How to Invest for Beginners (2024)

So let's say you want to get started with this

invest

ment. You may have a little money saved. It's probably not enough for a house, but you decide you should probably

invest

it in something that you can invest in stocks, stocks, stocks, government bonds, corporate bonds, real estate. forex crypto nfts Futures Fine Art watches there seems to be tons of stuff out there and you may even have seen those ads on YouTube of the gurus talking about day trading and forex trading and how you can make money that way by investing and On top of all this confusion, there is the very real fear that you could lose all that money you've worked so hard to save, so in light of all that, this is the ultimate guide to investing for

beginners

and we're going. to split this video into four parts, which will have a timestamp below so you can skip it if you want.

The first part will cover the basics and philosophy behind investing. The second part is about why and how to do it. invest your money in stocks and shares, in part three we will address common fears, questions and concerns about investing, like what happens if I lose all my money and then in part four we will talk about fast track investing, which is an alternative approach to traditional investing to build wealth part one the philosophy and basics of investing so let's start by talking about what the point of investing is. The goal of investing is so that your money can earn more money, so let's say you start with a thousand dollars that you have saved through your hard earned work.

Now you could put that money under your mattress or you could put it in a bank checking account, but the problem with that is that there is a thing called inflation that You might be reading about on the news and your thousand dollars could buy you a MacBook Air right now, but in a few years, when inflation rises, that MacBook Air will cost twelve hundred dollars and, over time, your money. it loses its purchasing power, so the ideal is to invest in something because when you invest in something your money magically grows on its own, we will talk about that later and that means that you can combat the effects of inflation and that brings us to the next question , which is, first of all, how money magically grows and, in general, the philosophy behind investing is that you buy something now and that something makes you more money over time and there are two ways in which what you buy can generate more money.

Let's say you buy a house, it costs a certain amount of money to buy a house right now, but there are two ways the house makes you money; firstly, you can rent the house and therefore you get rental income every month and secondly, hopefully, in theory. The value of the house will also increase over time if you hadn't bought it and simply had that money in a bank account, and over time you will lose money because inflation will eat into 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.

Everyone pays rent and therefore you are making money, but with most other asset classes you don't have this equivalent of rent. Many of these things you buy and then hope you can sell them at a higher price over time. The main exception to this are some stocks and shares that we'll talk about a little later in the video. and these asset classes are a long list of things that you've probably heard of, but you may not be entirely familiar with, you know, we have stocks, stocks and securities that are pretty much the same thing, we have hedging, we have we have index funds, we have bonds, government bonds, corporate bonds, you may have heard some people investing in watches and then fine art, you have probably heard of people investing in cryptocurrencies and even winning or losing lots on my case or they lose a lot. of money because cryptocurrencies have crashed recently and a lot of this can get very complicated pretty quickly, so we're going to keep things simple and for the rest of this video we're going to talk about investing in stocks and shares because that's the main type investment that normal people like you and I can unlock quite 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 gambles and stuff. like what you need to do with cryptocurrencies and you don't need to be an accredited investor or anything like you need to invest in old investment 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 mean is I want to buy Tesla or I want to buy Netflix or I want to buy Amazon, so let's talk about the second part, why and how to invest in stocks and shares, so when you invest in stocks and shares for example, you are basically buying a percentage ownership of the company you are investing in, so let's say I want to buy shares of Apple, for example, Apple is a publicly traded company. which means the public can trade Apple stock now in a dream world.

I could just go to apple.com and buy slash and I could buy Apple stock and now I actually own a percentage of the company. I can't do that directly. I have to go through a middleman we call a broker, but once I go through this middleman platform, I now personally own a piece of Apple. Now I can make money with stocks and shares in two different ways. First of all, I could make money because I expect the price of Apple or whatever stock I invested in to increase over time, so 10 years later I could sell it for a lot more money than I bought it for.

Cross your fingers, but the second way. where you can earn money through stocks and shares it is similar to how to earn income from renting a house because certain companies will pay what they call dividends, for example in the UK there is a company called BT British Telecom and they pay dividends, so when you own a piece of BT, not only do you expect the price to rise over time, but you are also literally paying out some of the profits the company makes to its shareholders, so if, for example, you were ridiculously rich and owned 20 of BT, every time they declare a dividend, which could be every three months, you would get 20 of the profits they are distributing to shareholders.

In reality, you and I probably wouldn't own 20 of a big company like that because that being said, it would absolutely cost billions, but instead we could get ten dollars, fifteen dollars, twenty dollars, like five dollars, 5, 47 here and there, and if we invest in many companies that pay dividends, then it seems that we have this kind of free money. of rental income, but it's actually the profits from these companies that come into your account every month and that's pretty good, so at this point it's okay, now you can buy shares of these different companies, you can own a small percentage of the compensation company, but how are you supposed to choose?

Which companies should you put all your money in Apple or Netflix or Disney Plus or should you go with 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 different opinions on the subject, but I'm going to quote Warren Buffett's opinion on this, which is also my opinion on this, which is that if you are a beginner in investing, unless you are legitimately a financial professional who literally does it. To make a full-time living, you shouldn't try to pick stocks.

The average person won't know enough to know what stocks to buy, they won't know enough to know when to buy them, but they don't have to because they can. buy the entire United States through an index fund because, realistically, you and I are not going to have an idea of ​​how, oh, I think Apple will do very well because whatever, or I think Disney will do very good because, literally, there are finances. professionals whose full-time job is to do that kind of analysis and still don't do it well most of the time, so what you can do is, instead of worrying about stock picking, which you probably shouldn't do.

LOL financial advice is investing in an index fund and that begs the question what the heck is an index. Well, an index fund is a fund and a fund is a basket like a group of stocks and shares or other things except stocks and shares for example. and the index component means that this fund tracks a particular stock index, for example, in the US there is a very famous index fund called SNP 500 and this is basically the 500 largest companies in the US and You can see here these are the components of the S P 500 right now, so Apple represents 6.4 percent of the S P 500 because it is a large company, then we have the alphabet of Microsoft Amazon, which is Google Berkshire Hathaway, which is the alphabet of Warren Buffett's company Class C, which is also Google Nvidia Tesla Exxon Mobile.

You may be familiar with many of these companies, but if we scroll down to the 500th company that we have, I don't know Ralph Lauren or Hasbro and I didn't realize that Hasbro was on the S P 500, but you can Let's see that Hasbro represents the S P 500's 0.21 compared to Apple's 6.4 because those companies are very different in terms of market cap or valuation I guess, so the whole point of the S P 500 is that it gives you a single number that you can graph over time. 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 therefore if the value of these 500 companies is increasing slowly over time, which usually happens, that means that the US stocks the market is doing well and these companies are doing well and life is good if, for example, you are in a recession in the that the stock market is going down or if, for example, covert activity just became a thing and the stock market has gone down, that means that collectively people have decided that the value of these stocks is lower than it was before and therefore the graph will go down at those times.

So what does all this mean for you and me as normal retail investors? Basically what it means is that we can invest. in an index fund, so let's say I put a thousand dollars in the S P 500 index fund, that's very good because it means that my thousand dollars is now divided among 500 of these companies and, more importantly, it is divided based on the wait in the S P 500, so of my 1000 that I just put in the S P 500 6.4 would be in Apple shares and now I have 64 Apple shares and that is great. Now I have a little bit of Apple 5.4 of that would be Microsoft, so now I have 54 shares of Microsoft and 0.015 of them will be Ralph Lauren, which is ranked 498 on the S P 500, so now I have 14 shares of Ralph Lauren, This is a very good thing and this is what Warren Buffett recommends from my point of view.

For most people, the best thing to do is stick with the S P 500. He says that if you had an extra hundred thousand dollars to invest, you should put it directly into the S P 500 or some other large index fund because over time your money will be lost. is going to follow the market, you're not trying to say "hey, I have a crucial view of 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 all this stuff.

I'm just going to diversify my money among the top 500 large companies in the US. I think that in general US companies are going to go up over time and therefore I don't have to think too much about this, so what is the alternative ? Well, we talked about how, in theory, you could pick stocks yourself so you could say you know what I'm going to ignore the S P 500, but the chances aren't it going to beat the market? Chances are, unless you're really lucky, you won't be able to really reliably earn the returns you would by simply investing in all 500 of these companies.

Now there have been many. of studies and surveys and Warren Buffett even did a challenge experiment on this which basically shows that very few funds overall outperformed the S P 500 and if you have a fund that outperforms the S P 500 I.E, that year it will do better than the S P 500 did same thing, it's unlikely to do the same thing next year, so a lot of these phones are trying to price to beat the market, but since Warren Buffett and many other people say you can't beat the market, so let's just invest in the market. straight up just put your money in an index fund and don't think about it too much, every person I knowwho has invested by picking stocks has lost money and every person I know who has invested by simply investing in an index fund has made money over time the next question this raises okay, great, I want to invest in a stock market index fund, how the hell do I do that?

I just continue on s p 500.com, slash, buy and buy some index funds again, not quite. How it works, you need a bit of an intermediary and that's where these types of online platforms come in. This will vary depending on the country you are in so if you want to find a stocks and shares investing platform in your country then just google that in the UK for example there are many that I personally use are Charles Direct Stanley 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 I personally use to invest in individual stocks these days is Trading 212 and actually this video is now sponsored by Trading212.

This is pretty fun as you can see anyway I'm recording on a different day if you want. to get started with investment training 212 really is the app I use it's the best way to get started you can trade stocks and shares you can also open a Isa an individual savings account if you are in the UK one of the interesting things about 212 trading is that you can practice investing with practice money so everything in the markets is identical, only you are investing fake money instead of real money and if you don't feel comfortable investing real money for now, this is a great way to get more familiar with the concept of investing and then once you are ready to invest with real money, you can simply switch using a simple button in the app and you can deposit money through Apple, pay up to two thousand pounds and then you can use the bank transfer afterwards and the Another interesting thing about trading with 212 is that they have this really cool pie feature where you can basically look at the app and see other investment pies that other people have created, so you'll have these financial professionals who are creating their own custom projects. pies and you will see that they have allocated 10 to the s p or 20 to the ftse 100 or this percentage of Apple or Tesla or Microsoft or whatever and then you will be able to see the performance of that specific pie over time and then what can you do if you really want it , you can copy and paste someone's pie that you have incorporated into your own investment account and now you can automatically invest with a single click, let's say 100 pounds into that pie and then that 100 pounds will be divided between the various allocations that the person has decided do in the pie and that's great, obviously I would still recommend investing in some broad stock index fund like the S P 500, although I don't give financial advice anyway if you fancy giving it a try. it has no commissions, it is completely free to register, you don't have to pay anything, you can go to trading212, it is available in the App Store on iOS and on Android, and if you use the Ali Ali coupon code when you register you will get a free share of up to 100 pounds so you can get completely free money just by signing up to trading 212.

Check it out with a link in the video description or search for trading212 in any of the app stores, but thank you very much, trading. 212 for sponsoring this video, part three common fears, concerns and questions about investing, so if overall you are very unlikely to lose money because Vanguard collapsed overnight, but you could lose money if the value of your low investments and this is where people really get really worried because they always think, ah, you know, if I invested my forgiven cash in these stocks and shares, what if it goes to zero, what if I lose my money, this is a common fear and certainly let's say you invested a thousand dollars in the S P 500. right before the 2008 financial crisis and then the markets crashed for I don't know 60 or whatever and now your thousand dollars is worth like 400.

I know you're thinking , "Oh my god, like I can't believe it." I have lost 60 of my money now, if at that time you sell you have realized the loss, now you have literally lost money because you bought the thing for a thousand and sold it for 400. But if you just held on, then the market recovered with time and by 2012 it was at the same levels and then it just went up and up, so even if you had invested a lot of money right before the 2008 financial crisis, if you had stuck with it and left that money there you would have already doubled or tripled or something like that your money because generally the stock market goes up for a pretty long time.

Horizon, the same goes for house prices, you can buy a house and if you try, sell it next week, then maybe the price will have gone down, but if you try to sell it in 20 years, chances are, Unless your country has been destroyed the price will have gone up and the longer you can leave your money in these index funds or the more it compounds over time and as Einstein is said to have said that compound interest is the eighth wonder of world, what are the chances that the 500 largest companies in the US will suddenly drop to zero value overnight? zero percent I think if the value of the 500 largest companies in the US went to zero, we're going to have bigger problems in the world than the value of my stock portfolio and the reason I think that is It's reasonable to make the bet that over time the stock market goes up is because every day thousands of people go to work in each of these companies, every day Apple employees create value, they are researching new technologies, By building new things, they're adding an extra camera or an extra lens to the iPhone and all that means is that because these people are bringing in human labor, you would expect the value of the company to increase over time because they're doing more and more interesting things and like People are going to want to keep buying more and more of those cool things now, another question that people sometimes have is how much money do I need to get started?

Do I need to be super rich to start? start investing and the answer again is no, it depends on the platform you are using, but for example, I am trading with 212 or Vanguard and Vanguard. I think you only need £100 to invest trading with 212. I think you can start with 5 again. This varies wildly depending on your country, so do some research and find out which are the most reputable and legitimate platforms in your country and then you can invest based on that. Now there are two other categories of things I invest in. I invest in real estate. so I have a few properties in the portfolio, we're not going to talk about that because I made a video on buying versus renting and that's generally out of range for most people until you've already made a lot of money to be able to pay a deposit on a house and get a mortgage and I also invest a certain amount of money in cryptocurrency, yes, and as we can see here, the total value of my cryptocurrency portfolio is 200,000, but actually I have lost 65,000, so I have invested 265k in crypto and currently worth 200k, what can you do?

I expect the price to go up over time, so in general when it comes to recommending investing in cryptocurrencies, people often ask about this, I would say bet well if you want, but make sure the only money you are Putting money in your crypto account that you can 100% afford to lose. Don't try to think of investing in general or cryptocurrencies in particular as a get-rich-quick scheme, but in general if you want to invest your money in stocks and shares like Warren Buffett says and like I do and like I generally recommend, although I'm not a financial advisor nor financial advice, etc., it is quite reasonable to put that money in a stock market index fund like By the way, the S P 500, for example, if you are enjoying this video so far, I would love to hear in the comments which one you have been your biggest concern when starting to invest.

What's stopping you? Part 4, Fast Lane: Investing in Alternative Approach to Building Wealth So far we have talked about what some people would somewhat disparagingly call the slow lane approach to building wealth is like the slow lane and this and there is the fast lane now this It's terminology from MJ DeMarco's book The Fast Millionaire Language, it's actually a really good book, but the basic idea of ​​slow investing is that I have some money. I'm going to do my daily work. I'm going to save 10 from my paycheck and every month. I'm going to put 10 in my savings account and then I'm going to invest that money in the S P 500 and then in 50 years, when I'm 65, that money will have compounded and then I'll be a millionaire. a very, very slow way to invest, it's a very slow way to build wealth and it's certainly fine to invest in stock market index funds.

I do it too, but there's another approach to investing and it's worth talking about that here because when we hear investing a lot of us just default to thinking, oh, I guess I should buy stocks and shares or I guess I need to buy a house, but yeah We really think about it, what's the point of investing money? make more money in the future, that's the point, the point is not to invest in stocks and shares, stocks and shares are a vehicle by which you can convert your money into more money in the future, but when it comes to Fast Lane investing in the fast lane is basically that instead of investing in someone else's business, i.e.

Apple, Amazon, Google or whatever, you are investing in yourself and your own business, the S P 500 goes up again seven percent each year on average, so if Putting a thousand dollars into the S P 500 would be worth on average one thousand and seventy dollars within twelve months, so the question is: can I do something better with that thousand dollars to earn more than seventy dollars in the next 12 months and in general? The answer is hell yes, there are two things you could invest in. I could invest in my own ability to make money. So for example let's say I'm a healthcare assistant in a hospital and I can take a course for a hundred pounds and that course gives me the chance to become a phlebotomist, someone who takes blood and let's say I'm earning 15 pounds an hour as an assistant healthcare but I could earn £25 an hour as a phlebotomist now suddenly I've paid £100 I've invested £100 in my own skills but I've been able to increase my earning capacity almost double and therefore within four hours of working as a phlebotomist I will have paid back my hundred pound investment and now if I work as a phlebotomist rather than a healthcare assistant I now earn over £10 an hour so every 10 hours of work I do I will get that hundred back pounds, so my return on this hundred pounds is very high. much more than just seven percent because I fundamentally increased my own value in the market.

I have fundamentally increased my own ability to make money. Therefore, investing in your own education is generally a very reasonable thing to do. Yes, you can discover many things. stuff on YouTube and I'm always in favor of saying hey, if you're broke, don't buy fancy courses, don't take out loans to buy courses, look for free information on the internet, but I have a lot of friends who have a few thousand extra quid and they put it on the S P 500 because they expect it to grow over the next 50 years rather than just spending some money on a weekend course on whatever skill they want to improve and then they can use that skill. you literally make a lot more money than they would just do the S P 500, so that's one way to invest in Fast Lane, you invest in your own ability to make money, but the other way to invest in Fast Lane is to invest in your own ability. .

Obviously this only applies if you have a business and want to start a business, but in general the way to get rich quick, like in the next 10 years instead of the next 70 years, is to build your own business, own your own business and increase. the value of that business instead of giving your money to Apple or Tesla, so for example, if I wanted to, I could start my own coffee shop or my own online business or my own YouTube channel, which is a business. If I wanted to, I could start. my own web design agency or social media marketing agency, if I wanted I could learn to code, create software and turn it into an app.

I support myself to be able to do a business and learn for myself the basics of how to do it. to run that business and make that business more valuable in terms of percentage return than the seven percent that you would get on the S P 500 and when I interviewed Alex for Mosey, which is like a 200 million dollar entrepreneur that he calls , he more or less calls it investing in the s p versus investing in the sne it's a full S P 500 versus SME 500, but you will get a significantly higher return investing in your own ability to make money than in any market and his advice is also that you should invest . in the sense that you should invest in yourselfinvest in your own skills invest in your own ability to make money invest in your own business because the returns on that are much more likely to be ridiculously higher than that shitty seven percent you get from investing in the S P 500, so So if, for example, you're interested in investing in your own education and you want to start a YouTube channel and really take it seriously and treat it like a business, you might want to check out my own part-time YouTuber Academy course.

It's great, people love it, it has good vibes, which will be linked below and that course is basically teaching you the things you need to know to systematize and scale a YouTube channel, if you want to treat it like a business, it's not a course for people who want to do it as a hobby, but if, like me, they want to turn their channel into a business and make money that way, that's a course that could help them, but of course it's all available on YouTube for free Also, so if you are broke or if you have a lot of time and not a lot of money, then of course you can find all this information for free on the Internet.

I hope you found this video helpful if you are interested in learning more about this fast investing approach to Building Wealth you should watch this video here which is the review of my book on the Millionaire Fast Track by MJ DeMarco which is the best book I've read about how to make money quickly and meaningfully in the next 10 years instead of the next 60 years, so check out that video. Thank you very much for watching and I hope to see you in the next video.