This is my father, Mervin Tilbury.
He's one of the hardest working people I know,
and as a kid,
I remember him working in a factory job making cable ties
and a side hustle cutting grass,
so he could provide for me and my mom and my three sisters.
He'd stash away any extra money he made in a shoebox as well
as a bank account that paid little to no interest,
hoping that one day he could quit his job
working in the factory.
When my uncle invested some
of his money in the stock market,
my dad said it was an extremely risky move.
Unfortunately, what my dad didn't realize
is that he was also playing a risky game.
Can you see where this story's going?
Every year, my father's money
was losing value due to inflation.
This is just what happens over time.
As more money is printed,
the money in circulation becomes less valuable.
This meant he was never able to quit his job in the factory.
The thought of my money being eaten
away by inflation scared me so much
that I've made sure to invest throughout my life.
As a result, not only have I beaten inflation,
but my investments actually now grow
by around $17,000 a week on their own,
which over my lifetime has made me millions.
I'm no financial advisor,
but I am someone that's been there and done it.
That's why I'm making this video.
It's exactly what I wish I had when I was younger.
How can I make money investing in stocks?
To make money,
we first need to beat the inflation issue.
In the last 60 years,
this average is out to a rate of 3.8% per year.
So if your money isn't growing by more than this on its own,
then you're getting poorer by the second.
In a perfect world, you would have a savings
account that provides an average return
of eight to 10% every year,
so that you can both beat inflation and earn some profit.
Unfortunately, such savings accounts don't exist.
However, you can achieve returns
like this by investing in the stock market.
A stock is a small part of a company and when you buy it
you become a shareholder, and when you're a shareholder,
there are two ways you can make money.
Firstly, if the price
of the stock goes up during the time you own it,
you can sell it for more than you paid.
Secondly, you can receive dividends.
Dividends are regular payments to shareholders.
Not all stocks pay dividends, but if they do,
this means that you can receive money
without ever selling your stock.
The magic really starts to happen when you own a bunch
of stocks that grow at an average of 10% per year,
because the interest applied becomes larger and larger.
This is called compound interest, and I have to admit,
a guilty pleasure of mine is messing
around with online compound interest calculators.
Let's do one now.
If you were able to invest $250 per month,
at an 8% annual return,
in 42 years, you'd be a millionaire
and if you continue to do this for another 10 years,
you would actually have over 2 million in your account.
Of course, if you wanted to invest even more
then that would just speed up the process.
This is all based
on historical average data and it isn't guaranteed,
but it's certainly been my experience.
So as you can see, the real secret ingredient
to this millionaire formula is time,
which brings me onto when should I start investing.
The short answer to this is as soon as possible.
The younger you start, the better.
As you're giving your investments more time
to grow and compound.
This also means you can take more risk,
as your investments have time to recover
if a stock market crash happens
and it will happen, it always happens,
but life isn't as easy as this, as there are often things
in the way preventing you from investing.
So here's how I would structure things.
First, you need to make sure you've paid
off all high interest debt like credit cards.
Just think about it.
There's no point trying to make 10% in the stock market,
if you are paying 15% to a credit card company.
Secondly, build up an emergency fund.
This should be enough to cover three to six months
of your living expenses.
This way, you are not forced to sell your stocks
in the event of an emergency
which can really ruin your progress.
Once you've done both of these things,
you are ready to start investing.
If you are younger than 18,
then it would be a great idea to ask a parent to open
up a custodial account, which allows them to invest for you.
This will give you such an advantage in the future.
Your next question is probably something
along the lines of how much should I invest?
When you ask an investor,
they'll probably say as much as possible.
However, I have a different opinion.
I made most of my money
through starting different businesses
and only use the stock market to grow my wealth over time.
I've also had a pretty fun life
from flying full-size airplanes and racing cars
to competing for my country and traveling the world.
If I'd invested all of that money into the stock market,.
then I'd have missed out on so much.
So my answer would be to invest whatever you
feel comfortable with, but if you want a more solid answer
then a 70/20/10 rule is a pretty good guide.
It states that you should split your money
by these percentages, 70% on living expenses,
20% on investments, and 10% on the fun stuff.
Research shows that people who invest
at this level are much better equipped to ride the ups
and downs of life and also get ahead of everyone else.
That's all well and good, but how do I buy a stock?
There are various different apps out there
that allow you to invest in stocks.
I'll leave some links below.
The key is to open the correct type of account.
You'll often hear people throwing around the terms,
ROTH IRA, in the USA and stocks and shares ISA
in the UK, TFSA in Canada and supers in Australia.
If you don't have one of these accounts
then you're missing out
as they allow you to avoid paying taxes on your investments,
but they do have limits because they're so powerful.
A great thing about these investing apps is they
actually give you the ability to buy fractional shares.
So rather than buying a share of Apple for $190,
you can invest as little as $1.
I wish I had this option when I was younger,
as it would've allowed me
to get some early investing experience
without having to take any big risks.
One of my favorite investing platforms is Trading 212,
as they do both of these things.
Since I was planning to talk about their app anyway,
I reached out to see if they'd be interested
in sponsoring this portion of the video.
They agreed and are also offering a free stock worth up
to £100 to anyone that uses the code
Tilbury when they create an account.
One of the really cool things
about Trading 212 is they let you practice investing
with fake money so you can get familiar
with real data from the markets without risking any money.
So if you're a little uncomfortable with investing,
or just want to try some strategies
before putting your own money on the line,
this is a great way to get started.
Another great feature is called Pies,
where you can see how other investors
have allocated their money into different stocks.
If you wanted to invest 100$ into that pie,
then it would just be split amongst the various
allocations that that pie creator has chosen.
If you live in the UK or Europe,
it's worth trying out Trading 212 because signing
up is completely free and there are no commissions.
Of course, don't forget to use the code Tilbury
and you'll receive a free share worth
up to a hundred pounds.
Or alternatively, click the link in a description
to sign up and see exactly how to access the free share.
Now, the obvious next question
is how do I pick the best stocks?
There are two main ways to attempt
to predict the stock market.
These are called technical and fundamental analysis.
A good way to think about this is like a scale.
Usually short-term day traders are purely focused
on the technical aspects.
This includes looking at charts and patterns.
They believe they can predict how the stock will change
in price by judging the highs and the lows on the graphs.
As a long-term investor,
my strategy is about keeping it simple.
Lots of people talk about using margin and options,
but that's really not something I worry about.
I'm a lot more focused on the fundamentals of a company.
This includes the financials, the leadership,
and the brand recognition,
as I believe this is where the true information
lies to indicate the long-term success of a stock.
When I invest in a stock, I don't have an intention
of selling it for at least two to five years.
However, like I mentioned, it's a scale,
so I do look at the occasional chart
in order to find the best time to buy.
This approach has helped me find some really
good investments over the years rather than just dipping
in and out, trying to make a profit every day.
But with the majority of my investments
I don't actually do any of this.
That's because I allocate most of my money to index funds.
This is definitely the best strategy for most people.
So what's an index fund?
It's a way for the average person to make more money
than the professionals with very little effort.
I'm a big football fan
and if you've ever followed any sports,
you'll be familiar with a lead table like this.
The better your team performs,
the higher up they'll be on the list.
On the other hand, if they do really badly,
they might be removed from the league entirely.
This is almost exactly the same as an index.
All you have to do is switch out the teams for companies.
Let's take the S&P 500 for example.
This is a list of around 500 of the largest public companies
in the USA, the big dogs being Amazon, Google,
Apple and Tesla.
Just like the league table,
if a company does poorly,
then they run the risk of being removed
from the list.
With this league table or index of companies.
You could go and buy stocks in some of them individually.
However, if something bad happens
to those companies that you've picked,
then you can wave goodbye to your money.
The idea of an index fund is to be a little bit sneaky
as it allows you to invest
in every single company on the list with just one click.
Even if a few companies do terribly, then it's balanced
out by all the companies doing extremely well.
The average annual return of the S&P 500
over the last 10 years has been 13.6%.
Although this is slightly higher than the average over time
no one has ever lost any money if they've bought
and held an S&P 500 index fund for more than 20 years.
The truth is
that the average actively managed fund return 2% less
per year than the market in general.
This means that the professionals on average are doing worse
than index funds, and even if they end up losing you money,
they still charge you high fees no matter what.
The reason that index funds can charge really low fees
is because they're passively managed,
which means they look after themselves
and don't need an expert to keep adjusting them.
Meaning the fees can be as low as 0.02% per year.
When I tell people about index funds,
it often blows their minds.
However, when they go onto an investing app,
they get confused at the different options and ask
what's the best index fund to invest in?
Well, as I said, I'm not a financial advisor,
but I have had a lot
of success with three different types of index funds.
Number one tracks the S&P 500 index.
This is the one we briefly mentioned before.
The historical return
of eight to 10% has allowed me to generate a fortune
over the years.
This is due to the power of compound interest.
The S&P 500 tracks 11 different industries/sectors
and no sector is more than 30% of the index.
However, it is worth pointing out
that it's a bit tech heavy these days,
with five tech stocks dominating 23% of the entire fund.
It's up to you if you see this as a positive or a negative.
I personally don't mind
as I believe in the future of technology.
There are so many different index funds that track
the S&P 500, so here are some of my favorites.
The best I found in the USA
is the V-FIAX Index Fund or the VOO ETF.
The best in the UK would probably be the VUSA ETF.
The only real difference between an index fund
and an ETF is that the ETF can be purchased
or sold at any time throughout the day.
Just like a stock,
index funds can only be purchased in full.
So for example,
if the price is $500, you must pay $500.
An ETF on the other hand,
can be purchased in fractional shares,
which means you don't have to buy a full share
and instead you can invest whatever amount you like.
This is great if you just starting
out or want to dollar cost average in.
Personally, I've set up a direct debit every month
so the money leaves my bank account
without me even noticing.
Really and truly, there isn't a huge difference
between an index fund and an ETF.
Just consider which one is best for you, take the plunge.
Number two is a total stock market index.
The total stock market index has returned investors
an average of 13% each year
over the last 10 years, which isn't bad at all.
It's the definition of diversification.
You can't really get any more skin
in the game for a lower cost.
If you want to invest for a long period of time
without having to even check or even think about it,
then this is most likely the fund for you.
Investing in everything means you can experience gains
across the entire market,
and unless a crazy crash happens,
you should be okay,
but even if it does crash, with time,
things tend to bounce back.
I've seen three crashes since I've been an investor,
the.com bubble, the 2008 financial crisis,
and the 2020 COVID crash.
I'm not going to pretend these crashes didn't hurt,
but long term
every market I've invested in has bounced back.
The downside to this index is it depends
on the entire market trending upwards.
This means there could be an individual stock
that you really believe in that goes to the moon,
but you might not experience those gains
because that stock doesn't play much
of a role within the index fund.
The best I found in the USA is the VTSAX Index Fund
and the VTI ETF
and the best in the UK is the VWRL ETF.
Number three is the emerging markets index.
Emerging markets are predicted by some experts
to be on the rise, and whether I agree with this or not,
I think it's important for me to have
at least a little bit of exposure to these markets.
It's all well and good buying the S&P 500,
but when China, or another emerging country
has some great gains,
you'll end up missing out.
Just as an example of this growth,
when I first traveled to China around 20 years ago,
I looked into buying an apartment in Shenzhen.
That real estate was $47,000,
and now it's worth over a million.
This just shows the potential growth in these markets.
Emerging market funds are definitely the most risky type
of index funds we've discussed.
These funds include stocks from lots
of different growing markets and could be very heavy
with Chinese companies.
Taking a look at a list of the largest economies
in the world.
A lot of them are emerging markets, so it just makes sense
to me to throw a little bit of money in for diversification.
The best I found in the U S A is the VEIEX ETF
and in the UK, the VFEM ETF, but there are also lots
of other emerging market funds available,
so it's worth having a look around.
Now, I know at some point I need to address
the biggest question around investing,
which is, of course, is investing risky?
It really depends on how you define risk.
You may be scared that you'll lose money.
However, you also face this risk
by not investing, as my father Mervin found out
if you have a diversified portfolio of index funds
and keep investing at a gradual rate each and every year,
then even if there is a stop market crash,
then historical data shows you should be able
to endure the storm.
A great way to make sure you're protected
in the event of a market crash is to mix
in a few bonds within your stock portfolio.
These are just a different type of investment
that are far more stable than stocks
and you can buy these on the same investment platforms.
In your twenties and thirties,
I wouldn't worry too much about them,
but as you move closer to retirement
it's a good idea to have more bonds and stocks.
In my opinion, in your younger years,
the biggest risk you can take is not taking enough risk.
Now, for the question on everyone's mind,
when should I sell my stocks?
It's possibly one of the most common questions
in the stock investing world.
Knowing when to sell stocks
or hold onto them mostly depends on your age.
If you're older, you've likely been investing
for a while and can live
off them during retirement by gradually selling when needed.
However, if you're younger, this usually isn't the case.
In fact, if you are in your twenties to thirties,
there are only three good reasons to sell your investments.
Number one, you need money for an emergency.
Hopefully, if you followed the video so far,
then you won't need to worry
because you've got an emergency fund to help you
out in times like this.
Number two, you made a bad investment.
If you have individual stocks that appear
to be underperforming consistently,
it may be time to cut your losses before those losses stack
up even higher.
Before panic selling,
take a good look at the wider industry.
If other goods like it are also in decline,
then you know it's the industry, not just your stock.
If everything's doing poorly,
this gives you a bit of extra context.
Number three, you've achieved a specific goal,
although I don't really recommend it.
If you are investing for short or medium term goals like,
I don't know, saving up for a dream vacation,
then it would be a great idea to set a target price.
This is a figure
at which you would feel satisfied selling the stock
and enjoying your gains.
The most important thing to remember is to not
sell your stocks for as long
as possible so they have the longest time to grow.
Just invest and forget about it,
until you want to stop investing and take your profits.
This thinking will also help you avoid panic selling.
If you wanna know exactly how I pick my individual stocks,
then you can check out this video next,
but don't click on it just yet.
Make sure to subscribe if you want to grow your wealth.
Okay, I'll see you over there.