when i was brand new to investing i literally had no idea how to get started
even today when i talk to my friends and family that are new to investing
i ask that they have money in the market and they say they literally have no idea what to do
in this video we're going to take you through the step-by-step process to make
your first investment my name is Brian Feroldi and my name is Brian Stoffel
thanks to Quartr for sponsoring today's video brian if somebody comes to you and they say they
want to start investing what do you tell them i tell them before we get started we
need to hold on one second because there are three things that have to be in place first
the first is that you need to make sure that you have paid off all of your high interest debt
debt that compounds faster than 10 per year is going to keep building and building and building
you want to take care of that before you put any money in the stock market the second thing
we want to make sure that people have before they start investing is an emergency fund
life is unpredictable and you can be sure that something will happen in the future that requires
you to access hundreds or even thousands of dollars if you don't have a pool of cash to cover
that emergency you're going to have to sell your investments and the chances are that's going to
come at an inopportune time so make sure you have a fully built out emergency fund before you invest
and third you need to make sure you've got the right time horizon in mind brian and i are big
believers that investing in the stock market is a great way to build wealth because it always
goes up but it always goes up over a long enough time period there are several time periods where
over three years the stock market actually goes down so you don't want to put in any money that
you're going to need in those three years for big things like college expenses buying a home
or maybe having a wedding it's better to keep that money out of the stock market all right
brian so my high interest debt is gone i have an emergency fund and i have a time horizon that's
measured in years what do i do next you gotta find a broker and if you don't know what a broker is
you go to a bank to store your money you go to a broker so that you can invest that money nowadays
there are dozens of wonderful brokers out there if you want a curated list go on to brianferaldi.com
and there you'll find links to all of the major brokers out there many of which offer zero fee
commissions which is fantastic for individual investors in this video we're going to do a
step-by-step walk through with a relatively new broker that offers a lot of advantage that making
investing very easy that company is called m1 finance however the steps we're going to go
through apply to pretty much any broker that you choose once you click on m1 finance on brian's web
page it'll take you to a screen that looks just like this what you need to do is find the box that
says get started the next step from there is to go through the process and get yourself registered
you're going to have to put things like your email address your password and it's basically
the same process that you go through when you open a bank account online after that you're
going to get a chance to learn a little bit more about what we think makes m1 finance special
like the way that it automates investing and makes it simple for you to make your investments in the
companies or the areas that matter the most to you click on that continue button and they'll tell you
how they go about doing this now once you're in there open an account you're going to be
asked what type of account that you want to open a tax advantaged account or a non-taxable account
we're going to walk you through the three most popular types of accounts that you can open
the first type of account that you want to be aware of is called a roth ira this is a tax
advantage account that offers numerous advantages now when you put money into a roth ira there's
no tax advantage at all you're putting in after tax dollars but once the money is in a roth ira
it grows tax-free and when you want to take money out later in life there's no taxes to pay so long
as you follow the rules now in 2021 you could contribute up to six thousand dollars to a roth
ira or seven thousand dollars if you're over 50 assuming you qualify not everybody qualifies for
roth ira there are income limitations but if you do qualify to open roth ira it can be a fantastic
place to put capital one of the cousins of a roth ira is a traditional ira and you'll be able
to see how these two are very closely related unlike the roth in a traditional ira the money
that you put in is not taxed in other words if you earn say a hundred thousand dollars a year
and you put five thousand dollars into your traditional ira when you have to pay taxes
in 2021 you'll only pay on that 95 000 instead of 100 000 it is untaxed money that you put in
like the roth any growth that you experience when you buy or sell stocks you'll be able to do that
without paying taxes when you do have to pay taxes is when you're in retirement and you're pulling
that money out to support your living expenses at that time you'll be taxed at whatever tax rate
you're in during those years now like the roth ira there are limits for how much you can put
into it six thousand dollars and we'd like to mention that that six thousand dollar number
is a combination you could put three grand into one three in another zero into traditional six in
the roth but unlike a roth ira there are no income limits to contributing to traditional ira the
final type of account we want to make you aware of is just called a regulator brokerage account
this is an account that allows you to invest but there are absolutely no tax advantages at all you
put in after tax dollars and if you make money on any of your investments you are going to pay taxes
on them a great thing about a regular brokerage account is there's absolutely no income limits or
contribution limits at all after you choose what type of account you want to have you're going to
need to figure out how you're going to fund it you can do that by connecting it to a bank account or
setting up a reoccurring transfer there will be lots of options that are very similar again
to setting up your own initial bank account great so your account is open and you're ready to go
but what should you actually invest in before we get to that we wanted to give a shout out to
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the video so now that you've got all this set the question becomes well what can i actually
invest in the first thing we'll cover are mutual funds that's where a professional money manager
is taking your money and splitting it up between many different assets in an effort to
accomplish whatever goal it is usually to beat the market now we're not huge fans of mutual funds but
sometimes they make sense for people and it's worth noting that not every brokerage account
allows you to invest in mutual funds for instance m1 finance does not support an
investment in mutual funds the second type of thing that you can invest in is what's known as
an exchange traded fund or an etf and etf is kind of like a hybrid between a mutual fund and a stock
it trades on a public stock exchange such as the new york stock exchange or the nasdaq and there
are thousands of exchange traded funds out there and they can give you exposure to whatever assets
you want there are exchange traded funds that invest in cyber security stocks or agriculture
stocks or growth stocks or value stocks whatever flavor of investing that you want to come up with
exchange traded funds are an easy low-cost way to gain exposure to any asset class that you want
two types of exchange traded funds that we want to give a special call out to are very broad ones
that are very popular the first are index funds and that's where you're investing money in an
index in this case we give the example of the s p 500 index by buying the ticker symbol spy
you're investing in an etf that invests in the 500 largest publicly traded companies in
the united states the second one we want to call out are target date retirement funds that have a
year associated with when you will actually be retiring the idea is is that your risk profile
will change from riskier stocks when you're younger to more conservative allocation as you
get closer retirement to make sure that you have everything you need when you hit that retirement
age one reason why we wanted to call m1 finance is they have this thing called m1 pies which make
it extremely easy for new investors to invest their capital exactly the way they want to so
you can use these pies to choose what percentage of your portfolio you want in any asset class that
you can think of they have more than six thousand stocks and funds that you can build a custom pie
and it doesn't matter how much capital you put in if you put in fifty dollars but you want ten
percent in health care stocks ten percent technology stocks and 10 in real estate
and one's pies will allow you to do that and if you don't want to be responsible for
picking those investments yourself m1 also has more than 80 curated pies that are picked by
experts that allows you to invest according to your specific risk profile finally you have the
opportunity to invest in individual stocks and if you're watching this channel we're guessing
that that's probably something that is interesting to you now as for how do you find stocks to invest
in and how do you screen them well we have a lot of videos exactly on that topic click the link
you see on your screen to watch a video where we show you the places that we find individual stock
investments we hope this video was helpful and we wish you good luck with your investing brian's out