who is the fastest self-made billionaire
ever
while it took warren buffett 55 years to
join the billionaires club
jay walker literally did it in less than
a year
he launched priceline.com during the
dot-com bubble
and his net worth instantly jumped from
zero to billions
but that wasn't sustainable because when
the bubble burst
his net worth crashed as well while
buffett is still on the top of the list
and he doesn't seems to go anywhere
anytime soon
that's the kind of wealth you want to
build the game of money isn't easy
it's tough competitive and ruthless and
if you don't know the rules
you are doomed to fail the problem with
most people is that
they might work super hard their entire
lives
but end up poor then of the journey
because they don't know how to let their
money
make even more money in other words they
don't know how to invest
let's assume that you have been saving
money and have an extra thousand dollars
in your bank account
that is already an achievement because
nearly 70 percent of americans
don't even have an extra thousand
dollars so instead of spending it on
another useless gadget or a pair of
shoes
that you would wear once and then keep
in your wardrobe for many years
before you finally throw it away let's
assume that you're going to invest that
money
but the question is how do you invest
your first thousand dollars
do you invest it in real estate or the
stock market what kind of stocks do you
buy
is a thousand dollars is enough to start
investing
we're going to answer all of these
questions and many more so give this
video a thumbs up
and let's get started to understand what
investing
is and how does it works consider this
example
let's say you worked so hard and saved
three hundred thousand dollars
you can pay a visit to a ferrari store
and get yourself
a luxurious car and let everyone know
how successful are you
or you can buy real estate and rent it
out
every month you will receive at least
two thousand dollars
if you decide that you no longer want to
keep receiving the two thousand dollar
paycheck every month
you can sell it and get back your
initial investment
in fact the value of your investment
might even appreciate
so you will sell it for a higher price
and that's how money makes money
but you can't buy real estate for a
thousand dollars that's not even enough
for a down payment
however that doesn't mean you can't
invest a thousand dollars elsewhere and
let it grow
the easiest way is just to deposit it
into a savings account and generate
interest
but why would the bank pay you for
keeping your money in the bank
shouldn't they charge you instead no you
see
the bank is going to take your money and
loan it to someone else
at a higher rate and would share with
you a portion of that profit
that's how banks work in short the only
problem with this strategy is that
interest on deposits account is so low
that it doesn't worth it
the highest rate you probably can get is
0.8 percent
which means that if you invest a
thousand dollars into a savings account
12 months from now you will receive an
extra eight
dollars which is extremely low because
the fed targets an inflation rate of two
to three percent
which means if you're not getting at
least two or three percent
over time the real value of your
thousand dollars
will depreciate which means you can buy
with it
less goods every year but why interest
rates are so low on deposits account
because interest rates in general are
low this year
since the pandemic forced the fed to
lower them to encourage everyone to
borrow money and spend
a year or two from now once we get out
of this recession
the fed will increase interest rates to
one or two or even
three percent which means interest rates
on savings accounts
will rise as well your second option is
to buy government bonds a government
bonus security that's issued by the
government to raise money to support
government spending
say the government wants to build a
school but it doesn't have the money to
do that
so it issues an iou a piece of paper
that says
whoever owns the security is owed this
much of money
plus interest by the us government of
course
this is an oversimplified example but
that's the point in short
government bonds are heavily influenced
by interest rates
so since interest rates are extremely
low this year
government bond rates are less than one
percent
but two years ago when interest rates
were high government bonus rates were
as high as 3 percent which is not bad
since the government bonds are the
safest investment
you can ever make any investment carries
with it
a certain level of risk if you're
loaning money to the us government
what are the chances that the us
government will default on its loan
for the us government to go bankrupt the
entire u.s economy
might have to fail that's why u.s
government bonds are considered
the safest investment in the world but
if you want to make a higher return
let's say 10
20 or 30 percent then you have to
consider
investing in the stock market for
example amazon stock price increased by
over 80 percent just this year google
stock price rose by almost
30 percent tesla stock increased by 721
percent
yes you heard that right 721 percent
then the question is why would anyone
invest elsewhere when they can double or
even
triple their money in the stock market
the answer is
risk when it comes to government bonds
for example
there isn't much risk in fact it's
risk-free to a certain extent
but when it comes to individual
companies there is a risk that the
company might fail
it might report negative earnings pretty
much any negative news can drive the
stock price down
the company might release a product and
if the public doesn't like it
that can make some negative headlines
which can drive the price down
so with higher returns comes more risk
apple is a well-established company and
its chances to fail
are way lower than tesla for example but
it also has less room to grow than tesla
that's why tesla grew by 721 percent
this year
but apple by just 70 percent what you
have to determine
for yourself is how much risk you can
take without going nuts
if that thousand dollars is all that you
have left
maybe risking it all isn't the wisest
option
because if things turns out you can end
up losing most of it
so one way investors minimize the risk
in the stock market is by investing in
an index
the most famous one is the s p 500 which
tracks
top 500 u.s companies so an index fund
would basically invest in these top 500
us companies
some of these companies will definitely
fail but others will grow
judging by historical data the average
return rate for the s p
500 since the 1920s was around 10
percent
this means buying a share of these index
funds means
you're buying a tiny share in the top
500 us companies
my three top favorite index funds are
voo
or vanguard 500 index fund triple q
an index fund by invesco and fidelity
zero total market index fund
all of them are great and invest in
pretty much the exact same companies
but how do you buy shares in this index
fund
i mean where do you start first you need
to find a broker
someone who is qualified to sell you
stocks in the past it was always
someone you had to pick your phone and
call him and ask him to sell you some
shares
remember the wolf of wall street he
would spend his entire day
calling people and try to sell them
worthless stocks
but thank god we are in 2020 and things
are much better and easier
brokerage firms created apps so that you
can buy shares from the comfort of your
smartphone
such as robinhood weeble and so on
all you have to do is that download one
of these apps
and sign up and you can start investing
right away
in fact if you use the link below to
open a weibull account
you will get two free stocks just a
disclaimer it's an affiliate link
but you're going to get your two free
stocks isn't that amazing
that's a good way to start i would say
check the link in the description
i tried my best to make this video as
simple as possible so that
whoever wants to start investing can
start right away
often what happens is that you want to
start investing but you have a million
questions and you start googling
this and that and get exhausted after
some time
and then you just give up and try again
a few months later maybe
so i try to answer all of your questions
here in this short video
so if you have found this video helpful
make sure to give it a thumbs up
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thanks for watching and until next time