- 14 hours ago
Millionaire Explains: How to Invest for Beginners in 2026
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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, but as a complete beginner,
00:12I 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,
00:54you 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
02:20for 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.
02:31Also 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
02:50and 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
02:57when you're thinking about investing in 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,
03:14liabilities and 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.
03:21I'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
04:02and when investing your 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,
04:29think 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.
04:40Mm, very nice.
04:41For a company, this is the cash or anything
04:45that 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
04:55the headquarters and 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,
05:24as 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
05:43divided by total current liabilities.
05:46A good rule of thumb is this number should be above one.
05:50But how does this actually work in practice?
05:52Well, 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,
06:10that 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.
06:30Hmm.
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
06:45when 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,
06:57public 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,
07:13and 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.
08:27These 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?
08:54Well, here's a simple calculation to see if a business
08:57is 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%,
09:21which is a high profit margin.
09:23This is a great indicator to use.
09:25However, it's important to remember
09:27that older, more established companies
09:30will 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.
09:48Past 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.
10:11You don't wanna 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.
10:40Operating activities show the money a company makes
10:42from its regular business operations.
10:44In Coca-Cola's case,
10:46that's selling their various beverages.
10:48All you need to look for here is a positive number,
10:52like this.
10:53It means the company is making more money
10:55than it spends on its day-to-day operations.
10:58This is a good sign.
11:00Investing activities shows the money
11:02the company spends on investments,
11:03like buying new equipment, buildings,
11:06or other companies.
11:08It also includes money made from selling
11:10those kinds of investments.
11:12Believe it or not,
11:13this negative number here isn't a bad thing.
11:16This is because the company is reinvesting back
11:19into the business.
11:20I always like it when I see that companies investing wisely
11:23in their future.
11:24Just be cautious that they're not spending too much
11:27or selling off lots of assets.
11:29Financing activities is about the money a company borrows
11:32or gets from selling pieces of the company,
11:35and the money it uses to pay back loans or give rewards
11:38to stock owners in the form of dividends.
11:40It's very important for you to keep an eye on how they're
11:43managing their debt and dividend payments.
11:45Be cautious if they rely too much on borrowing,
11:48and if they're paying high dividends
11:50with 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,
12:01and eventually you'll run out of cash.
12:03However, this isn't the case with Coca-Cola,
12:07because even though they gave away $7.95 billion
12:11worth of dividends to their shareholders,
12:14it's safe to say with that kind of positive cash flow,
12:17they can afford it.
12:21Have you ever been really attracted to someone online,
12:24who seems perfect on paper,
12:26but when you finally meet them,
12:28you 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
12:37that spreadsheets just can't capture.
12:40That's why you need to cross-examine
12:41with something called qualitative analysis.
12:45This basically means checking out things
12:47that aren't numerical,
12:48like how well-known the company is,
12:51how loyal their customers are,
12:53and how happy those customers are with that company.
12:56So yeah, it's not all about the numbers.
12:58You need to seek out this information
13:00from 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
13:11when 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
13:26about their product quality and good privacy reputation.
13:30I mean, most people out there own an Apple device,
13:33and they've built a very strong customer base.
13:36But what if I asked you about a brand
13:38that wasn't as popular like Xiaomi?
13:40You'd probably get a lot more blank stares,
13:43especially in the UK.
13:44If you haven't heard of it, it's a Chinese tech company.
13:47So just through those two examples,
13:50there is a clear contrast between the two.
13:52And I'd say 99.9% of you would rather invest in Apple stock,
13:57just based off its brand recognition.
14:00Even though Xiaomi is a major player in China,
14:03and emerging markets with a growing customer base.
14:07But why is this?
14:08Well, companies with a strong brand recognition
14:11have 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,
14:25and its position is central to the game,
14:28making it irreplaceable.
14:30The second key thing to check out
14:31is the company's leadership.
14:33You can find all this information
14:35by researching the company's board of directors,
14:38reading transcripts of earnings calls,
14:40and checking out the executive's LinkedIn profiles.
14:44However, it's not only important to know
14:45who these leaders are,
14:47but how long they've been working there.
14:49In general, the longer they've been in charge,
14:52the more knowledgeable they are,
14:53meaning the more successful they're likely to be.
14:56In addition to this,
14:57lots 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,
15:06it can send stock prices to the moon or crashing back down.
15:10I mean, back in 2016, Donald Trump tweeted,
15:14the F-35 program and cost is out of control.
15:18Billions of dollars can and will be saved on military
15:22and 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
15:32took a nosedive.
15:34The company's shares fell by 2.5% on the same day,
15:39wiping out nearly $4 billion in market value.
15:42So it's becoming more important than ever
15:44to 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
15:53is any competitive advantages.
15:55So this can be things like patents,
15:57loyal customer bases, or disruptive business models.
16:01These advantages set them apart from the competition,
16:04helping them make more money
16:05and grow their businesses faster over time.
16:08For example,
16:09Tesla has managed to secure a competitive advantage
16:12through cutting edge electric vehicle technology,
16:15and an expansive charging network.
16:18These competitive advantages are like gold for investors,
16:22because it means lower risk and bigger potential rewards.
16:25You'll be able to find all this information
16:27on the company's website,
16:28and also through a good old Google search.
16:31It's time consuming, yes,
16:33but understanding these aspects
16:35could 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,
16:44and have it backfire.
16:48Let's say you hear a nasty rumor
16:50about 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
16:58when they hear bad news
16:59about the company they've invested in.
17:01They rush to sell it
17:03without 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
17:11that we might see empty shelves in the supermarkets.
17:14What did everyone do?
17:15They panic bought toilet rolls
17:17until 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,
17:28and toilet rolls wouldn't have sold out in every store.
17:31The news has the same power over investors too,
17:34and can cause abrupt surges in stock prices,
17:37but more often than not,
17:39it causes extreme panic selling.
17:41One example of panic selling
17:43is when the Cambridge Analytica scandal broke in March 2018,
17:48and personal data was unethically taken,
17:51causing Facebook stock to plummet nearly 18% in just 10 days,
17:57as investors reacted to the news of data misuse.
18:00But as we can see, if we zoom out,
18:02since then the stock has gone up by more than 200%.
18:06This was just a blip on the radar,
18:08and 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,
18:17then 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,
18:29and not the stock market.
18:31For example, if you find yourself in a financial emergency,
18:35and don't have any emergency fund to fall back on,
18:38then I'd advise you sell your shares
18:40to get yourself out of that sticky situation.
18:43Or on a more positive note,
18:45maybe you've hit a financial goal,
18:47and you'd like to take a vacation.
18:48I wouldn't normally suggest this to people,
18:51but 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
18:59is when you no longer believe
19:01in the fundamentals of the company,
19:03and their future trajectory.
19:05In this case, it may be time to cut and run.
19:11When looking for a partner,
19:13you don't wanna settle with the first person you date.
19:16It's important to explore
19:17what different people have to offer.
19:19Some may seem perfect, but are too self-absorbed,
19:23while others may have a great potential.
19:25The same concept applies
19:27when building your investment portfolio.
19:30The main types of stocks are value and growth.
19:33It's beneficial to understand both,
19:35so you can decide whether to focus on just one type,
19:38or mix and match.
19:40Value stocks are normally shared
19:41in big, well-known companies.
19:44These companies have a few key features.
19:46First, their stock prices are considered lower
19:48compared to other companies in the market.
19:51They also have a low price-to-earnings ratio,
19:54which means they make good money
19:56compared to their stock price.
19:58Additionally, they're stable,
20:00and they don't have wild ups and downs
20:02in their stock prices, and they pay dividends,
20:04which essentially means they regularly give
20:07some of their profits back to their investors.
20:09Value stocks are often found in companies
20:12that people rely on, even when times are tough,
20:15like during a recession, for example.
20:17These companies make or provide things
20:19that people need no matter what.
20:21Examples include consumer staples,
20:24which are everyday products like food
20:25and household items,
20:27energy companies that provide fuel and power,
20:30financials like banks,
20:32and industrials that build things
20:34and provide raw materials.
20:36Some well-known examples of value stocks
20:38are Berkshire Hathaway,
20:40which is owned by Warren Buffett,
20:42and invest in many different companies.
20:44Procter & Gamble, which makes everyday products
20:47like shampoo and toothpaste,
20:49and JP Morgan, a major bank.
20:52Growth stocks, on the other hand,
20:54are usually seen as overvalued compared to the market.
20:57They tend to be pretty volatile,
20:59meaning their stock prices can go up and down a lot.
21:02These stocks have higher price-to-earnings ratios.
21:05This means that investors expect them
21:07to grow a lot in the future,
21:09and they pay little to no dividends.
21:11Some growth stocks aren't even profitable for a long time,
21:15as they reinvest their earnings to fuel further growth.
21:19Growth stocks are expected to grow
21:20at a more rapid pace than the overall market,
21:23which is why they often outperform the market.
21:27Some well-known examples of growth stocks include Amazon,
21:30Meta Platforms, Nvidia, and Tesla.
21:33If you're not sure if the stock is growth or value,
21:36then a quick way to tell is by using the PE ratio.
21:40You can easily find this here on Trading212.
21:44Typically, the average PE ratio is around 20 to 25.
21:49Anything below that would be considered good,
21:51whereas anything above would be worse.
21:54However, this is just a general rule of thumb,
21:56and does vary depending on the industry,
21:58so make sure to compare it
22:00with some other companies in that sector.
22:02Once you've determined whether you're a value,
22:04growth, or mixed investor,
22:06you need to ensure you have a diverse range of stocks
22:09in your portfolio.
22:10This is what we call diversification.
22:13So if one of your stocks takes a dive,
22:16you're banking on the others to balance things out.
22:18A general rule is not to have more than 5% of your money
22:21in one stock, and no more than 20% of your investments
22:26in one sector, such as technology, for example.
22:29It's a good idea to have stocks
22:31in at least five different sectors,
22:34a minimum of two countries,
22:36and more than 25 different stocks in total.
22:39You could also look into having a cash ISA too,
22:42which is basically just an individual savings in the UK,
22:45which allows you to save money
22:47and earn tax-free interest.
22:49At the moment, Trading212 seem to have one
22:52of the highest paying cash ISAs right now at 5.2%.
22:56So if you've already used the code Tilbury
22:59or the link in the description
23:01to pick up your free fractional share worth up to 100 pounds,
23:04then all you have to do is go up here
23:06and they'll walk you through the process.
23:08If after watching this video,
23:09you think picking individual stocks
23:11seems too time consuming,
23:13then there is a way you can cut out
23:15pretty much all the research
23:16and in a lot of cases, get even better results.
23:20If you want to understand how I make around $17,000 a week
23:24using index fund investing,
23:26then you should watch this next video
23:28where I explain everything in detail,
23:30but don't click on it just yet.
23:32Make sure to subscribe if you want to grow your wealth.
23:35Okay, I'll see you over there.
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