00:00There are so many headlines right now telling you to start investing, buy gold, save 15% of your
00:05salary for retirement, but also avoid tech stocks because an AI bubble is about to burst.
00:11Which of these headlines are right and what should you actually do? I've spent almost a
00:15decade in banking and in this video, I'm going to cut through the jargon that I spent years learning
00:20to give you a tried and tested strategy that works. I'll tell you exactly what you need to
00:25be doing, not only to protect your finances, but also to make sure you come out ahead in the long
00:31run. Let's start with part one, the basics. What is investing and why does it matter so much?
00:36At its core, investing is just using your money to make more money. That is it. Why do you need it?
00:43Why do you need your money to make more money? The first is inflation, which makes your cash lose
00:47value over time. Prices rise, but the money sitting in your account doesn't. So if you've got 1,000
00:53sitting in your account in a few years time, it might only buy you 800 worth of stuff. Doing nothing
00:59feels really safe, but it's actually a slow way to lose your money. The second reason you want to
01:05invest is because it is the easiest way to get rich and build wealth. Because we are living in an
01:10economy where owning assets like property, like stocks, like businesses is rewarded far more than
01:16simply earning a salary. If you think about it, someone who bought a house over 20 years ago has
01:21probably seen its value more than double. Someone who invested in the stock market has seen their
01:26money grow around eight to 10% a year on average, if they did it correctly. But salaries, they haven't
01:33been as oppressive and they have barely kept up with inflation. And so if you want to stop feeling
01:38like you're constantly falling behind and in this cycle of just earning, spending, earning, spending,
01:43you need to understand and start using this to your advantage. You need to be investing. By the way,
01:49we are covering how to invest as a beginner in this video. But if you're really looking to take
01:53this whole investing thing very seriously and start making your money work for you, I've got a
01:58completely free live workshop coming up this Sunday, the 26th of October. Doors close in less than three
02:06days. It is the only investing workshop I'll be doing this year. Completely free to join. We are going
02:11to cover what to invest in, how to do it safely in the current market, and how to compound your wealth
02:16over time in a way that is as close to a guarantee as you can get. It's 45 minutes, completely free.
02:22You can sign up at nisha.me forward slash invest or click the link in my description. Let's move on to
02:29part two. How does the stock market work? All right, so now we've covered why investing matters. Let's
02:33talk about how the stock market actually works because it's one of those things everyone's heard of,
02:38but very few people really understand. When you buy a share, you're literally buying a small piece
02:45of a company. So if you buy one share of Netflix, you now own a tiny fraction of Netflix. So you're
02:51basically saying, I believe this company will keep making great products and keep becoming more
02:56valuable over time. And I want to make money from that growth. Once the company has decided to offer
03:01shares to the public, you can buy those shares on the stock market, which is basically just a
03:06marketplace where people trade tiny pieces of thousands of different companies. And those prices
03:11go up and down all day based on what people think that those companies are worth. Now, there are two
03:17main ways you can make money from this. The first is when you buy a stock and the price of that stock
03:22rises. So if you buy a share in Netflix for a hundred, and then a few years later, it's worth 150,
03:27you can sell it and make a profit. It's that simple. The capital gain, that is your profit. The second way
03:34is through dividends. Some companies share their profits with investors by paying them dividends on a
03:40regular basis. Some companies pay dividends every three months, but others are also annually. It's
03:46basically the company's way of saying thank you for being a shareholder and to encourage people to keep
03:51investing in them. Now, you're probably thinking, okay, well, that's all well and good. But what
03:55actually do I invest in? Do I invest in Netflix? And you could do, but it's a bit risky. Even though
04:02Netflix is one of the biggest companies in the world, it's risky because even the biggest companies can go
04:07out of flavor or struggle for years at a time. For example, remember when we all had a BlackBerry?
04:13If you bought one BlackBerry stock for $144 back in June 2008, it would be worth $4.52 today. Back
04:21then, we all thought that it was going to be the next big thing. Very few could have predicted that
04:26within a few short years, we would ditch BBM for iMessage or WhatsApp. Even if you spend your evenings
04:33reading company reports and analyzing balance sheets, which realistically not many of us want to do,
04:39it's incredibly hard to know which companies will do well in the long run. That's why most successful
04:45investors don't bother trying to analyze and guess the winners. Instead, they just buy all of these big
04:51companies at once through something called an index fund. An index fund is basically a big basket of
04:58hundreds or even thousands of shares designed to track the overall stock market. So for example,
05:04you can invest in a fund that tracks the S&P 500, a stock market index that includes the 500 largest
05:09companies in the US, including Apple, Microsoft, Amazon, Google, Tesla, and so many more. And here
05:16on the screen, you can see how it's performed over the last 30 years. If you invested $100 in the S&P 500
05:23at the beginning of 1996 and reinvested all of your dividends, you'd have about $1,764. That's a
05:31return on investment of about 1,664% or roughly 10% per year. Or if you're taking into account
05:39inflation, it would be around 7.52% per year. So instead of putting all of your eggs in Netflix's
05:45basket or Apple's basket, you can reduce your risk and build a diversified portfolio by investing in an
05:51S&P 500 index fund. If some companies go down, but others go up, you still benefit from the general
05:57upward trend of the market over time. You'll own hundreds of businesses across dozens of industries,
06:03including tech, including energy, including healthcare, including finance. And you might look
06:08at the S&P 500 and look at what it's made up of and think, why don't I just get the best performing
06:13companies in there, invest in the main ones. And for instance, the Magnificent Seven. And by that,
06:19I mean, Apple, Microsoft, Amazon, Google, Meta, Tesla, and NVIDIA. They have dominated the US stock
06:25market in recent years. So I get why you'd want to just focus on those. They are the ones that have
06:29had the biggest gains. Why don't you just go all in on that? But looking at the S&P 500 between 1980
06:35to 2020 shows the biggest companies have changed a lot over time. Back then, the market was dominated
06:42by completely different companies, General Electric, Walmart, ExxonMobil, which just goes to show how risky
06:48it is to depend on a small number of companies. There is absolutely no guarantee that today's
06:53winners will still be in the lead a decade from now. Looking back even further in the 1960s and early
07:0070s, American Express, McDonald's, Kodak, Coca-Cola, they were the big names and investors assumed
07:06they would keep growing. But the bubble burst in the mid 1970s, with many seeing a huge drop in share
07:13price, Kodak's fell by more than 90%. So that's the point I'm trying to make. You just don't know
07:18which companies are going to be at the top. Something else to keep in mind is that the US
07:22economy has its own uncertainties right now. So it may make sense to invest in funds from other
07:26parts of the world too. No one knows which country or which company will lead the next decade. So by
07:32owning a little bit of everything, you can reduce the risk and have a really concrete long-term plan.
07:37And now let's move on to part three, which is how to actually invest. Because now you know what to
07:42invest in, how do you actually start? So here's what you need to do step by step. First, you'll need
07:47to pick an investment platform. Wherever you are in the world, this is just the website or the app
07:52you'll use to buy and manage your investments. The key thing to look at here is that or to make sure
07:58is that it's regulated, reputable and has low fees because over time, the smallest fee difference can
08:05massively eat into your returns. Before signing up, have a look at the different types of accounts
08:09available on that platform. Some offer general investment accounts where you may have to pay
08:13tax on your profits. Others will provide tax efficient accounts such as the stocks and shares
08:18ISA in the UK, the TFSA if you're in Australia or Canada, NISA if you're in Japan. If you have access
08:24to a workplace pension, this might be even more rewarding than a tax efficient account as in many
08:30parts of the world your employer will also match your contributions to. So if your employer does
08:38match that, look into this option first so your portfolio can grow even quicker. Step two, once your
08:43account is open, you'll need to add some money, usually by bank transfer or by debit card. Step three,
08:50then you want to choose your investments. Remember what I said earlier about index funds generally being
08:54less risky than individual stocks? As tempting as it may be to build a portfolio with your
09:00favorite companies individually, you'll usually make less money that way than you do or than you would
09:06with funds. That's what you want to do. Start with global diversified funds and then as you learn more,
09:11you can get more nuanced and increase your returns by adding more structure to your portfolio. Step four,
09:18here's the part that most people overlook, automation. Instead of trying to pick the perfect moment to
09:23invest, you can set up a monthly direct debit. So a set amount that is invested automatically,
09:28100 a month, 200 every month. By investing small and manageable amounts regularly, you can smooth
09:34out the highs and lows of the market. This is known as dollar cost averaging. Some months you buy when
09:39prices are high and other months you buy when they're low. But over time, it tends to average out and most
09:45importantly, you remove the temptation to mess about with it. And then part four, the million dollar
09:51question, what if it all goes wrong? Before you dive in, let's talk about this. What if the market
09:57crashes because it's at an all-time high or the companies you've invested in stop growing? Well,
10:04the first thing to keep in mind is that if you've invested in funds rather than picking individual
10:09stocks, you are already well protected. By diversifying your portfolio, you'll find it much
10:15easier to ride out market turbulence even if some companies fail or the market crashes. That's why
10:22diversifying not only across funds but also across assets is so important. And to be honest, the biggest
10:28risk for most investors isn't actually the market itself. It's themselves. For example, let's see you
10:33see some guy on the news saying that we're heading for a crash. You might panic and sell your investments
10:38only for the expert on the news to be completely wrong. Best case scenario, you sold it for a profit and
10:44you could always buy back in. Worst case scenario, you sold it at a loss and you realize that loss
10:50and it'll cost you more money to buy the same investments again. Automating the process stops
10:55you from panic selling when things dip or for trying to wait for the right time that never ever comes.
11:01So if you've been thinking of investing but you haven't known where to start, I hope this video has
11:05given you the confidence to take that first step. If you'd like to dig a bit deeper and figure out how to
11:10choose the right funds for you and identify the best exact time to invest and protect yourself
11:16from common investing pitfalls, you might enjoy my free investing workshop. Once again, it's on Sunday,
11:22the 26th of October at 5pm UK time. Doors are closing in a few days and it's designed specifically
11:28for beginners. By the end of it, you'll walk away knowing exactly what to do next and I promise
11:33not to bombard you with boring investment jargon or overwhelm you with numbers. It's just a clear plan
11:39to get your money working for you. Thank you so much for watching. You could click the link in
11:44the description to sign up and don't forget to subscribe if you haven't already. See you in the
11:48next one.
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