- Hey guys, it's Jatz.
And in today's video,
I'm going to discuss everything you need to know
about investing,
from things like index funds,
stocks and cryptocurrencies.
I'll be sharing the benefits of investing,
when to consider investing
and how you can get started just like me.
A year ago,
I knew nothing about investing and lost a lot of money,
but now I have been dabbling around it for a year.
I have much clear understanding of how things work,
and wish I knew this before I started.
Make sure you stick around till the end,
as I've ordered the safest investing options
from the lowest to the highest risk,
where there are higher gains.
Now the big question most people have
is why should you start investing?
We all want to gain financial freedom.
Some want to have a peaceful retirement,
enjoying a cold breeze at the beach.
While some want have enough money
to live in lavish lifestyle.
In order to gain financial freedom,
it is said that you cannot become free,
if you're constantly using your time for money,
neither will your savings do you any justice.
You need to make your money work for you,
or else it will become useless
due to something called inflation.
You may or maybe not aware,
but every year, your money loses value
due to everything else becoming expensive.
I mean take this can of Coke, for example,
I used to pay fifty p for one can,
but now it costs sixty nine p per can,
see the affects of inflation.
Now this is just a small example
compared to the bigger picture,
but you get the idea.
On average inflation rises by two percent a year,
but banks give you an interest
of less than one percent on your savings.
Therefore, you all always losing money overall.
Now, on the other hand,
if you had invested your money in an index fund,
you could have gone an average return
of ten percent over the years.
So now the question is,
is it really worth having your money saved up in a bank,
or to invest to gain far more financial growth?
Definitely not to save it up.
So let me introduce you to the lowest risk option.
Index funds.
Now, you may be wondering, "what is an index fund?"
Well, let me break it down for you.
An index fund is simply a fund.
A collection of money from people
put in a big pot then invested into the big indexes,
like the S&P 500.
The S&P 500 and other major indices,
are built up of big corporations,
depending on their percentages as shown on the chart.
Now the funds simply invest the money on the percentage
of how the indices is built.
Let's say there's a fund worth of a hundred pounds
and is invested into the S&P 500.
As you can see,
Apple here is worth six point nine percent
of the whole S&P 500.
So the fund will buy six point nine percent
which is six point ninety worth of Apple stock.
Now it'll do the same for all the other companies
which make up the S&P 500.
Now I hope this makes it much clear
on what an index fund is.
If you still don't understand it, don't worry.
I'll go more in detail in coming videos.
Now you don't have to invest in the S&P 500.
There are many other indexes such as the FTSE 100,
or the NASDAQ Composite.
The best thing about an index fund
is that it's passive investment,
just like a pension scheme.
You don't have to look at it constantly and day trade.
All you do is keep feeding the fund and over time,
it'll give you high gains.
I mean, look at the stats.
Yes, the market has gone down a bit,
but has always led to higher gains in return.
The reason being is that
it relies on five hundred companies.
If one or two go down,
there are still four hundred and ninety eight companies
that will balance out your returns.
Now psychology plays a huge point investing,
as you need to ride the wave
when the market goes up and down.
And this is why I love index funds.
As personally, I'm not so good psychologically.
I can simply put in my money monthly,
and let the fund work for me.
While we're at it here.
Here's a fun fact.
I'm just twenty two.
And if I started putting hundred pounds
into the S&P 500,
with a return of ten percent a year,
by the time I'm sixty seven,
I should have made over a million pounds in passive income.
Now, if I just waited few more years
and started when I was thirty,
I would get a return of only four hundred thousand pounds.
Now look at the difference,
I would lose that on so much money,
and this is why you should start investing
as early as possible.
Here are a few platforms you can look into
to start investing into index funds.
If you're from the UK,
I would recommend Vanguard,
as this is the one I use and it's really safe.
My pro tip here would be just choose a fund
that has a low brokerage fee.
So you don't get ripped off.
For my US people,
I would recommend Fidelity Investment,
but as I mentioned, just make sure you choose a fund
that has a low brokerage fee.
And for my young audience, don't worry.
You can also join in on the action.
All you have to do is get Custodial Account in the US,
and a Junior Stocks and Share ISA if you're in the UK
with the permission of your parents
and you should be good to go.
Let's move on to the second investing option,
which is through stocks.
This is slightly more riskier than index funds.
Let's say you believe in Apple
and think by the end of 2023,
the company is going to do so well
in terms of financial gains.
Then you can simply buy a stock for Apple.
This means you're essentially owning a part of the company.
So you can pretty much say, "I own Apple."
Now, if Apple does so good, you'll gain high returns,
whereas if Apple goes down,
so does the price of the share you bought into.
Now this is where it's more riskier to invest in
rather than in index fund,
as you're relying on a single company.
If the company goes bankrupt, you'll lose all your money.
However, on the flip side, if the company does so good,
you'll make more gains
as your money's invested in one company, rather than many.
Another benefit of investing in single stock
is that you can get paid dividends each year.
Let's say Apple does good this year,
and sells many phones and make millions this year.
They can choose to share the millions
among shareholders equally,
allowing you to gain some extra money.
The reason why big companies
like Apple and Microsoft do this,
is that they can attract more investors to invest in them.
Not only that, they try and promote long term holdings
as there are two type of stock traders.
One being long term Passive holder,
which companies love.
Another called Day trader,
where throughout the days they simply buy and sell stocks,
causing the market to go up and down.
There are many ways you can buy a stock.
You simply need to create a brokerage account for the UK.
You can simply go to sites
like Trading 212,
or ETORO to make an account.
And for the US,
you can simply go to Fidelity Investments or Public.
Once you're in there,
you can simply deposit some money in and buy stocks
for any companies you like.
Obviously do not blindly buy stocks,
make sure you carry out technical and fundamental analysis
of each company you wanna invest in.
Now, if you have no idea what these two words mean.
Technical Analysis is when you look at the stock chart
to see how well the company's doing.
If it's going up or down,
commonly used by Day traders
as within markets may move a lot within a day.
Whereas Fundamental Analysis,
is when you look at company report,
news and balances sheets
to see how well the company is performing,
and what the future looks like for the company.
This analysis method is used by both type of traders,
Day and Passive holders,
but it suits Passive holders more,
as they only care about long term gain.
However, don't get me wrong.
Both analysis methods are important
and should be used by everyone,
regardless of what type of investor you are.
They share key information you need
before investing into stocks.
Once you start investing in stocks,
it is important you start diversifying your portfolio.
Look to buy in different stocks in different markets.
As if a certain sector is doing bad,
you can cover them from other sectors that are doing great.
Finally, let's talk
about the most spoken topic in 2022, cryptocurrencies.
This is a high risk,
but at the same time, high rewarding investing option.
For those of you that don't know of what cryptocurrency is,
it is basically a digital currency,
just like we have pounds and dollars,
but they are all locked in the blockchain.
Now some of you must be saying, "what are you saying?
Some cryptos like Bitcoin and Ethereum are low risk."
I disagree as they're very, very volatile
at the moment due to uncertainty around them.
Although I believe they have a key part to play
in the coming years, but it's still too early.
And that's the main reason why it's risky.
Yet finally, Bitcoin and Ethereum
are the safest option in the crypto world.
As there are many dodgy coins
being made on daily basis in the crypto world.
I mean, they're so easy to set up.
Check out this video by Biaheza who made a Fluff coin,
and within a day,
it reached over four million dollars in market cap.
The people in invested got lucky,
as if he decided to pull out,
he could have taken all the money and fled.
Now not everyone is lucky.
I'm sure you've heard of the Squid Game Token,
where they pumped the coin to three million dollars,
and within a second, it went to zero.
As the creators pulled out all the money.
Now, the people who invested, lost all the money.
These scams have happened countless times.
People simply start making DisCon communities,
and hype up a coin and start pump and dump scheme.
This is why I would highly recommend
you stay away from such investments.
As in my eyes, I don't even see them as investments.
But if you wanna take some risk,
go ahead, just make sure you use the money
you can afford to lose.
My best tip I would give you
is buy and sell straight away,
and keep recycling the money.
But any projects you invest in,
never forget to carry up extensive research on the projects,
just to see they're legit,
and have some type of value before you invest in them.
If you do wanna invest in cryptocurrencies,
then you can sign up to a platform like crypto.com
If you click the link in the description,
you'll get twenty five pounds just to sign up.
Once you're in,
you can simply select the currency you will wanna buy.
But like I said, make sure you do your research
before investing in any coins.
Now, before you even think about investing,
here's a checklist you need to complete
before you start investing.
And there are a few important things you need to consider.
Number one, you need to make sure you have an emergency fund
before you start investing.
Sounds a bit scary, "emergency fund."
I know, but it's rather simple.
You need to have some money around
just in case an emergency arises,
and you need the money immediately.
It is recommended,
you have at least six to one year's worth
of living expenses in cash, ready to use.
Just in case you have lose your job
or a medical emergency arises.
The second thing you need to consider,
is paying off all your debt you may have.
Now, this is because all your debt has high interest on it.
Therefore let's say you are making some returns
on your investment.
Your debt interest
will be cutting those investment returns down.
So it's most definitely advised
to get rid of any debt as soon as possible.
And lastly is important.
You do not invest any money you will need
in the next three to five years.
This could be for a marriage,
or even a down payment on the house you're planning to buy.
This is because investing is still risky.
No one can predict what will happen.
The market can even crash tomorrow.
I mean, look how down the market is at the moment.
Once you have done these three important things,
then is best you start investing straight away.
The more you wait,
the more you will lose on potential gains.
Here's a little bonus for your new investors.
Psychology plays a huge part in investing.
If you're a very impulsive and impatient person,
then I suggest you take long term passive investing options
instead of dabbling into day trading
where you are constantly battling
with the urge of buying and selling,
as soon as you see some action in the market.
Most people lose money due to this reason,
as they're not able to figure out
what type of trader they are.
There's no shame in being a passive trader,
as you would rather make money in the long run
than lose money in the short term.
Now, if you still have the determination
to get involved in day trading,
then I would highly recommend,
you read some of my favorite books
that has helped me to grow a stronger mind
when it comes to trading.
The books are, "The Disciplined Trader."
Developing winning attitudes,
and "Thinking Fast and Slow."
So those were the different type of investment options
you could start as a beginner,
depending on how much risk you're willing to take.
I personally would recommend the low risk options,
as this is a long run game.
If you have no money lying around to start investing,
and you need some money,
then you can watch this video
where I shared seven online jobs
which you can start today and start making some money.
And also if you want me to go in detail
for each of the investing options,
then let me know in the comments
and I'll make a video for you.
However, don't forget to hit that like button and subscribe
and I'll see you in the next video.