Investing can seem like a daunting and scary concept, but it doesn’t have to be! In the video “How to Invest for Beginners 2024,” the host breaks down every step of the investing process so that you can learn how to invest your own money. The video covers important topics such as why you need to invest, what investing actually is, where to invest, when to invest, and how to invest. The host even provides a live example of investing to show viewers how it’s done.
The video starts by discussing what investing actually is. It’s all about making your money work for you and allowing it to grow over time. The host emphasizes the fact that by not investing, your money is actually losing value due to inflation. The video goes on to explain the different types of investments, such as stocks, bonds, and mutual funds, and why diversifying your portfolio is important.
The focus then shifts to index funds, which the host recommends for beginners. Index funds are a collection of stocks that track a specific market index, such as the S&P 500 or the NASDAQ. They are a great way to diversify your portfolio and lower the risk of investing in individual stocks.
The video uses simple language and clear examples to make investing less intimidating for beginners. The host also provides valuable insights and tips based on personal experience. It’s an educational and informative video that aims to demystify the world of investing and empower viewers to start investing their own money.
Overall, the video “How to Invest for Beginners 2024” is a great resource for anyone looking to dip their toes into the world of investing. It’s a friendly and accessible guide that encourages viewers to take control of their finances and make their money work for them. So, if you’ve been curious about investing but didn’t know where to start, this video is a great place to begin.
Watch the video by Elena Taber
Hi hello how’s it going it’s Alena and welcome back to my channel and today we’re talking about money specifically investing I love talking about investing and it sounds kind of scary at first but I’m here to show you it’s much easier than you actually expect I actually
Filmed a video like this on my Channel about three and a half years ago I was 23 going on 24 and I just turned 27 and so over the years I feel like I’ve learned quite a lot I tested out this method now for quite some time I’ve done
A lot of investing and I kind of want to get into the nitty-gritty and really break it down step by step and show you guys how to invest we’re going to talk about what is investing why you need to invest how to invest when to invest and
I’m lit going to take you along with me and do a live example of me literally investing so you know how to be able to do it for yourself let’s start off with what is investing according to Investopedia investing is a process of buying buy assets that increase in value over time
And provide returns like income payments or capital gains which we’ll get into so it’s basically making your money work for you which we love okay so let’s say you’ve been too nervous to invest I get it it’s a little scary to get started and you’ve just been sticking all your
Money maybe under your mattress or more realistically in a bank somewhere in a checking or savings account but by doing this and by doing this for a while you actually lose money because of inflation we’ve all probably heard about inflation in the news like I feel like Aid prices
Went up a bunch this year and inflation is basically a decrease in purchasing power of your dollar and the US Federal Reserve actually aims for a 2% inflation rate every single year because it actually leads to a healthy economy but that’s not great for your dollar if your
Dollar is just sitting in a bank account the value of that dollar is going down because the price of everything is going up but your dollar is staying the same if you’re not investing it but investing can help that dollar grow alongside inflation and ideally at even a much
Higher rate okay maybe not I’ve scared you straight about the fact that your money just sitting in a bank account account is actually losing value over time and you’re technically losing money and you don’t know what to do about it so let’s break it down so let’s talk about what investing
Actually is and I just want to preface there’s no such thing as a dumb question when it comes to finances I feel like so many of us we’re never taught properly and then we get to a certain age and we’re like shouldn’t we know this by now
But we don’t so let’s break it down nice and simple so investment is an asset that is required with the hope of generating income or appreciation over time so basically putting more money back into your pocket and you’ve probably heard of a lot of different of these Investments stocks bonds mutual
Funds index funds you might be wondering what the hell does this all mean and today we’re going to talk about the most important ones to focus on when you’re getting started a stock basically represents having part ownership in a company so let’s say I went out and
Bought Tesla stock that means I would technically have a small percentage ownership of Tesla and it’s usually quite small but technically you’re owning a little bit of it and so the way you make money through stocks is basically through two different ways either dividends or capital gains and dividends is basically regular profit
Sharing payments made between a company and an investor so let’s say you own Microsoft stock and Microsoft has done well so they decide they’re going to pay dividends to their shareholders basically means you would get dividends depending on how much you have invested in the company and usually it’s not a
Lot maybe it’s five1 $20 here unless you somehow own a ton of stock in a really big company the other is capital gains which basically just means when your asset increases in value over time so for this example let’s say you own Microsoft stock and those share prices
Have gone up over time let’s say you hold on to that Microsoft stock for 10 years ideally 10 years later you’ll be able to sell for more money than the original amount you invested in that’s what a capital gain is but how do you decide which stock or company to invest
In that’s when it starts to get a bit overwhelming and the general rule of thumb is that it is really risky to just put all your money into one stock even if you’re a professional and you’re devoting all your time to learning the stock market studying different sectors
And pay pay attention of what is going on in the economy chances are you won’t get it right A lot of the time and you won’t come out on top so this is where funds come in I feel like the general will of advice that I’ve heard for so many years now
For those beginning to invest is to invest in index funds and let’s break down what that means so a fund is like a big old bouquet of stocks and instead of just buying one single stock or one single flower you can buy the whole damn bouquet with a bunch of different stocks
In it which essentially diversifies your portfolio and lowers the risk and so to understand the index funds specifically we actually need to rewind a little bit back and talk about mutual funds which came before index funds so a mutual fund is a actively managed fund which means there’s some investment manager
Basically going in and you pay him a certain percentage or expense ratio to choose the stocks that go into that fund so somebody on Wall Street goes in and chooses the stocks that they think are the best fit and invest in those for you and while this sounds nice there’s a few
Different downsides to this one is that the fees are generally higher than index funds so they usually charge a big old management fee like one to two% also called an expense ratio may not sound like a lot but if you’re investing a lot of money over time that percentage adds
Up and the other downside is that research shows generally low cost index funds have generally outperform managers in the long term so then comes along this great thing called index funds and to understand this let’s break down the word quite literally into two parts so we talked about what fund is it’s
Basically a huge bouquet or basket whatever you want to call it of a bunch of different stocks and then an index tracks a market index like thep 500 or the NASDAQ or Dow Jones or all these fancy words you probably heard of like the S&P 500 is an index which tracks the
500 largest companies listed on the US Stock Exchange so you put those two together index and fund and an index fund essentially mirrors a specific index so what’s amazing is that you just basically purchase one index fund and through that you’re then let’s say with S&P 500 Index
Invested in 500 companies all at once so it’s really really easy to invest in and also again it diversifies your portfolio so you have way less risk because if one company isn’t doing great and that stock drops a ton you have another $499 to help offset that loss and another perk
Is they generally have a really low expense ratio like literally 05% because it’s being managed by like an algorithm or a formula essentially instead of by an individual Good Old Warren Buffett one of the richest men in the world and one of the top investors of basically all time is constantly
Recommending index funds is one of the best way for your everyday investor to invest through money so let’s say you have $1,000 and you decide to invest it in an index fund that tracks the S&P 500 that basically means like I said that ,000 is split over across all 500
Companies so looking at the current S&P 500 6% goes towards Microsoft 6% goes towards apple and then there’s some smaller different companies like oh Starbucks is on here number seven 77 that would get 27% of your $1,000 oh hey Bath and Body Works is number 462 at .3%
And while you can’t promise anything with investing of course if you look at the index fund from its very beginning Inception it’s generally always trended upwards and it usually has about an 8 to 10% return so let’s look at the S&P 500 over the last 35 plus years as you can
See it’s always kind of trended in this upwards trajectory and there have been some big dips like in 2008 with the financial crisis this then but if you had held on to your money you can see that over time it had bounced back from where it was and even grew further so
The only way to lose money with investing is essentially to get rid of your stocks and sell at a lower Point than the money that you put in so most investing is about the long run it’s about putting money in and not thinking about it and letting it sit and ride the
Waves of the stock market for a long time we’re talking many many years so with index funds it’s kind of like passive investing and then ideally passive money making if you’re a normal person you don’t have the time and knowledge to try to beat the market this
Is a very hands-off approach and a way to generate these returns over time so going back to our guy Warren Buffett in 2008 he actually made a $1 million bet with hedge fund managers that a simple S&P 500 Index Fund would outperform a handpicked basket of hedge funds and lo
And behold 10 years later he was right so again a few things to keep in mind with this and with starting to invest is that investing is not about getting rich quick or making a Fast dollar it’s about the long run and it’s about setting your future self up for success and putting
Money in and letting it ride the waves of the stock market because if you’re checking every day you might go a little crazy in my case I basically put all my money into index funds I just said it and I forget it and I’m not checking daily honestly I maybe only check every
Like five or six months because otherwise I would probably go a little crazy cuz there are times where it dips and you’re like holy I’m losing all this money but again if I check back in 6 months the chances are it’s probably Frozen back and has eventually made me
More money and obviously this is not me telling you what to do with your money or giving you specific Financial advice I’m just telling you what is approach that I’ve seen many people do you need to always do your own research and make a well-informed decision for
Yourself okay so this all sounds great when should I start you may be asking great question so the best time to start investing was yesterday because the longer you’re in the stock market the more chance you have for your stocks to grow through compounding interest which Albert Einstein actually called the
Eighth found of the world it’s never going to feel like the right time to invest cuz you know it’s fun to spend your money and not have to save and invest it but this is you looking out for future you I’m so glad pelena saved money and put in the time
To invest in her future and now I’m starting to reap some of the benefits and I will for decades to come but of course with investing only invest what you can afford to lose and you’re not going to need for sever years because a chance of getting those positive returns
Improves the longer you give your Investments time to grow so only put in money that you are really saving for the future 3 5 10 20 years so even though index funds have always knitted about 8 to 10% investing of course always carries risks and with that being said
There actually are a few steps you should do before investing the first is to have an emergency savings fund this is so important you don’t know what life is going to throw your way and it is super important to have around 3 to six months of your salary saved up and
Tucked away in a safe place because you never know you could get sick you could lose your job your plumbing could break you need to have money to able to address these things and you don’t want it tied up in investments in case you need it immediately the second being pay
Off your high interest rate debt certain credit cards interest rates can be around 15 to 30% which is crazy so if you’re not paying off that high interest rate debt it doesn’t matter if you’re making 10% returns in the stock market because you’re recurring all that back
In high interest rate debt and it would basically be canceling out any gains you have so address that first okay and something worth mentioning is to check if you have a 401k through your job this doesn’t apply to everyone but this is basically an employer sponsored retirement account that is tax
Advantaged it’s a super easy place to start investing and there’s a really good chance you have an employer match which means your employer might match your Investments up to a certain percentage which is basically free money which we love so then you want to look into different investment accounts that
You can open on your Own okay so now you’re ready to invest let’s talk about how you actually do it you can’t exactly just open up Google and click on the little shopping toggle and type in Index Fund so what you basically need is a middle man you need a broker by opening up a brokerage account and
There are a lot of super popular ones out there like Vanguard Fidelity Charles Schwab Etc they all kind of are similar across the board as long as you’re choosing one of the big ones and I personally have been using Vanguard for many many years so going back to our
Earlier analogy of the bouquet this is essentially like the shopping cart that’s going to hold all your bouquet and flowers AK your index funds and your stocks Etc and within this there are different types there are retirement tax advantage accounts and your regular taxable brokerage accounts and so I
Actually have both within my overarching Vanguard account so let’s break this down as well so they benefits of investing within a retirement count are they have some really great tax advantages so there’s something called a Roth IRA you may have heard of which you can invest up to $6,500 a year and it’s
Actually capped because the tax advantages are honestly so good so what happens is that you are paying taxes on The Upfront when your money is going into this retirement account and then when you take out the money which you can take out at 59.5 it’s taxfree so all
The money that’s grown within that retirement account over time isn’t taxed when you take it out the downside is that you’re essentially agreeing to lock up this money until retirement age there are some cases where you can take it out but you usually have to pay a penalty
Fee generally this is one of the best places a lot of people recommend to start investing especially because it caps out 6,500 but the the other options you can just have a classic brokerage account and pick your Investments within there either way these are like shopping
Carts so you still have to once you open up the account pick which different index funds you want to purchase there’s popular ones like Vu which is an ETF that tracks S&P 500 or like VT saxs which tracks the usrp total stock market index but these are just some of the
Popular ones that track some of the most well-known index funds and have low expense ratios okay now’s the fun part let’s actually do this together I’ve got my phone here and we are going to purchase some index funds right here right now I’m going to take you step by
Step so I’ve got Vanguard up in my phone I have my account open you just need to go ahead and open account once you have an account open you’re going to want to buy some index funds but the first thing you usually need to do is deposit money
Into your account and I already have $96 here but let’s put a little bit more into my brokerage account here and let’s transfer $1,000 we’re going big go big or go home so we’re going to click on buy ETF in stocks then you’re going to want to
Click on which account and like I said going use my brokerage account there’s the Roth area there which you can do as well and there’s my $1,096 I have available I’m personally going to be investing in Vu today with the money I got and so what those three
Letters are are basically a ticker symbol that stands for the different ETF we’re investing in so here you go you can see the vanard S&P 500 Index Fund I’m going to click on that so you can either invest through shares or dollars and also calculates dollars to shares so
Vu currently cost $429 which basically if I want to invest $11,000 is going to be two shares but I can just do it like this and then we’ll calculate to okay so we’re going to buy two shares order type Market limit stop so there’s different order types it just basically changes
The time that you’re buying the share at and Market just means you’re buying it immediately so we’re going to do Market because I’m doing two shares it actually is about $161 preview order preview order submit order and there you go I just invested if you did it with me now you’re an
Investor go one last thought before this video gets too too long is that let’s say you have $10,000 you want to invest should you just dump it all in all at once into one Index Fund no actually there’s something called dollar cost averaging which essentially means systematically investing equal funds
Into a certain investment regardless of the price of that fund instead of doing $10,000 out lth maybe I’m doing $2,000 every month and depending on when you’re investing maybe that share or fund is a little bit higher or a little bit lower by doing it systematically and spread
Out it kind of helps even out those highs and lows so again the best time to start investing was yesterday set it and forget it think about the long term and try not to get too tied up in the roller coaster of the stock market what matters
For me is that in the long term the stock market has always gone up and I’m doing this for my future self so you’re welcome future Elena I’ve got you covered so I hope this was helpful and has inspired you to start your own investing Journey it’s really not that
Hard and having Financial knowledge and with that Financial Peace and Independence is one of the biggest gifts you can give to yourself and I’m so happy you took this first step to learn about investing and hopefully you’ll learn to invest in your future and invest in yourself if you like this
Video it would mean a lot if you gave it a like and hit subscribe it really helps out my channel and with that I’ll see you guys next Time
Video “How to Invest for Beginners 2024” was uploaded on 01/27/2024. Watch all the latest Videos by Elena Taber on Gretopia