The Only Investing Video You’ll Ever Need (Start With $0)

0:00 Okay, so let's say you want to get started with this investing thing.

0:02 You might have a bit of money saved.

0:04 It's probably not enough for a house,

0:05 but you decide you should probably invest in something.

0:07 You could invest in stocks and shares, government bonds, corporate bonds,

0:10 real estate, foreign exchange, crypto, NFTts, futures, fine art, watches,

0:14 or maybe you've got that one friend who bought Bitcoin in 2013 or Nvidia

0:17 in like 2015 and then that person got super rich and you're like,

0:20 whoa, like man, if only I done that, I'd have

0:22 been like mega rich without having to do any work.

0:24 So, there's all these dreams, there's all this confusion,

0:26 and then on top of all of this, there is the very real fear

0:28 that you might actually lose all of this money

0:30 that you've worked so hard to save.

0:31 So, in light of all of this, this is

0:32 my updated ultimate guide to investing for beginners.

0:35 And so, we are going to split this video up into four parts,

0:38 which are timestamped, so you can skip around if you feel like it.

0:40 In part one, we're going to talk

0:41 about the basics and the philosophy behind investing.

0:44 Then, we're going to talk about why and how

0:45 to invest your money and some nuances around that.

0:47 Thirdly, we're going to talk about common fears and questions

0:50 and concerns like what if I lose all my money?

0:52 And then in part four, we're going to talk about fast lane investing,

0:54 which is an alternative approach to building wealth.

0:57 So with that said, let's dive in.

1:00 Part one, the philosophy and the basics of investing.

1:03 Okay, so let's start with the basics and let's start by asking the question,

1:05 what's actually the point of investing in the first place?

1:08 Now, a lot of people I speak to have the experience

1:09 where they have managed to save up some amount of money.

1:12 Maybe it's a few thousand, a few, thousands,

1:14 and they're feeling pretty good about it because now

1:15 they have a safety net and they're being financially responsible.

1:18 But if you are interested in investing,

1:19 then you probably know that if that money

1:21 is just sitting there in your bank account,

1:22 it's actually losing value every single day.

1:24 And that is thanks to a wonderful thing called inflation,

1:27 where essentially over time your money loses its purchasing power.

1:30 And so obviously $1,000 today buys you less stuff than

1:33 $1,000 did 10 years ago or $1,000 did 20 years ago.

1:36 The $1,000 is theoretically the same.

1:38 It's just that everything else has gone more expensive and therefore

1:40 you can buy less stuff with the same amount of money.

1:42 Now, the whole point of investing is to be able

1:44 to put our money somewhere where it makes more money.

1:46 firstly to counteract the effects of inflation and secondly if we

1:49 can beat inflation then it means like the more you invest

1:52 the more money you make the more it compounds over time

1:54 and then that is one of the strategies for building wealth.

1:56 So if the point of investing is to magically

1:58 grow your money you might be thinking okay

2:00 but like how does investing actually make you money

2:02 and here we're going to introduce the term asset.

2:05 An asset is a thing that puts money in your pocket.

2:07 So for example if you think about buying a house and then putting it

2:10 on rent you kind of make money

2:12 in two separate ways from that particular equation.

2:14 Firstly, you buy the house and then you put it on rent.

2:16 Therefore, you get rental income coming in from your tenants

2:18 every month and that puts money in your pocket.

2:20 And secondly, hopefully the value of the house also goes up over time.

2:23 This is called capital appreciation.

2:25 So, let's say you win a million dollar in the lottery

2:27 and you put all of it in to buy a house in cash and you're able to rent

2:30 out that house for, I don't know, $2,000 a month.

2:33 Every year, you're making $24,000 in rental income from the house.

2:36 And maybe if you sell the house 10 years later,

2:38 maybe it'll be worth 1.5 million.

2:40 And so you've theoretically made an extra

2:42 500,000 from the capital appreciation of the property.

2:45 In reality, of course, you probably use a mortgage.

2:46 In reality, there's property taxes.

2:48 There's like inflation itself and all sorts of more complicated factors.

2:50 But essentially, in this context, you are earning money through rental income

2:53 and through appreciation of the asset itself.

2:55 Now, houses are an interesting example because they're quite easy to visualize.

2:59 Like you can imagine theoretically owning

3:01 a house and then theoretically becoming a landlord

3:02 and having someone pay you rent because you probably pay rent to someone else.

3:05 And so most people when they think of investing,

3:07 they think I should get on the property ladder in some degree,

3:09 especially if your parents were into that sort of stuff many decades ago.

3:12 But for the most part, for most people,

3:13 owning a house is actually a relatively inaccessible

3:16 thing if you were just getting started with investing.

3:18 And so we want to be looking to alternative asset classes.

3:21 Now, there is a long list of assets

3:22 that you could potentially choose to invest in.

3:25 There's stocks, shares, and equities, which is sort of the same thing.

3:27 There are hedge funds.

3:28 There are index funds.

3:29 There are government bonds.

3:30 There are corporate bonds.

3:31 There are fancy watches.

3:33 There's fine art.

3:33 There is crypto of course and a lot

3:35 of this stuff can get very complicated very quickly.

3:37 So we are going to simplify things and we

3:38 are going to be focusing on stocks and shares.

3:40 The reason we're going to be talking about stocks and shares

3:42 and this is most sensible people's recommendation

3:44 when it comes to investing your money.

3:46 Firstly because it is very accessible to normal people like you and me.

3:49 Secondly, you don't need a huge amount

3:50 of money to get started unlike buying a property.

3:52 Thirdly, you don't need to take on huge

3:54 amounts of risk unlike something like crypto.

3:55 And fourthly, you don't need to be an accredited investor of any kind.

3:58 Like for the most part, normal people can just buy stocks and shares.

4:03 Part two, why and how to invest in stocks and shares.

4:06 So, what does it actually mean to buy a stock or a share?

4:08 Well, when you're investing in stocks and shares,

4:10 you are basically buying a small percentage

4:12 ownership in the company that you're investing in.

4:14 So, let's say I wanted to buy shares in Apple.

4:16 But first, let's answer the question of what even is the point of owning,

4:19 for example, Apple stock.

4:20 And the point is that there are two ways to make money from stock.

4:23 The first way you make money from investing

4:25 in stocks is that the value of the company

4:27 increases over time and therefore the value

4:29 of your stocks or shares increases over time.

4:31 Secondly, certain companies pay what they call dividends.

4:34 For example, in the UK,

4:34 there is a company called BT, British Telecom, that pays dividends.

4:37 And so, if you own a piece of BT, even if it's just like a tiny percentage,

4:41 you're not just hoping that the price increases over time.

4:43 They are also literally paying out some of their profits to their shareholders.

4:46 So, we've established that there are two

4:47 ways to make money from stocks and shares.

4:49 The next question we have to get to is how

4:51 do you choose which companies you want to invest in?

4:54 Maybe you have an iPhone and you're like, man, Apple seems pretty good.

4:56 Maybe you're like, AI stuff seems interesting.

4:58 I should invest in Nvidia.

4:59 Maybe you're an Elon fanboy and you're like, "Man,

5:01 I should invest in Tesla." Maybe you watch loads of Netflix and you're like,

5:04 "Man, I should invest in Netflix." Now,

5:05 here the advice from most sensible people

5:07 who give advice about this stuff, not me.

5:09 I'm not a financial adviser,

5:09 but sensible people who are basically say you should not try and pick stocks.

5:13 This is a wonderful book by a chap called JL Collins.

5:15 This was is like how I got started with investing like 10 plus years ago.

5:18 He says you should not try and stockpick.

5:20 Warren Buffett himself says you should not try and actively pick stocks.

5:23 In general, there is a better and safer approach

5:25 to investing and that is to buy an index fund.

5:28 So what is an index fund?

5:29 Well, an index fund can be divided into two words, index and fund.

5:32 So a fund is basically just like a group of stocks and shares.

5:35 And then the index component means

5:36 that the fund tracks a particular stock market index.

5:39 So for example, in the US,

5:41 there is a very famous stock market index called the S&P 500,

5:44 which is basically the top 500 biggest companies in the US.

5:46 For example, at the time that I'm recording this video,

5:48 Nvidia makes up 7.18% of the S&P 500.

5:52 Apple makes up 6 and a bit%.

5:54 Microsoft makes up 4 and a bit%.

5:55 Other companies that you have heard of are Amazon, Alphabet,

5:58 which is the parent company of Google, Meta,

5:59 which is the parent company of Facebook and Instagram.

6:01 And interestingly, company number 498 out of 500 is Matchgroup,

6:04 which is the company that owns the dating apps Tinder and Hinge,

6:07 which also makes up around 0.01% of the index.

6:10 Now, the point of the S&P 500 index is that it gives you a single number

6:13 that you can track over time to see how

6:16 valuable as a whole the US stock market is.

6:18 And the vast majority of the value

6:20 in the US stock market is in these 500 companies.

6:22 Now, if you look at a graph of the S&P 500 over time,

6:24 you will see that for the most part,

6:26 it goes up and to the right, which is what we'd like to see.

6:28 But you'll see these moments of decline,

6:29 and this is where you are in a recession or you've got like the 2008

6:32 financial crisis or you've got COVID that's

6:34 just hitting or you've got like tariffs.

6:36 So, the market as a whole, i.e.

6:37 the sum of the value of all the different companies goes up over time,

6:41 but sometimes goes down and then generally

6:42 kind of continues going back up slowly.

6:44 So, that is what the S&P 500 index is.

6:46 Now, if you invest in an index fund,

6:48 what basically happens is that the money you put

6:50 into the fund gets distributed amongst the companies in the index.

6:53 And crucially, this is split based on their waiting in the index.

6:57 So, for example, if I invested $1,000 into the S&P 500 today,

7:01 in reality, what's happening behind the scenes is I've got $71.80 of Nvidia.

7:05 I've invested $65 in Apple.

7:07 I've invested about $47 in Microsoft and so on across these 500 companies.

7:11 And this is exactly what people like Warren Buffett

7:13 recommend in terms of how to get started with investing.

7:15 I think it's the same thing that makes most sense practically all of the time

7:20 and and that is to consistently buy an S&P 500 lowcost index fund.

7:27 Keep buying it through thick and thin and especially through thin.

7:30 Now the great thing here is that over

7:31 time your money is going to track the market.

7:33 So the money you invest grows at the same rate as the stock market as a whole

7:37 if you invest in the S&P 500 which is the US stock market as a whole.

7:40 You're not trying to come up with like

7:42 some crucial like game-changing insight that like, you know,

7:45 you aren't trying to predict 10 years ago that Nvidia

7:47 was suddenly going to do well or anything like that.

7:48 You're not trying to do all of this research

7:50 into all these companies to figure out which companies are like,

7:52 you know, mispriced and like what their price to earnings

7:54 ratio is and any of this sort of stuff.

7:55 You're just saying, you know what, I'm going to make a bet that as a whole,

7:58 the US stock market in this case is going to go up over time.

8:01 And so, I'm just going to distribute my money across the top 500 companies.

8:05 I'm not going to think about it too hard.

8:07 I'm just going to set it and forget it.

8:08 and I'm going to do better things with my time

8:09 rather than comb through spreadsheets and try and research companies.

8:12 And if we take a historical average over the last like I don't know 100 years

8:15 or something the S&P 500 grows roughly by somewhere

8:18 between 7 and 9% on average every year.

8:21 Now at this point whenever someone hears the advice of index

8:23 funds for the first time and what I was thinking

8:25 when I first read this I was like okay but like

8:28 why would I invest in like freaking Cample Soup Company?

8:31 Why would I invest in like Ralph Lauren?

8:33 Like these companies clearly aren't going to be big.

8:35 obviously I should just invest in tech companies or obviously

8:38 I should invest in Nvidia or I should invest

8:39 in Apple or I should invest in Tesla or obviously

8:41 I should invest in products that I actually use.

8:43 Like surely I have I have enough insight that I

8:46 can pick winning stocks that like outperform the market.

8:48 Now this makes a lot of sense cuz you might be thinking

8:50 that 7 to 9% like that's nothing like that's not that interesting.

8:53 I want to double my money.

8:55 I want to you know triple my money.

8:56 And in general when it comes to the world of investing you should

8:59 not expect to double or triple your money because that tends not to happen.

9:02 uh unless in except in very few circumstances which we're

9:05 going to talk about at the end of this video.

9:06 Having a 7 to 9% return rate is actually considered really solid.

9:09 The best private equity firms in the world I think aim for like 20%

9:13 returns but normal people like you

9:14 and me generally can't access private equity anyway.

9:16 And so most of us normal people are

9:18 content with 7 to 9% annual compounding returns.

9:21 Now I want to talk a little bit more about

9:22 why you should generally not try and pick individual stocks.

9:25 And the whole idea here is that unless you get really

9:27 lucky chances are you are not actually going to beat the market.

9:30 There have been a bunch of studies

9:31 and surveys where people have tried this over time.

9:33 Warren Buffett even did a challenge where

9:34 he challenged like fund pickers who were like

9:36 like literally specialists at picking stocks and basically

9:38 compared the performance of these like professionals whose

9:41 entire job it is to pick stocks against

9:42 the S&P 500 and basically found that the S&P

9:44 500 actually outperforms most funds most years

9:48 if you take a long enough time horizon.

9:49 There is also a hidden cost of stock picking

9:51 because even if you could theoretically beat the market,

9:53 the way you do that is by investing loads and loads and loads and loads

9:55 of time in actually doing the research

9:57 to be able to know what you're talking about.

9:59 So like spending hours every week reading

10:00 financial reports and tracking the news and analyzing

10:02 charts and worrying about whether you should

10:04 be buying or selling at each individual moment.

10:06 Now that is time that you probably have better things to do with.

10:08 You could probably spend it with your family

10:09 or your hobbies or building a business.

10:11 If you invest in an index fund,

10:12 it basically takes like 30 minutes or less to get started and then you

10:15 don't have to put any time into it thinking about it or worrying about it.

10:17 Whereas stock picking is quite different.

10:19 For me personally, I have a bunch of friends who have

10:20 invested in individual stocks over time rather than an index fund.

10:24 Basically, all of them have made less money than they would have

10:27 done if they just invested in the index fund in the first place.

10:29 And some of them have even lost money overall

10:31 because they were so convinced that company X was going

10:33 to do really well and then company X didn't do

10:35 well and they put too much money in company X.

10:37 So that's like a scenario in which you can actually lose money,

10:39 but you're very unlikely to lose money if you just spread it out amongst

10:42 the top 500 companies in the US

10:44 or amongst the top thousand companies in the world.

10:46 Now, I do want to hammer home this point because at this point,

10:49 if you're still with us in the video,

10:50 you might be thinking, "But like surely stock picking is easy." I mean,

10:53 man, 5 years ago, I knew that Apple would do well.

10:56 And if I just invested in Apple 5 years ago, I'd be rich right now.

10:59 Or like, man, you know, 10 years ago,

11:01 I had a good inkling that Nvidia was going to get big.

11:04 You know, I just didn't get round to putting money in it.

11:05 But had, man, had I put money into Nvidia, it would have gone to the moon.

11:09 And so, what people do is that they get this sort of false sense

11:11 of like thinking of themselves as being

11:13 very good investors because at one point,

11:14 maybe in 2013, you considered buying Bitcoin just

11:17 like I did and never actually did it.

11:18 or like I don't know when Disney Plus was announced in I don't know five

11:20 years ago I was like huh maybe I should invest in Disney stock and I

11:23 never did and I'm like oh man Disney stock is so up man if only

11:26 I'd invested in Disney stock I'd have been I'd have made so much money etc etc

11:29 the thing to keep in mind is

11:30 that unless you actually invested in Bitcoin in 2013

11:33 you can't say that like man I'm such a good investor I I knew Bitcoin

11:37 was going to do well because like everyone's like I knew it was going to do

11:39 well and unless you put your money where your mouth is it really doesn't count.

11:42 Secondly if you did invest in Bitcoin in 2013

11:44 or invidia in 2013 when would you have sold?

11:47 Would you have sold when the price 5xes or 10 x's or 100 x's?

11:50 Like how would you have known to hold on for the next like 15

11:53 years because like stuff was going to go up and down and ultimately up.

11:55 Let's say you own Nvidia stock right now.

11:57 Nvidia is at an all-time high in its stock price.

11:59 Do you keep on holding or do you sell?

12:01 Do you think man this AI boom is a bubble?

12:03 So do you sell Nvidia because you're like this Open AI and all these Microsoft

12:07 and all these companies it's all it's all

12:08 just like a bubble and it's going to pop.

12:09 Why didn't you sell 6 months ago when everyone was like oh my god Nvidia is

12:12 dy dy dy dy dy dy dy dy dy dying and stock price is going down.

12:13 Like loads of people sold at that point.

12:15 Like what is it about you that would have kept you holding on to the stock?

12:17 It is so easy to delude ourselves into thinking

12:20 that we are good investors just because we had a thought

12:22 a few years ago that like I should probably

12:24 buy Nvidia and then and then didn't actually do it.

12:25 Or even if you did buy Nvidia a few years ago,

12:27 you you maybe just got lucky and it has nothing to do with like your quality

12:31 as an investor cuz there are literally full-time

12:33 professionals whose job it is to pick stocks.

12:35 They do it for 60 to 80 hours a week.

12:37 And in general over time,

12:38 index funds outperform even those people who are putting

12:41 their entire life's work into trying to pick stocks.

12:43 Generally, the younger you are, the more prone you are to wanting to do

12:47 individual stockpicking because your memory is just not long enough.

12:50 For example, if you happen to be one of the, I don't know,

12:51 20% of people who watch this channel who are over the age of 40,

12:54 you probably remember Kodak in the 1990s.

12:57 They were absolutely huge.

12:58 No one could have imagined a world

13:00 without Kodak because they were absolutely massive.

13:01 Like, they actually invented digital cameras back in 1975,

13:04 but they didn't want to market the digital camera

13:06 because it would cannibalize their like film camera business.

13:08 And now, no one uses a Kodak anymore.

13:09 It's kind of like retro nostalgic tech

13:12 because they filed for bankruptcy in like 2012.

13:13 Or if you have the memory of like 20 years ago,

13:15 Blockbuster was like absolutely massive.

13:17 People would go to a Blockbuster store on a Friday night and like rent a movie.

13:20 Netflix literally went to Blockbuster and said, "Hey,

13:22 do you want to buy us for $50

13:23 million?" And Blockbuster CEO laughed in their face.

13:25 And now there is one Blockbuster left on the planet

13:27 and Netflix is worth hundreds of billions of dollars.

13:29 If you speak to your parents or your grandparents,

13:31 there is no way they would have ever imagined that Lehman Brothers,

13:34 the 158-year-old investment bank,

13:37 would never not be around cuz it was just too big to fail.

13:40 It survived the Civil War, it survived two world wars,

13:42 it survived the Great Depression in the US.

13:43 But then in September 2008, it just collapses in a single weekend.

13:46 And people who have worked there for decades,

13:48 who have their entire retirement savings in the bank,

13:50 who have their entire like stock portfolio in like the Lehman stock,

13:53 those people lost everything overnight.

13:54 Now, the point is the more life experience you have,

13:56 uh, the more you know that these are things, right?

13:58 Like every single generation has examples

14:00 of companies that were too big to fail.

14:03 Right now, I cannot imagine a world

14:04 without Apple or without Tesla or without Netflix.

14:07 But neither could the chaps in 2008.

14:09 They could not imagine a world without Leman Brothers.

14:11 The point isn't that you don't want to invest in Netflix and Apple and Nvidia.

14:13 The point is you don't want to only invest in Netflix and Apple and Nvidia.

14:16 You want to try and diversify your holdings across multiple different

14:19 companies rather than betting your entire financial future on a single company.

14:22 Okay.

14:23 So at this point, if you are sold on index funds,

14:25 then you might be asking the practical question of like,

14:26 how do I actually buy them?

14:28 Unfortunately, you cannot just go to S&P500 indexf fund.com/by.

14:32 You have to go through a middleman.

14:33 And that middleman is generally referred to as a stock broker.

14:35 Back in the day, it was a real life person that you would phone up to buy

14:38 and sell stocks on your behalf on the New

14:40 York Stock Exchange or the London Stock Exchange or whatever.

14:42 Nowadays, it's not a real person.

14:44 It's just online platforms.

14:45 There are loads of them depending on which country you're in.

14:47 So, you just Google like stock platform and then insert your country name.

14:49 Like Vanguard is one of the big global

14:51 ones uh that's available in lots of different countries.

14:53 They're also available in the UK.

14:54 So I have a lot of my holdings in Vanguard.

14:56 Trading 212 is another app that me

14:57 and my wife and you have been using for years.

14:59 So I mostly have my holdings split across Vanguard and Trading 212.

15:02 Speaking of, we should reach out to Trading 212 to sponsor this video.

15:04 So if that deal goes through, you will hear a sponsored message now.

15:07 All right.

15:07 So I'm going to tell you about Trading 212,

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15:13 Me and my wife Izzy were both using it independently and have been for years,

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15:55 And their pies and auto invest features are also really good.

15:57 So the pies feature is essentially you can

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16:02 portfolios and you can copy and paste their asset

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16:34 So, thank you trading212 for sponsoring this video and let's get back to it.

16:37 Oh, that worked well.

16:38 It's pretty good.

16:38 Seamless integration.

16:40 Fingers crossed.

16:41 But anyway, even with all this information,

16:42 there are probably some fears and concerns in the back of your mind.

16:45 So, let's talk about those.

16:47 Part three, common fears and concerns and questions.

16:50 Fear number one, what if I lose all my money by investing?

16:53 This is the big one.

16:54 This is the thing that stops most people

16:55 from ever getting started with investing because like,

16:58 oh my god, what if I lose all my money?

16:59 What if something like 2008 happens and like you had all your money

17:02 in Lehman Brothers and then it collapses and then suddenly you're bankrupt?

17:04 Oh my god, that would be terrible.

17:05 Now, this actually is a totally legitimate concern.

17:07 I was worried about this until 2015 when I read The Simple Path to Wealth by JL

17:12 Collins for the first time and realized that I

17:13 didn't need to worry about it too much.

17:14 So, let's put some numbers on this.

17:15 The biggest crash in recent memory was the crash of March 2020,

17:18 uh, when COVID was was happening.

17:20 You're probably old enough to remember that.

17:21 Now, let's say you'd invested $1,000 into the S&P 500 at exactly the wrong time,

17:26 just before the crash.

17:27 So, like early 2020, and then COVID hits,

17:29 and then in a single month in March 2020, the market, the S&P 500 drops by 34%.

17:34 So, your $1,000 is now worth $660.

17:37 You have lost $340.

17:39 Oh my goodness.

17:40 At this point, you're thinking, "Oh my god,

17:41 I knew I shouldn't have done this investing thing.

17:43 I've lo I'm I'm losing so much money.

17:45 My money Oh my god, I've lost this $300.

17:47 The world is literally shutting down.

17:48 Oh my god." Now, if at that point you decide, screw it.

17:52 I'm just going to sell.

17:52 I don't want to I don't want to lose any more money.

17:54 Then you have realized the loss because you bought the index at $1,000.

17:57 You sold it at 660.

17:59 So, you have literally bought high and sold low,

18:01 which is the opposite of what you should do.

18:03 And so you've lost $340.

18:04 But if you had just held on, if you'd been like,

18:07 you know what, I'm just going to hold on.

18:08 You know, I knew that investing in stocks

18:10 and shares was like a little bit risky,

18:11 but it gets a lot less risky if you just like hang

18:13 on and just leave your money in there for a long time.

18:15 The market literally recovered to its pre-crash levels by August.

18:18 So it took 5 months to recover back to where it was before.

18:22 So within 5 months, you'd have been back up to $1,000.

18:24 And then it just kept going up and up.

18:26 And by the end of 2021, your $1,000 would have been worth $1,400.

18:29 And by the end of 2025, that same $1,000,

18:32 if you just held on through the crash, would have been worth over $2,100.

18:36 So in that 5year period, where we all lived through a pandemic,

18:39 you would have more than doubled your money if you had

18:41 just held on, assuming you had invested at the worst possible time.

18:44 Now, yes, back in 2008,

18:45 it took like a few years for the market to recover, but recover it did.

18:48 And even if you'd invested in the stock

18:50 market at the absolute worst possible time,

18:52 just before the 2008 financial crisis,

18:54 you would have still made way more money in the long run if you just held on.

18:56 And the key insight here that I learned

18:58 from this book and a bunch of research since is

19:00 that for the most part the stock market goes up over

19:03 time as long as you have a long enough time horizon.

19:05 It's sort of the same with house prices.

19:07 Like for the most part in most countries,

19:09 in most cities where people actually want to live,

19:10 if you buy a house today and try and sell it next week,

19:13 maybe the price has gone down.

19:14 If you try and sell it next month, maybe the price has gone down.

19:16 But if you try and sell it 20 years from now,

19:18 chances are the price will have gone up quite significantly.

19:20 So basically, the longer you can leave

19:21 your money in the index funds without touching it,

19:24 the more it compounds over time.

19:25 And apparently Albert Einstein had that quote of like

19:27 compound interest is the eighth wonder of the world.

19:29 Okay, but like seriously, you know,

19:30 this is my this is my hard earned cash I'm investing here.

19:33 Like what would have to be true for me to lose all my money?

19:35 So if you're investing in the S&P 500,

19:37 in order for you to lose all of your money,

19:39 the value of top 500 companies in the US suddenly has to drop to zero overnight.

19:44 What are the chances of that?

19:44 Like if all of the top 500 companies

19:46 in the US suddenly had their entire value disappear overnight,

19:50 we would probably be living through an apocalypse.

19:52 we'd probably have way worse problems than the value

19:55 of your stock market portfolio and the money that you invested

19:57 in those stocks probably wouldn't even be worth the paper it's

20:00 printed on because like civilization has collapsed or something like that.

20:03 Now I think it's a very reasonable bet

20:04 personally that the stock market is going to go

20:06 up over time over a long enough time

20:08 horizon and there's a few different reasons for that.

20:10 So firstly human productivity is a thing and human productivity compounds.

20:14 So if we imagine a company like Nvidia,

20:16 Apple, Amazon, Meta, like these companies that make up,

20:18 you know, the top the the top few companies of the S&P 500 every day,

20:21 there are thousands and thousands of people that go to work

20:24 where their job is to literally add value to the company, right?

20:27 Like they make stuff, they invent things,

20:28 they create a new iPhone, they make a new chip.

20:30 All of that stuff creates real value.

20:32 Like one thing that I didn't quite appreciate before I

20:35 started getting into investing is that the value of a company

20:38 is not just people gambling on like I reckon Elon's

20:42 going to be great therefore Tesla price should go up.

20:45 I mean in that context it kind of is

20:47 but like the value of a company is a real thing.

20:49 And in general the more revenue the company has the more profit

20:51 the company has the more product the company has the greater that value is.

20:54 And so because people are continually doing work,

20:57 you would expect the value of companies where people are continually doing work

21:00 to go up over time because value is literally being created every day.

21:03 The second reason is that the world keeps on getting bigger.

21:05 So like 20 years ago, we had like 6 billion people in the world.

21:07 Now we have like 8 billion people in the world.

21:09 More people means more customers

21:10 and more transactions and more economic activity.

21:12 There's hundreds of millions of people in Asia and Africa and South America

21:15 who are like buying stuff like entering the consumer economy for the first time.

21:18 More and more people are getting access to the internet every single day.

21:21 These people are buying iPhones.

21:22 They are opening bank accounts.

21:23 they're like subscribing to online software.

21:25 So the fact that like in general the world's population

21:27 is increasing is another reason as to why you would

21:30 expect the value of companies to go up because there

21:32 are more consumers who want the stuff that the companies make.

21:34 Thirdly, I think it is a reasonably strong bet that the value of something like

21:37 the S&P 500 index fund will go up

21:39 over time is because it is a self-healing index.

21:42 So it's not like a list of 500 companies that never changes.

21:44 It's a curated list of 500 companies.

21:47 So if a company starts failing,

21:48 it gets kicked out of the index and it gets replaced with a new company.

21:51 something like Blockbuster disappears and something like Netflix takes its spot.

21:54 So, you can kind of think of the index as a sort of like best

21:56 of Spotify playlist that's like constantly being updated

21:59 with whatever is most valuable at that given moment.

22:02 And so, you're not betting that any single company will survive forever.

22:05 You're not even betting that like these top 500 companies will survive forever.

22:08 You're just betting that the top 500 companies in the US in this example at any

22:12 given time will collectively grow because people are

22:15 going to work and creating value within these companies.

22:17 At this point, you might be thinking,

22:18 but like the S&P 500 is just American companies and you know,

22:21 America is going to collapse because of Trump

22:24 or because of Elon or because of the woke

22:26 people or because of the immigrants or because

22:28 of insert whatever flavor uh you would want in that.

22:32 It's like, you know, and to that I would say,

22:34 yeah, that's actually a fair point.

22:35 That is why you don't have to invest in the S&P 500 index fund.

22:38 There are things called global index funds.

22:40 So, there's the Vanguard Footsie Allworld Index Fund,

22:43 which is sort of like the S&P 500 in that it is an index fund,

22:45 but instead of investing in just the top 500 companies in the US.

22:48 Instead, this fund splits your money across

22:50 the top 3,700 companies across 49 different countries.

22:55 So, if you put $1,000 in that, you're getting a little bit of Apple,

22:57 you're getting a little bit of Microsoft,

22:59 but you are also getting some Samsung from South Korea,

23:01 you're getting some TSMC in Taiwan,

23:03 you're getting a little bit of Toyota in Japan,

23:04 you're getting a little bit of LVMH in France.

23:06 So even if for whatever reason you believe

23:08 that the US economy is heading for decline, the global economy probably isn't.

23:12 And so you can just spread your money when you're

23:15 investing across like global companies rather than just US companies.

23:18 And the nice thing about the Vanguard All World Index is

23:20 that it automatically adjusts its weightings based on where the value is.

23:23 So if the US suddenly shrinks and let's say India's economy suddenly booms,

23:27 then your distribution of investments will naturally

23:29 shift to wherever the growth is happening.

23:30 So again, you're not gambling that like a particular

23:32 company or a particular country is going to win.

23:35 What you're basically saying is I reckon humans

23:37 across the world who are working in companies

23:39 will be creating more value over time

23:41 and there will be continued demand for that value.

23:43 Therefore, the price of everything is going to go up over time.

23:45 So, with all that said, you might be asking the question of like, okay, cool.

23:48 I'm sold.

23:48 How do I get started?

23:49 How much money do I need to get started?

23:50 The answer to this question depends on the platform.

23:52 Uh most uh sensible platforms in most countries,

23:55 you can get started with like a dollar or like $10 or like $100.

23:58 Like generally a small amount of money.

23:59 Again, I would do some googling or ask your claude to figure out

24:02 like what the best free platform is depending on what country you're in.

24:06 You should be able to find a platform that is completely free.

24:08 You shouldn't have to pay for it unless you're

24:09 in a country that has weird regulations and stuff.

24:11 But for the most part,

24:12 you can do this for free with very little money to get started.

24:14 Oh, by the way, if you're enjoying this video so far,

24:16 I would love to hear from you in the comments.

24:17 What has been your biggest concern about getting started with investing?

24:20 And if you haven't yet, like what's the thing that's holding you back?

24:22 Okay, so at this point, we've covered the traditional approach to investing.

24:25 But there is a final thing we need to talk

24:27 about because yes of course we all want to be

24:29 rich in 30 to 40 years but it would be nice if we could get rich in 5 to 10

24:33 years 15 years rather than having to wait 30

24:35 to 40 years to build true wealth and that is

24:37 where we come to part four of the video which

24:39 is fast lane investing the alternative approach to building wealth.

24:42 Now what we've talked about so far is what MJ DeMarco author

24:45 of the millionaire fast lane calls the slow lane approach to building wealth.

24:49 He's a bit disparaging about it but basically it's

24:51 like I've got some money I've got a day job.

24:53 I'm going to save 10% of my income from my day job.

24:56 I'm going to put it into investments like stock

24:58 market index funds or like real estate or whatever

25:00 and then 50 years from now that money is going

25:01 to compound and then I'll be a millionaire and stuff.

25:03 Now, this is a very slow form of investing.

25:06 It's totally fine and I think it's very important to do

25:08 as part of a diversified balanced portfolio and balanced life and stuff.

25:12 But there is another approach and that approach

25:14 involves reframing what investing actually means.

25:17 Now when we hear investing a lot of us

25:19 default to thinking that investing means taking our money

25:22 and buying an asset with it like uh

25:24 stocks and shares or like buying a rental property.

25:26 But if we really think about it from first

25:27 principles what is the point of investing money?

25:29 The point of investing money is for your existing

25:31 money to make more money further down the line.

25:33 The point isn't explicitly to invest in stocks and shares

25:36 or like watches or like I don't know fine art.

25:38 The point is to grow your money and the stocks

25:40 and shares or the rental property or the watch.

25:41 That's just the vehicle by which you turn your money into more money.

25:45 So, if we imagine something like, you know, 7% returns in the S&P 500.

25:48 Let's say you've got a spare $10,000.

25:50 If you put the $10,000 in the S&P 500 today,

25:52 on average, it'll be worth what, $10,700 next year.

25:56 So, then the question becomes,

25:57 can I find a way to invest that $10,000 or whatever the thing might

26:00 be so that it can make more than $700 in the next 12 months?

26:03 And generally to that, the answer is usually a hell yes.

26:06 So, there's a couple of different options here.

26:08 Option number one is if you invest in your own ability to make money.

26:12 So, let's say I have a job like I'm I'm a healthcare

26:14 assistant in a hospital and I could spend £1,000 to take

26:18 a new course that gives me a new certification and that certification

26:21 like being a flabotamist allows me to increase my hourly rate.

26:24 So, if I'm making let's say $15 an hour as a healthcare assistant

26:27 and this new thing lets me suddenly make $30 an hour as a flotist.

26:32 I've invested in my own skills and my own like credentials and as a result I've

26:35 literally doubled my earning capacity and so

26:37 with an additional 4 hours of work what's that?

26:39 an extra $60 with 40 hours of work.

26:42 So 40-hour work week, it's $600.

26:43 So within week two of making this trade,

26:46 I've already like made back my investment and now it's

26:48 just like pure profit from there based on like that investment.

26:51 And so my return on this $1,000 that I've invested

26:53 in this course or whatever is way higher than 7%,

26:56 because I've invested in my own ability to make money.

26:59 And this is generally why investing in your own

27:01 skills or your own education is very reasonable provided

27:04 you can see a path from like okay getting

27:06 that credential or getting that qualification or learning those skills.

27:08 provided you can see a path to like a sensible return on that investment.

27:12 I'm not saying you have to buy courses and stuff.

27:13 You know, you can find stuff for free on YouTube.

27:15 I'm just saying that there is often more value

27:17 in investing in your own ability to make money

27:19 than there is in investing in like 500 random

27:22 companies in the US if you had to choose.

27:23 Then we have option number two,

27:24 which is to actually invest in your own business.

27:27 And that is another form of fast lane investing.

27:29 Now, obviously this only applies if you have a business

27:31 or if you want to start your own business.

27:33 If I use my own business as example, when I was 18,

27:35 I started a business helping kids get into med school.

27:37 In year 1, it made about £8,000, like $10,000.

27:41 In year two, it made about £80,000.

27:43 In year three, it made about £150,000.

27:45 So, we 8xed revenue in year 1.

27:47 And we 2xed revenue in year 2.

27:49 And then I sort of stayed at 150,000 for a few years.

27:51 And then a few years later in like 2020,

27:53 boom, went up from 150k to like 1.2 million.

27:55 So, we sort of 10xed in revenue again.

27:57 And then the next year,

27:58 we 4xed in revenue from 1.2 million to $4.6 million pounds.

28:02 I can't remember the exact currency.

28:03 If we consider the 12- year period of this, that's way more than 7% per year.

28:07 Now, if you were to put money in Apple,

28:08 it is very unlikely that Apple will 10x its value

28:11 in the next 12 months because they're already absolutely huge.

28:13 And the bigger you are, the harder it is to grow,

28:16 at least in terms of percentages, because you're already so huge, right?

28:18 But if, for example, you took $1,000 and you used it to start your own business,

28:21 it is totally reasonable for you to have made

28:23 10 grand by next year or even 100 grand.

28:25 You know, I've got this thing called the Lifestyle Business Academy,

28:27 which is like an online business

28:28 mentorship thing for beginners starting businesses.

28:30 We have some people who have started a business

28:31 for the first time and within like three

28:33 months they made 10 grand and they're on track

28:35 to make 100 grand within the first 12 months.

28:37 And so if you think of the investment in starting their business for example

28:40 and maybe investing in an educational

28:42 program or a mentorship program or whatever,

28:44 like they're getting a way better return on that particular

28:46 investment compared to just investing in the S&P 500.

28:49 And if you're interested in this sort of approach to building

28:51 your own business where you could take some amount of money,

28:54 it doesn't have to be a huge amount.

28:55 You could invest it a small amount of it like maybe

28:57 even a few hundred maybe even less in starting your own business.

29:00 That business could be something like a lifestyle business that could

29:03 quite conceivably get you to 100K in revenue within about 12 months.

29:06 If you're interested in more details about that, I have a video

29:08 over here somewhere that breaks down that concept in more detail.

29:11 In general, I think it is good to invest a good chunk of your time, energy,

29:14 and money into starting your own thing and improving your own ability

29:17 to make money and then investing the rest into something like the S&P 500,

29:21 which is what I've been doing for the last like 10 plus years.

29:22 So, yeah, you should totally check out this video over here if you are

29:25 interested in potentially starting your own business

29:26 to drastically increase your rate of return.

29:28 Thank you for watching and I will hopefully see you there.