- 4 months ago
Disclaimers:
This video does not represent financial advice, and I am not a financial advisor. When investing, your capital is at risk. Investments can rise and fall and you may get back less than you invested. Past performance doesn’t guarantee future results. Images used throughout the video are for illustrative and educational purposes only, not indicative of past or future performance.
Pies & AutoInvest is an execution-only service. Not investment advice or portfolio management. Automatic investing refers to executing scheduled deposits. You are responsible for all investment and rebalancing decisions.
212 Cards are issued by Paynetics which provide all payment services. T212 provides customer support and user interface.
This video does not represent financial advice, and I am not a financial advisor. When investing, your capital is at risk. Investments can rise and fall and you may get back less than you invested. Past performance doesn’t guarantee future results. Images used throughout the video are for illustrative and educational purposes only, not indicative of past or future performance.
Pies & AutoInvest is an execution-only service. Not investment advice or portfolio management. Automatic investing refers to executing scheduled deposits. You are responsible for all investment and rebalancing decisions.
212 Cards are issued by Paynetics which provide all payment services. T212 provides customer support and user interface.
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LearningTranscript
00:00What's the best way for beginners
00:01to start investing online with just $100?
00:04As a millionaire investor,
00:06this is something I get asked all the time.
00:08And because of that, four years ago,
00:11I set out to answer this question
00:13by creating a video where I invested $100
00:16into five different things.
00:18Today, I'm gonna compare the results
00:20from those five investments
00:21that you can make from your laptop
00:23and try to finally answer the question once and for all.
00:26We're gonna be using this grid
00:27to judge each one in these categories.
00:29First up, learning curve.
00:31This is how long it takes
00:32to learn the ins and outs of each method.
00:34Ideally, we want this to be as short as possible.
00:37Next is passive income potential,
00:40which is how much money an investment
00:42can earn for you passively while you still own it
00:44without needing to sell it.
00:45Then there's tax efficiency,
00:48which refers to the specific tax advantages
00:51or benefits available for each type of investment
00:54that can help you pay less tax.
00:56After that, we have risk level,
00:58which is about how likely you are to lose money
01:01and how much the investments value might go up or down.
01:04And finally, we're looking at the results.
01:07This is where I'll reveal my percentage return
01:09over the last four years
01:11and exactly how much my $100 investment is now worth.
01:14Before we jump in, please remember,
01:16I'm not a financial advisor.
01:18I'm just sharing my own results and strategies
01:21that have worked for me over the years.
01:22Please also do your own research.
01:28Okay, first up is individual stocks.
01:31Individual stocks give you the chance
01:33to own a piece of a company you believe in.
01:35This can be really exciting
01:36because you're directly investing in businesses
01:39that you think will grow or succeed.
01:41For learning curve, I'm gonna say this is high.
01:44If you want to be successful picking individual stocks,
01:47then it's not just a guessing game.
01:48You'll need to dig into the nitty gritty
01:50of a company's fundamentals.
01:52This includes looking into the financials,
01:54who's leading the company,
01:56and how well known the brand is.
01:58When I invest in individual stocks,
02:00I look through income statements, balance sheets,
02:02and cash flow statements.
02:04So when I invest in a stock,
02:05I'm in it for the long haul,
02:07which means at least two to 10 years.
02:09A great way to learn how to do this
02:11is by using an investing app with a demo account,
02:14which lets you play around with fake money
02:16until you're confident with your strategies.
02:19For passive income potential,
02:21I'm gonna say this is good.
02:23You see, when you own a stock,
02:25there are two ways you can make money.
02:26Firstly, if the price of the stock goes up
02:29during the time you own it,
02:30you can sell it for more than you paid.
02:32Secondly, you can receive dividends.
02:35Dividends are regular payments to shareholders.
02:38Not all stocks pay dividends,
02:39but if they do,
02:40this means you can receive money
02:42without ever selling your stock.
02:43This is essentially passive income.
02:46Now for tax efficiency.
02:48This is great.
02:50If you use the right accounts,
02:51then you can reduce your tax burden.
02:54In the UK, these are called stocks and shares ISAs.
02:57You can set one up on most investing apps,
02:59and any profits you make are safe from taxes.
03:02In the USA, there's something similar called a Roth IRA.
03:05These accounts work like a shield,
03:07protecting your profits from the tax man.
03:09While there are different rules depending on where you live,
03:11the idea is the same.
03:13Please bear in mind that I'm not a tax advisor,
03:15and you should do your own research
03:17as everyone's circumstances are different.
03:19So what's the risk?
03:20This is definitely high.
03:23Back in 1995, during the dot-com boom,
03:26I got lucky and picked a few great stocks.
03:28I sold them at the right time
03:30and made a lot of money in a short period.
03:32But when the bubble burst,
03:34some of the other companies I'd invested in,
03:36ones that cost me very little,
03:38went out of business completely,
03:39even though I ended up making money overall.
03:42It just shows how risky investing
03:44in individual stocks can be,
03:46especially if you put all your money
03:48into just a few companies.
03:49If they fail, you could lose everything.
03:52So let's look at how much
03:53my $100 investment is now worth.
03:56Let me refresh your memory.
03:57Here's what I invested in.
03:59So I'm gonna throw a dart at the board,
04:00and as you can see,
04:01I've randomly selected 20 different stocks,
04:05and wherever the dart lands,
04:06that's what I'm gonna invest in.
04:08Now I've just gotta put on a blindfold.
04:09Okay, here we go.
04:13Right, let's see what we got.
04:15And we've gone into Samsung.
04:18That investment is now worth $67.66.
04:23But don't forget my dividends.
04:25Over the four years, I made 10 cents.
04:28So that leaves me with a total of $67.76.
04:33That's a negative 32.34% return.
04:39This example perfectly shows how hit or miss
04:41individual stock investing really is.
04:43That dart could have just as easily landed on Apple,
04:46Microsoft, or Nvidia.
04:48So let's have a look at how much I would have made
04:50if that dart had landed a bit differently.
04:53A $100 investment in Apple four years ago
04:56would now be worth $170.
04:59The same investment in Microsoft would be $188.
05:03And, drum roll please, Nvidia would be worth $908.
05:09Those stocks have boomed in recent years,
05:11and luckily I have some of those in my personal portfolio.
05:15But this just goes to show,
05:16you can't just leave individual stock investing down to luck.
05:20You have to be strategic with your stock picks.
05:22And even then, the market is unpredictable.
05:25If you wanna try this out, just download Trading212.
05:28It's a great app for beginner investors
05:30because it lets you use a demo account
05:32to practice trading with fake money.
05:35This way, you can learn how it all works
05:37without risking any real cash, just like I mentioned earlier.
05:40It also lets you set up a stocks and shares ISA
05:43if you're in the UK,
05:44which protects your investment returns from taxes.
05:47But again, I'm not a tax advisor,
05:49so please do your own research
05:50as everyone's situation is unique.
05:52Trading212 also lets you buy fractional shares,
05:56which means you don't have to buy a whole stock.
05:58That's how I was able to own just 0.07 of a Samsung stock,
06:03instead of having to buy an entire share.
06:05As I was gonna mention Trading212 anyway,
06:07I reached out to see if they'd be interested
06:09in sponsoring this portion of the video.
06:12They agreed and are offering a free fractional share
06:14worth up to a hundred pound to anyone that uses the code
06:18Tilbury when they create an account.
06:20Plus, you can get more free shares by inviting your friends.
06:23Both of you will get a free share
06:24as long as they fund their account.
06:26I'll leave the link in the description if you're interested.
06:28Second is a real estate investment trust,
06:35otherwise known as a REIT.
06:36I know this one sounds pretty complicated,
06:39but it's actually quite cool.
06:40Imagine your friend collects $100 from 3,000 people,
06:44giving him $300,000.
06:47He then uses that money to buy a property,
06:49rents it out and shares the rental income
06:52with all 3,000 people who helped him buy it.
06:55That's a simple way to explain a REIT.
06:58It allows anyone to invest in properties
07:00without needing to buy one themselves.
07:02Think of it like you own the front door,
07:04someone else owns a window and a few others own the bricks,
07:08which means together, everyone owns the entire property
07:11and shares in the profits.
07:12The learning curve, I'm gonna say it's moderate.
07:16And that's because getting started with REITs
07:18is much easier than buying physical property.
07:21It's not like you need a huge down payment or a mortgage,
07:24and there's no need to deal with agents or solicitors.
07:27However, you do need to understand how REITs work.
07:30They own things like offices, shopping centers,
07:33apartments, hotels, and much more,
07:35and they get their income through rent.
07:37For passive income potential,
07:39I'm gonna say this is great.
07:42REITs are well known for paying high dividends.
07:44This is because the law says they have to pass on
07:47at least 90% of all their profits to investors.
07:50So as long as the REIT is doing well
07:52and its properties are rented out,
07:54you can earn a steady stream of passive income.
07:56Most businesses sign long-term leases
07:59on their commercial properties.
08:00Therefore, most of the time,
08:02income is pretty stable and reliable.
08:04But of course, just keep in mind that your earnings
08:07depend on the REIT you pick
08:08and the types of properties it owns.
08:10For tax efficiency, I'm gonna put this down as great.
08:14This is because in many countries,
08:16REITs offer great tax benefits.
08:19For example, in the UK,
08:20you can hold REITs in a stocks and shares ISA,
08:23which means you don't have to pay taxes
08:25on your profits or dividends.
08:26In terms of risk, I'd have to say this is medium.
08:31REITs are generally less risky than buying a single property
08:34because they invest in multiple properties
08:36spreading out the risk.
08:37However, they're not risk-free.
08:39If the real estate market takes a downturn,
08:41or if the REIT struggles to keep its properties rented,
08:44you might see both a drop in dividends
08:47and the value of the investment.
08:48So what's my investment worth now?
08:50Let's flashback to me making the investment four years ago.
08:54As I'm in the UK, I'm gonna use the Trading212 website
08:57to put $100 into a similar REIT.
09:00Ready for the moment of truth?
09:01Looking at my investment now,
09:03I can see it's worth $98.59.
09:06So that's a small loss of 1.41%.
09:10This shows that even though REITs are normally more stable
09:13than individual stocks,
09:14they're not guaranteed to perform well.
09:17My REIT likely underperformed
09:18because it invested in commercial real estate,
09:21which struggled during the pandemic.
09:22But that's not the end of the world,
09:24as I made $11.93 back in dividends,
09:28meaning I'm actually $10.52 up.
09:31So that's...
09:3210.52% up.
09:37Third is cryptocurrency.
09:42Imagine a form of digital money
09:44that isn't controlled by any government or bank.
09:47That's what cryptocurrencies like Bitcoin and Ethereum are.
09:51These currencies run on the blockchain technology,
09:53which makes them secure, transparent,
09:55and almost impossible to counterfeit.
09:58Cryptocurrencies have created massive wealth for some people,
10:01with Bitcoin being the best performing asset
10:03of the last decade.
10:05But on the flip side,
10:06it's highly volatile,
10:08and people have also lost fortunes.
10:10That's why I'll describe crypto
10:11as part investment and part speculation,
10:14and not for the faint-hearted.
10:16For learning curve,
10:17I'm gonna say it's moderate.
10:19Crypto might sound complicated,
10:21but I'll break it down for you.
10:23First, you'll need a wallet.
10:24This is where you store your crypto.
10:26Think of it like a digital piggy bank,
10:28and there are different types.
10:30First are online wallets.
10:32These are easy to use,
10:33but you'll need to protect them
10:34with very strong passwords.
10:36Second are offline wallets,
10:38like hardware wallets.
10:40These are the safest
10:41because they're not connected to the internet.
10:43Next, you'll need to pick an exchange
10:45to buy and sell your crypto.
10:47Some popular ones are Coinbase and Binance.
10:50These platforms make it simple to trade,
10:52but make sure to choose a trustworthy exchange
10:55to avoid any issues.
10:56Then there's tokenomics.
10:58This just means understanding
10:59how the supply and demand of a coin works.
11:02For example, Bitcoin has a limited supply,
11:05which is why it's often called digital gold.
11:07For passive income potential,
11:09I'm gonna also say this is moderate.
11:12Unlike stocks or REITs,
11:13crypto doesn't pay dividends,
11:15but there are ways to earn passive income.
11:17The first is called staking.
11:19This is when you lock up your crypto,
11:21like Ethereum, to help the system work
11:23and process transactions.
11:25In return, you get paid rewards,
11:28kind of like earning points for helping out.
11:30The second is yield farming.
11:32This is when you lend your crypto out to others
11:34and earn interest on it,
11:35similar to how a bank pays you interest
11:37when you save money with them.
11:38These methods can generate decent returns,
11:41but they do come with higher risks.
11:43If the coin's value drops
11:44or the platform you're using gets hacked,
11:47your income could disappear along with your crypto.
11:50That's why I personally don't mess with any of this
11:52and just hold mine on a ledger wallet.
11:54For tax efficiency,
11:57I'm gonna have to say this one is poor.
11:59Taxes are a tricky part of crypto investing.
12:02In many countries,
12:03even swapping one cryptocurrency for another
12:05counts as a taxable event.
12:08And if you are in staking rewards,
12:09those are also taxed as income.
12:11You also can't hold crypto in tax advantage accounts
12:14like ISIS or Roth IRAs,
12:16which makes it less tax efficient than stocks or REITs.
12:20In terms of risk,
12:21I'd have to say it's very high.
12:24Crypto is one of the most volatile investments out there.
12:27Prices can soar 1000% in a year,
12:30but they can also crash just as fast.
12:32Personally, I just invest in Bitcoin and Ethereum,
12:35as they're more established
12:36and often referred to as blue chip cryptocurrencies.
12:39Smaller altcoins can be far more risky.
12:42You've also got to be cautious of scams.
12:44Since crypto isn't regulated,
12:46if someone hacks your wallet
12:47or tricks you into sending your coins,
12:50there's no way to get them back.
12:51So keeping your crypto safe is just as important
12:54as learning how to invest in it.
12:56So what's my investment worth now?
12:58Let's rewind to when I made this investment four years ago.
13:02So I'm gonna jump onto the most popular Bitcoin app,
13:04which is called Coinbase and invest my $100 in Bitcoin
13:08and forget about it.
13:10Ready for the reveal?
13:11The $100 I invested in Bitcoin is now worth $652.24.
13:18That's a return of 552.24%.
13:23Now, I know what you're thinking, that's insane.
13:27And it is.
13:28But I have to stress that this kind of growth is not typical.
13:31Bitcoin has been the best performing asset
13:33of the last decade,
13:35but most cryptocurrencies don't see these kinds of returns.
13:38Many lose their value entirely.
13:40In my opinion, crypto is exciting
13:43and the technology behind it has the potential
13:45to transform industries.
13:47However, it's not for everyone.
13:49It's highly volatile, speculative, and requires a strong stomach
13:53to handle the wild price swings.
13:55Just remember, crypto is all about high risk and high reward.
13:59So if you're gonna dive in,
14:00make sure you're doing your research and investing wisely.
14:07Fourth is gold.
14:09This is one of the oldest and most trusted ways
14:12to store and protect wealth.
14:14Gold is often called a safe haven,
14:16because it's a great way to protect your wealth
14:19during uncertain times, like when inflation is rising
14:22or the economy is struggling.
14:24For learning curve, I'm gonna have to say it's low.
14:27Learning how to invest in gold is pretty simple.
14:30You have two main options.
14:32First, physical gold.
14:34This includes gold bars and coins.
14:36Many people also think you can buy gold jewelry as investments,
14:39but you'll often pay more than the gold is actually worth
14:43because sellers had a markup for their craftsmanship.
14:45For this reason, I personally stick to gold coins.
14:48Just bear in mind, if you pick this option,
14:51then you'd have to store it somewhere safe.
14:53Second is gold ETFs.
14:55These are funds that let you invest in gold
14:57without physically owning it.
14:59For example, in the UK, you can use Trading212
15:02to buy shares in something like the iShares Physical Gold ETF.
15:06It's quick, easy, and you can buy or sell it
15:09with just a few clicks.
15:10Passive income potential is absolutely zero.
15:15Unlike stocks, REITs, or crypto,
15:18gold doesn't pay any passive income.
15:20It's not an income generating asset.
15:22It's purely a store of value.
15:24For tax efficiency, I'm gonna put this as good.
15:28If you buy physical gold, like gold coins or bars,
15:31the tax rules can be a little tricky.
15:33For example, in some countries, certain gold coins,
15:36like the UK's gold Britannia's are considered legal tender,
15:40which means you don't pay capital gains tax
15:43when you sell them.
15:44However, this doesn't apply to all gold coins or bars,
15:47so you'll need to check the specific rules in your country.
15:50For gold ETFs, they're generally more straightforward.
15:53In countries like the UK, you can hold them
15:56in a stocks and shares ISA,
15:57which makes any profits completely tax-free.
16:00Interestingly, physical gold has another unique advantage.
16:04It can be used to transport wealth across borders discreetly.
16:07That said, this approach comes with risk,
16:10such as theft or legal restrictions
16:12on transporting large amounts of gold across borders.
16:16While it's not something I'd necessarily recommend,
16:18it's worth mentioning as a unique aspect
16:21of owning physical gold.
16:22In terms of risk, I'd say this is a medium.
16:26Gold is one of the safest investments you can make.
16:29It's been used as a form of money for thousands of years,
16:31and it's known to hold its value during times of inflation
16:35or economic uncertainty.
16:37However, the opportunity cost of investing in gold
16:40can be a downside.
16:42While it's great for protecting your wealth,
16:44it doesn't have the same growth potential
16:46as other investments like stocks or crypto.
16:49So what's my investment worth now?
16:51Let's flashback to when I made this investment four years ago.
16:54I'm gonna invest using Trading212 in a similar share.
16:58And with just a click of a button, there you go.
17:01I'm now Mr. Goldman.
17:02So what's Mr. Goldman's investment worth today?
17:06Well, it's currently sitting at $140.10.
17:09That's a return of 40.1%.
17:13Now, that's not as exciting as Bitcoin's performance,
17:16but it's solid, steady growth.
17:19This shows how gold is better for protecting your wealth
17:22rather than rapidly growing it.
17:23The fifth is index funds.
17:29Imagine owning a tiny piece of the largest companies
17:32like Apple, Microsoft, and Amazon all at once.
17:36That's exactly what an index fund allows you to do.
17:39It's a basket of stocks that mirrors the performance
17:41of a specific index like the S&P 500.
17:45So you're investing in the overall market
17:47rather than betting on individual companies.
17:50For learning curve, I'm gonna have to say this one is low.
17:54Unlike individual stocks where you need to dig into
17:56the financial statements and company performance,
17:59index funds are passive investments.
18:01You don't have to pick and choose stocks
18:03as they're already bundled together for you.
18:06Getting started is simple too.
18:08Platforms like Trading212 let you buy index funds
18:11with just a few clicks.
18:13Once you've invested, all you need to do is sit back
18:16and let the market do the work.
18:18For passive income potential, I'm gonna say this is moderate.
18:22Index funds don't directly pay high dividends like REITs,
18:26but they still provide some income.
18:28Many companies in the fund pay dividends
18:30and those are automatically distributed to you
18:33or reinvested back into the fund, depending on your choice.
18:37While the main focus of index funds is long-term growth,
18:40the dividend income can be a nice bonus,
18:43especially if you're investing in funds
18:45that focus on dividend-paying companies.
18:47For tax efficiency, I'm gonna say this one is great.
18:51If you hold index funds in a stocks and shares ISA in the UK
18:55or a Roth IRA in the USA, you can avoid paying taxes on dividends
18:59and capital gains altogether.
19:01This means you get to keep more of your profits over time,
19:04which can make a huge difference when you're investing for the long haul.
19:08In terms of risks, I'd say it's pretty low.
19:11Index funds are much less risky than investing in individual stocks
19:15because they're diversified.
19:17Instead of putting all your money into a few companies,
19:20you're spreading it across hundreds or even thousands of stocks
19:24in different industries.
19:25Historically, the S&P 500 has delivered average annual returns
19:29of around 8% to 10% over the long term.
19:32While the market can go up and down in the short term,
19:35if you hold onto an index fund for 10, 20, or even 30 years,
19:39it's one of the safest ways to grow your wealth.
19:42However, of course, there are still risks like with any investment.
19:45So what's my investment worth now?
19:48Let's rewind to when I made this investment four years ago.
19:51If we head over to Vanguard's website now and we find the S&P 500
19:55and deposit some money and then click, there you go, job done.
19:59Right, so time for the reveal. Today, that investment is worth $179.57.
20:07That's a return of 79.57%.
20:11This result shows why index funds are such a great option for most investors.
20:16They're simple, low cost, and consistently deliver solid returns over time.
20:21Personally, index funds are my favorite investment,
20:24which is why I've allocated the majority of my money there.
20:27However, I also understand the importance of diversification,
20:32so I've spread smaller percentages across all the other investments we've discussed today.
20:36This way, I can balance growth, stability, and risk in my portfolio.
20:41So whether you're diving into individual stocks, buying some REITs, exploring crypto,
20:46getting into gold, or sticking with the steady reliability of index funds,
20:51each investment has its pros and cons.
20:53Some are better for growing your wealth quickly,
20:55while others are designed to protect it over the long term.
20:58The most important lesson is to start early.
21:02Even small amounts like the $100 we've been working with
21:06can grow into something significant thanks to the power of compounding.
21:09Time is your best friend when it comes to investing,
21:12so don't wait to get started.
21:14If you want to know what the laziest way to make money online is,
21:17then I'm going to leave that video right up there.
21:19But don't click on it just yet.
21:20Make sure to subscribe if you want to grow your wealth.
21:23Okay, I'll see you over there.
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