoretically pick stocks yourself. So you could say, you know what, I’m going to ignore the S P 500 but chances are you’re not going to beat the market. Chances are unless you just get really lucky, you’re not going to be reliably, able to get the returns that you would get by just investing in 500 of these companies. Now, there have been a bunch of studies and surveys in Warren. Buffett. Even did a challenge experiment thing about this. The following year. And so a lot of these funds are trying to quote B to the market. But as Warren Buffett and a lot of these other people say, you cannot beat the market. So let’s just


invest in the market directly. Just put your money in an index fund and don’t think too hard about it. Every single person I know who is invested by making stocks has lost money and every single person, I know who has invested by just investing in an index fund has made money over time. The next question that this raises is okay cool. I want to invest in a stock market index file. How the hell do I do that? Do I just go on? S P. forward slash by and buy some index funds. Again, it’s not quite how it works, you need a bit of a middleman and that’s where these kind of online platforms come in. Now, this is going to vary depending on whatever country you’re in. So if you want to find a stocks and shares investment platform in your country, then just Google. That in the UK. For example, there are loads, the ones that I personally use are Charles Stanley direct because that’s the first one I started using in 2015. I also use Vanguard Vanguard is super big and super legit. You can check it out and the app that I use personally, for investing in individual stocks these days is trading two on two. And in fact, incidentally, this video is now sponsored by trading, 212. This is kind of fun. As you can tell, I’m recording on a different day. Anyway, if you want to get started with investing training to one, two, genuinely, it’s the app that I use. It’s the best way to get started. You can trade stocks and shares. You can also open an ISO, an individual savings account. If you’re in the UK, one of the cool things about trading 212 is you can practice investing with practice money. So, everything about the markets is identical. It’s just that you’re investing fake money, rather than real money. And if you’re uncomfortable investing real money for now, this is a great way to become more familiar with the concept of investing. And then, once you’re ready to invest with real money, you can just switch using a simple button on the app, and you can deposit money through Apple. Pay up to two thousand pounds and then you can use bank transfer, subsequently. And the other cool thing about Waiting 212 is they’ve got this really cool pies feature where basically, you can look on the app and you can see other investment pies that other people have created. So you’ll have these like Finance, Bros that are creating their custom Pies, and you’ll see that they’ve allocated 10 to the best and P or 20 to the 5100. Or this percent to Apple or Tesla or Microsoft or whatever. And then you can see the performance of that specific pie over time. And then what you can do if you really want to is you can copy and paste. Someone’s pie that they have built into your own investing account and now you can automatically with a single click invest, let’s say 100 pounds into that pie and so that 100 pounds will then be split amongst the various allocations that person has decided to do in the pi and that’s great. Like obviously I’d still recommend investing in some broad stock market index funds. Like the S P. 500 even though I don’t get Financial advice anyway, if you fancy giving a go, it’s commission free, it’s completely free to sign up. You don’t have to pay anything, you can go to trading212, it’s available on the App Store on iOS and on Android. And if you use the coupon code, ALI, Elli, when you sign up, that will give you a free share up to the value of 100 pounds, so you can get completely free money by just signing up for trading. 212, check it out with a link in the video description or search trading212 on any of the app stores. Thank you so much trading, two and two for sponsoring this video, part three, common fears, concerns, and questions about investing. So you’re broadly very unlikely to lose money, because Vanguard collapsed overnight, but you might lose money. If the value of your Investments goes down and this is where people get really, really worried. But because they’re always think, ah, you know, if I invested my pardoned cash into these stocks and shares. What if it goes to zero? What if I lose my money? Now this is a common fear and certainly let’s say you invested a thousand dollars into the S P 500 just before the financial crash in 2008. And then the Market’s crashed by I don’t know 60. 

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