Complete Beginner's Guide To Investing In 2026 #how
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#earn #invest
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00:00This is the best piece of advice
00:01I've ever heard about investing.
00:04It came from a millionaire I looked up to as a kid.
00:07After overhearing him talk about investing,
00:09I wanted to get involved.
00:10But as a complete beginner, I didn't know where to start.
00:14So I asked him, how do I pick the right stocks to invest in?
00:18His answer was very simple.
00:20Treat it like finding a girlfriend.
00:23This is quite a clever way to look at it
00:25because when you buy a share in a company,
00:27you actually become a part owner.
00:29This is like a partnership between you and the company.
00:33And just like a relationship,
00:34you wanna make sure it's happy, long, and successful.
00:38But look, I'm not gonna pretend
00:39that there's a crystal ball that can tell you
00:41when to buy a stock before it rockets in value
00:43like most of the fake gurus online.
00:46However, there are certainly a few things you can do
00:49to tip the odds in your favor.
00:53When you're looking for a partner,
00:55you need to have a strategy in mind.
00:57Are you gonna shower them with gifts
00:58like a simp or treat them mean to keep them keen?
01:01You'll get very different results
01:03depending on which strategy you choose.
01:05And the same goes for stocks.
01:07So just like dating, you need to figure out
01:09how you're gonna approach the stock market
01:11so that you get the results you want.
01:14There are two strategies you can choose from,
01:16the technical or the fundamental approach.
01:19Both of these options are very different.
01:21So let's quickly go over what they involve.
01:23Technical analysis is mainly for short-term day traders.
01:27They use charts and price action to identify patterns
01:30that supposedly help them predict
01:32if a stock is gonna go up or down in the short term.
01:35I use the word supposedly because in my opinion,
01:38most of the people using this strategy
01:40are glorified gamblers.
01:42Is it possible to day trade successfully?
01:44Yes, but more than 95% of day traders lose money
01:48rather than making it according to the Motley Fool.
01:51Fundamental analysis is like being a detective for a company.
01:55You look at everything from their financial reports
01:58to how well known the brand is and who's running the show.
02:02All these pieces of information help you understand
02:04how the company is doing now
02:06and how it might perform in the future.
02:09This approach can help you pick a range of stocks
02:12that can make you a nice amount of money
02:13over a three to 10 year period.
02:16I know saying this will probably ruin my watch time,
02:18but I only want people getting into this for the right reasons.
02:22So if you're looking for a way to get rich quick,
02:24then stop watching my video now.
02:26My goal is to secure your financial future,
02:30not just help you make a quick buck.
02:32Also remember with any kind of investing,
02:34your money can go down as well as up.
02:36If you're still with me, then comment down below, I'm in.
02:39So I know how many of you are willing to invest
02:41for the long term.
02:43Right, all done?
02:44Cool, let's jump into.
02:48When you're on a dating app and checking out someone's profile,
02:51you usually look at their pictures and read their bio
02:54to see if they'd make a good match.
02:56It's exactly the same when you're thinking about investing
02:58in a company.
02:59You have to check out the company's profile,
03:02which in this case is something called a balance sheet.
03:04A balance sheet is a financial statement
03:06that provides a snapshot of a company's financial position
03:09at a specific point in time.
03:11It details the company's assets, liabilities,
03:15and shareholders' equity.
03:16Don't worry if that sounds a bit confusing.
03:18We'll take a look at one together,
03:20and I'll break it down with you.
03:22I'm gonna be using Trading212 to do this,
03:24which is a great place to research and buy stocks.
03:27You're welcome to download it and follow along.
03:30Trading212 is also sponsoring this portion of the video.
03:33And if you use the code Tilbury,
03:35you'll also get a free fractional share
03:37worth up to a hundred pound when you open your account.
03:40I'll put the link in the description.
03:41Plus you can get more free stocks by inviting your friends.
03:44Both of you will get a free share
03:46as long as they fund their account.
03:47I'm gonna be using their desktop website for this video,
03:50but you can do all of this on the mobile app if you want to.
03:53For everyone in the USA,
03:55you can find the same information on Yahoo Finance.
03:58Remember that nothing in this video
03:59should be taken as financial advice.
04:01I'm not a financial advisor, and when investing,
04:04your capital is at risk.
04:05So to find the balance sheet,
04:06just head to the stock you're interested in.
04:08For this example, I'm gonna pick Coca-Cola.
04:14Scroll down the page, click on the financials,
04:17and then the balance sheet, and more financials.
04:22This pulls up a pretty complicated looking page,
04:25but trust me, it is actually very simple.
04:28To help you understand this balance sheet,
04:30think of it like a cookie jar.
04:32There you go.
04:33At the top, you've got the current assets.
04:36These are like the cookies you can grab and eat.
04:40Very nice.
04:41For a company, this is the cash,
04:44or anything that can be turned into cash within 12 months.
04:48Next, you have the longer term assets.
04:50These are like the cookies that are deeper down in a jar.
04:53For a company, this often includes the headquarters
04:56and equipment.
04:57Here, you have the intangible assets.
05:00These are like the invisible things
05:01that make the cookies taste good.
05:04You can't touch these things,
05:05but they bring a lot of value.
05:07For a company, this is patents, intellectual property,
05:11trademarks, and goodwill.
05:12This next section is all about liabilities.
05:15These are like the cookies that you've promised
05:18to your friends for borrowing their ingredients.
05:20I'm most interested in the current liabilities,
05:23as these will need to be paid back within one year,
05:26or a normal operating cycle.
05:29So now you know what all of this information means,
05:32what should you actually do with it?
05:34Well, there's a simple calculation you can do
05:37to easily know if a company is high risk or not.
05:40And that is total current assets divided
05:44by total current liabilities.
05:47A good rule of thumb is this number should be above one.
05:50But how does this actually work in practice?
05:53Well, let's put Coca-Cola's numbers in.
05:55Their total current assets are $26.73 billion.
06:00So if we divide that by their total current liabilities,
06:05which are $23.57 billion,
06:09that comes to approximately 1.13.
06:13This means the company has $1.3 in current assets
06:17for every $1 in current liabilities,
06:21indicating they have enough short-term assets
06:23to cover their short-term debts.
06:25This is a great indicator, but our work is far from over.
06:33When you're getting to know someone new,
06:35you're probably curious about their past relationships.
06:38It's like doing a bit of a background check, right?
06:40You might wonder whether they've ever cheated
06:42or how many partners they've had.
06:44It's pretty much the same when you're considering investing.
06:47Before you put your hard-earned cash into a company,
06:50you wanna check out its track record.
06:52That's where the income statement comes in.
06:55And unlike people, public companies have to be upfront
06:59and honest about their past.
07:01An income statement is like a report card for a company,
07:04showing how well it did over a specific period,
07:06like a month, a quarter, or a year.
07:09Put simply, it tells you how much money the company made
07:12and how much it spent.
07:14This is normally found in the same place as the balance sheet.
07:17If you're using the Trading 212 app like me,
07:20then just click on the first tab,
07:23and then you'll see all the information.
07:25Here at the top, we have the total revenue,
07:28which is the total the business took in the time period.
07:31As we can see from Coca-Cola,
07:34they took 45.75 billion in 2023,
07:39which isn't too shabby.
07:41If we scroll down a bit, we get to the net income,
07:44which is the money the company makes
07:46after all expenses have been deducted.
07:49For Coca-Cola, this is $10.71 billion.
07:54So why does this matter?
07:56Well, every business has two main types of expenses,
08:00the cost of revenue and the cost of operations.
08:04If either of these are too high,
08:05then it could be a red flag.
08:07Just think about it.
08:09If you were selling custom T-shirts,
08:11you'd have to spend money on fabric and printing.
08:14This is your cost of revenue,
08:16as you can't create custom T-shirts without these materials.
08:20So this is a necessary expense, but that's not it.
08:24You'd also have to spend money on marketing
08:26and potentially staff.
08:28These are known as your operating expenses.
08:31Once you subtract both the cost of revenue
08:33and the operating expenses from the total money you make
08:37from selling your custom T-shirts,
08:39you get your operating income.
08:41Now, if you just scale up that example,
08:44it's the same idea for big companies like Coca-Cola.
08:47See here, this is the operating income.
08:50So now you know what all this information means,
08:53what should you actually do with it?
08:55Well, here's a simple calculation to see
08:57if a business is making a healthy amount of profit.
08:59Operating income divided by total revenue times 100.
09:04According to Tide Banking, as a rule of thumb,
09:065% is a low profit margin, 10% is a healthy margin,
09:11and 20% is a high margin.
09:14If we plug Coca-Cola's numbers into this calculation,
09:17we get approximately 25.73%,
09:22which is a high profit margin.
09:23This is a great indicator to use.
09:25However, it's important to remember that older,
09:28more established companies will be more profitable
09:31than newer, faster growing companies.
09:33So profitability isn't the most important thing.
09:37I mean, Amazon took years to make a profit
09:39and look at them now.
09:40But saying this, you should also keep in mind
09:42that a company that's done well in the past
09:44doesn't mean that it'll continue to do well in the future.
09:47Past performance doesn't guarantee future results.
09:53Listen, it might not sound like a romantic thing to say,
09:56but if you're thinking of getting involved with someone,
09:58you don't want them to be bad with money.
10:00It can lead to a whole lot of headaches down the line,
10:03trust me.
10:04In fact, money issues are a huge reason
10:07why relationships break up.
10:09The same goes for companies.
10:10You don't want to invest your money in a company
10:13that can't handle it correctly.
10:15That's why you need to check out their cashflow statement.
10:18Cashflow statement shows how much money is coming in
10:21and going out of a company over a period of time.
10:24It's divided into three parts.
10:26Operating activities, investing activities,
10:30and financing activities.
10:32They sound confusing, but trust me, they are super simple.
10:35Let's run through them one by one,
10:37and I'll let you know what to look out for.
10:39Operating activities show the money a company makes
10:42from its regular business operations.
10:44In Coca-Cola's case, that's selling their various beverages.
10:48All you need to look for here is a positive number like this.
10:53It means the company is making more money than it spends
10:56on its day-to-day operations.
10:58This is a good sign.
11:00Investing activities shows the money the company spends on investments,
11:03like buying new equipment, buildings, or other companies.
11:08It also includes money made from selling those kinds of investments.
11:12Believe it or not, this negative number here isn't a bad thing.
11:16This is because the company is reinvesting back into the business.
11:20I always like it when I see that company is investing wisely in their future.
11:24Just be cautious that they're not spending too much or selling off lots of assets.
11:29Financing activities is about the money a company borrows
11:32or gets from selling pieces of the company and the money it uses to pay back loans
11:37or give rewards to stock owners in the form of dividends.
11:40It's very important for you to keep an eye on how they're managing their debt and dividend payments.
11:45Be cautious if they rely too much on borrowing
11:48and if they're paying high dividends with a negative cash flow.
11:52It's like if you won a chunk of money and stopped working
11:56and then kept giving all your friends expensive gifts.
11:59It's just not sustainable and eventually you'll run out of cash.
12:03However, this isn't the case with Coca-Cola because even though they gave away
12:097.95 billion dollars worth of dividends to their shareholders,
12:14it's safe to say with that kind of positive cash flow, they can afford it.
12:20Have you ever been really attracted to someone online who seems perfect on paper,
12:26but when you finally meet them, you don't feel that spark.
12:30This could be similar to stocks.
12:32A company may appear to be a good investment based on data,
12:36but there are factors that spreadsheets just can't capture.
12:40That's why you need to cross-examine with something called qualitative analysis.
12:45This basically means checking out things that aren't numerical like how well known the company is,
12:51how loyal their customers are, and how happy those customers are with that company.
12:55So yeah, it's not all about the numbers.
12:58You need to seek out this information from sources that aren't as easy to find
13:03and really embody your inner Sherlock Holmes.
13:06So what information should you be looking for?
13:09And how can you find it when it's not immediately obvious?
13:13Well, there are three key things you need to keep an eye on.
13:16The first thing is brand recognition.
13:18If you went to a bunch of people in the street and said,
13:21tell me what you think about Apple.
13:23You'd probably get mostly positive responses about their product quality and good privacy reputation.
13:30I mean, most people out there own an Apple device and they've built a very strong customer base.
13:36But what if I asked you about a brand that wasn't as popular like Xiaomi?
13:40You'd probably get a lot more blank stares, especially in the UK.
13:44If you haven't heard of it, it's a Chinese tech company.
13:47So just through those two examples, there is a clear contrast between the two.
13:52And I'd say 99.9% of you would rather invest in Apple stock just based off its brand recognition.
14:00Even though Xiaomi is a major player in China and emerging markets with a growing customer base.
14:07But why is this?
14:08Well, companies with a strong brand recognition have built up a lot of trust with their customers,
14:13meaning that they're less impacted by any competition.
14:17Therefore, minimizing your risk as an investor.
14:20It's like the king on a chessboard.
14:23Every move revolves around it and its position is central to the game, making it irreplaceable.
14:30The second key thing to check out is the company's leadership.
14:33You can find all this information by researching the company's board of directors, reading transcripts of earnings calls,
14:40and checking out the executives' LinkedIn profiles.
14:44However, it's not only important to know who these leaders are, but how long they've been working there.
14:49In general, the longer they've been in charge, the more knowledgeable they are,
14:53meaning the more successful they're likely to be.
14:56In addition to this, lots of CEOs have big followings now on Twitter.
15:00However, this comes with both pros and cons.
15:03With the power to influence millions with just a tweet, it can send stock prices to the moon or crashing
15:10back down.
15:10I mean, back in 2016, Donald Trump tweeted the F-35 program and cost is out of control.
15:19Billions of dollars can and will be saved on military and other purchases after January the 20th.
15:25That F-35 program was a Lockheed Martin project.
15:29After that tweet, Lockheed Martin's stock price took a nosedive.
15:34The company's shares fell by 2.5% on the same day, wiping out nearly $4 billion in market value.
15:42So it's becoming more important than ever to invest in companies with a sensible CEO.
15:48Otherwise, the wrong tweet could lead to a very bumpy ride.
15:51The third important thing to research is any competitive advantages.
15:54So this can be things like patents, loyal customer bases or disruptive business models.
16:01These advantages set them apart from the competition,
16:04helping them make more money and grow their businesses faster over time.
16:08For example, Tesla has managed to secure a competitive advantage
16:12through cutting edge electric vehicle technology and an expansive charging network.
16:18These competitive advantages are like gold for investors,
16:21because it means lower risk and bigger potential rewards.
16:25You'll be able to find all this information on the company's website and also through
16:29a good old Google search.
16:31It's time consuming, yes, but understanding these aspects could make or break your investment.
16:37Remember, research is your best friend.
16:40It's better to spend a couple of weeks researching
16:42rather than make a rushed investment and have it backfire.
16:48Let's say you hear a nasty rumor about the person you're seeing.
16:52You might panic and dump them without getting to the truth.
16:56This is what so many people do when they hear bad news about the company they've invested in.
17:01They rush to sell it without actually giving it any proper thought.
17:05They just act on emotion.
17:07The news is actually so powerful.
17:09Think back to when the news broke that we might see empty shelves in the supermarkets.
17:14What did everyone do?
17:15They panic bought toilet rolls until they really did run out.
17:20The panic buying just made the situation so much worse.
17:23Just imagine if that wasn't reported on the news.
17:27There wouldn't have been panic buying and toilet rolls wouldn't have sold out in every store.
17:31The news has the same power over investors too and can cause abrupt surges in stock prices,
17:37but more often than not, it causes extreme panic selling.
17:41One example of panic selling is when the Cambridge Analytica scandal broke in March 2018
17:48and personal data was unethically taken, causing Facebook stock to plummet nearly 18%
17:55in just 10 days as investors reacted to the news of data misuse.
18:00But as we can see, if we zoom out, since then the stock has gone up by more than 200%.
18:06This was just a blip on the radar and long-term investors that understood that held strong
18:12because they were confident in their research.
18:14So if the news is full of fear mongering, then how do you know when to actually sell a stock?
18:20Well, there's a few occasions when you should sell a stock,
18:23and this might not be what you're expecting to hear,
18:26but these occasions actually depend on you and not the stock market.
18:31For example, if you find yourself in a financial emergency and don't have any emergency fund to
18:37fall back on, then I'd advise you sell your shares to get yourself out of that sticky situation.
18:43Or on a more positive note, maybe you've hit a financial goal and you'd like to take a vacation.
18:48I wouldn't normally suggest this to people, but if it's a figure at which you would feel satisfied
18:54selling the stock ad, then do it and enjoy your gains.
18:58The last reason to sell a stock is when you no longer believe in the fundamentals of the company
19:03and their future trajectory. In this case, it may be time to cut and run.
19:11When looking for a partner, you don't want to settle with the first person you date.
19:16It's important to explore what different people have to offer.
19:19Some may seem perfect, but are too self-absorbed, while others may have a great potential.
19:25The same concept applies when building your investment portfolio.
19:30The main types of stocks are value and growth. It's beneficial to understand both,
19:35so you can decide whether to focus on just one type or mix and match.
19:40Value stocks are normally shares in big, well-known companies. These companies have a few key features.
19:46First, their stock prices are considered lower compared to other companies in the market.
19:51They also have a low price to earnings ratio, which means they make good money compared to their stock
19:57price. Additionally, they're stable and they don't have wild ups and downs in their stock prices,
20:03and they pay dividends, which essentially means they regularly give some of their profits back
20:08to their investors. Value stocks are often found in companies that people rely on,
20:13even when times are tough, like during a recession, for example.
20:17These companies make or provide things that people need no matter what.
20:21Examples include consumer staples, which are everyday products like food and household items.
20:27Energy companies that provide fuel and power. Financials like banks and industrials that build
20:34things and provide raw materials. Some well-known examples of value stocks are Berkshire Hathaway,
20:40which is owned by Warren Buffett and invest in many different companies.
20:44Procter & Gamble, which makes everyday products like shampoo and toothpaste, and JP Morgan,
20:51a major bank. Growth stocks, on the other hand, are usually seen as overvalued compared to the market.
20:57They tend to be pretty volatile, meaning their stock prices can go up and down a lot.
21:02These stocks have higher price to earnings ratios. This means that investors expect them to grow a lot in
21:08the future, and they pay little to no dividends. Some growth stocks aren't even profitable for a long time,
21:15as they reinvest their earnings to fuel further growth. Growth stocks are expected to grow at a more
21:21rapid pace than the overall market, which is why they often outperform the market. Some well-known
21:28examples of growth stocks include Amazon, Meta Platforms, Nvidia, and Tesla. If you're not sure if the stock is
21:35growth or value, then a quick way to tell is by using the PE ratio. You can easily find this
21:41here on
21:42Trading 212. Typically, the average PE ratio is around 20 to 25. Anything below that would be considered
21:51good, whereas anything above would be worse. However, this is just a general rule of thumb and does vary
21:57depending on the industry, so make sure to compare it with some other companies in that sector. Once you've
22:02determined whether you're a value, growth, or mixed investor, you need to ensure you have a diverse
22:08range of stocks in your portfolio. This is what we call diversification. So if one of your stocks takes
22:15a dive, you're banking on the others to balance things out. A general rule is not to have more than
22:205% of your money in one stock and no more than 20% of your investments in one sector,
22:27such as technology,
22:28for example. It's a good idea to have stocks in at least five different sectors, a minimum of two
22:35countries and more than 25 different stocks in total. You could also look into having a cash ISA too,
22:42which is basically just an individual savings in the UK, which allows you to save money and earn tax-free
22:49interest. At the moment, Trading 212 seem to have one of the highest paying cash ISAs right now at 5
22:55.2%.
22:56So if you've already used the code Tilbury or the link in the description to pick up your free
23:01fractional share worth up to £100, then all you have to do is go up here and they'll walk you
23:07through the process. If after watching this video, you think picking individual stocks seems too
23:12time consuming, then there is a way you can cut out pretty much all the research and in a lot
23:18of cases,
23:18get even better results. If you want to understand how I make around $17,000 a week using index fund
23:25investing, then you should watch this next video where I explain everything in detail, but don't
23:31click on it just yet. Make sure to subscribe if you want to grow your wealth, okay? I'll see you
23:36over there.
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