This is my father, Mervin Tilbury. He's one of the hardest working people I know, and as a kid, I remember him working in a factory job making cable ties and a side hustle cutting grass, so he could provide for me and my mom and my three sisters. He'd stash away any extra money he made in a shoebox as well as a bank account that paid little to no interest, hoping that one day he could quit his job working in the factory.
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| Investing For Beginners 2024 |
Investing For Beginners 2024
When my uncle invested some of his money in the stock market, my dad said it was an extremely risky move. Unfortunately, what my dad didn't realize was that he was also playing a risky game. Can you see where this story's going? Every year, my father's money lost value due to inflation. This is just what happens over time.
As more money is printed, the money in circulation becomes less valuable. This meant he was never able to quit his job in the factory. I've made sure to invest all of my life because the idea of having my money eaten away by inflation terrified me. As a result, not only have I beaten inflation, but my investments actually now grow by around $17,000 a week on their own, which over my lifetime has made me millions.
I'm no financial advisor, but I am someone who's been there and done it. That's why I'm making this video. It's exactly what I wish I had when I was younger. How can I make money investing in stocks? To make money, we first need to beat the inflation issue. In the last 60 years, this average has increased to a rate of 3.8% per year.
So if your money isn't growing by more than this on its own, then you're getting poorer by the second. In a perfect world, you would have a savings account that provides an average return of eight to 10% every year, so that you can both beat inflation and earn some profit. Unfortunately, such savings accounts don't exist.
However, you can achieve returns like this by investing in the stock market. A stock is a small part of a company, and when you buy it, you become a shareholder. When you're a shareholder, there are two ways you can make money. Firstly, if the price of the stock goes up during the time you own it, you can sell it for more than you paid.
Secondly, you can receive dividends. Dividends are regular payments to shareholders. Not all stocks pay dividends, but if they do, this means that you can receive money without ever selling your stock. The magic really starts to happen when you own a bunch of stocks that grow at an average of 10% per year because the interest applied becomes larger and larger.
How to Start Investing in 2024: A Beginner's Guide
How to Start Investing in 2024: A Beginner's Guide This is called compound interest, and I have to admit, a guilty pleasure of mine is messing around with online compound interest calculators. Let's do one now. If you were able to invest $250 per month at an 8% annual return in 42 years, you'd be a millionaire, and if you continued to do this for another 10 years, you would actually have over $2 million in your account.
Of course, if you wanted to invest even more, then that would just speed up the process. This is all based on historical average data, and it isn't guaranteed, but it's certainly been my experience. So as you can see, the real secret ingredient to this millionaire formula is time, which brings me to the question of when I should start investing.
The short answer to this is as soon as possible. The younger you start, the better. You're giving your investments more time to grow and compound. This also means you can take more risk, as your investments have time to recover if a stock market crash happens. It will happen; it always happens, but life isn't as easy as this, as there are often things in the way preventing you from investing.
So here's how I would structure things. First, you need to make sure you've paid off all high-interest debt, like credit cards. Just think about it. There's no point trying to make 10% in the stock market if you are paying 15% to a credit card company. Secondly, build up an emergency fund. This should be enough to cover three to six months of your living expenses.
This way, you are not forced to sell your stocks in the event of an emergency, which can really ruin your progress. Once you've done both of these things, you're ready to start investing. If you are younger than 18, then it would be a great idea to ask a parent to open up a custodial account, which allows them to invest for you.
This will give you such an advantage in the future. Your next question is probably something along the lines of, How much should I invest? When you ask an investor, they'll probably say as much as possible. However, I have a different opinion. I made most of my money by starting different businesses and only used the stock market to grow my wealth over time.
I've also had a pretty fun life, from flying full-size airplanes and racing cars to competing for my country and traveling the world. If I'd invested all of that money in the stock market,. then I'd have missed out on so much. So my answer would be to invest whatever you feel comfortable with, but if you want a more solid answer, then the 70/20/10 rule is a pretty good guide.
How I Make $17K per Week from Stocks market
It states that you should split your money by these percentages: 70% on living expenses, 20% on investments, and 10% on fun stuff. Research shows that people who invest at this level are much better equipped to ride the ups and downs of life and also get ahead of everyone else. That's all well and good, but how do I buy a stock? There are various different apps out there that allow you to invest in stocks.
I'll leave some links below. The key is to open the correct type of account. You'll often hear people throwing around the terms Roth IRA in the USA, stocks and shares ISA in the UK, TFSA in Canada, and supers in Australia. If you don't have one of these accounts, then you're missing out, as they allow you to avoid paying taxes on your investments, but they do have limits because they're so powerful.
A great thing about these investing apps is that they actually give you the ability to buy fractional shares. So rather than buying a share of Apple for $190, you can invest as little as $1. I wish I had this option when I was younger, as it would've allowed me to get some early investing experience without having to take any big risks.
One of my favorite investing platforms is Trading 212, as they do both of these things. Since I was planning to talk about their app anyway, I reached out to see if they'd be interested in sponsoring this portion of the video. They agreed and are also offering free stock worth up to £100 to anyone who uses the code Tilbury when they create an account.
One of the really cool things about Trading 212 is that they let you practice investing with fake money so you can get familiar with real data from the markets without risking any money. So if you're a little uncomfortable with investing or just want to try some strategies before putting your own money on the line, this is a great way to get started.
Another great feature is called Pies, where you can see how other investors have allocated their money to different stocks. If you wanted to invest $100 into that pie, then it would just be split amongst the various allocations that the pie creator has chosen. If you live in the UK or Europe, it's worth trying out Trading 212 because signing up is completely free and there are no commissions.
Of course, don't forget to use the code Tilbury, and you'll receive a free share worth up to a hundred pounds. Or alternatively, click the link in the description to sign up and see exactly how to access the free share. Now, the obvious next question is: how do I pick the best stocks? There are two main ways to attempt to predict the stock market.
How I Make $17K per Week from Stocks market
These are called technical and fundamental analyses. A good way to think about this is like a scale. Usually, short-term day traders are purely focused on the technical aspects. This includes looking at charts and patterns. They believe they can predict how the stock will change in price by judging the highs and the lows on the graphs.
As a long-term investor, my strategy is to keep it simple. Lots of people talk about using margins and options, but that's really not something I worry about. I'm a lot more focused on the fundamentals of a company. This includes the financials, the leadership, and the brand recognition, as I believe this is where the true information lies to indicate the long-term success of a stock.
When I invest in a stock, I don't have the intention of selling it for at least two to five years. However, like I mentioned, it's a scale, so I do look at the occasional chart in order to find the best time to buy. This approach has helped me find some really good investments over the years rather than just dipping in and out and trying to make a profit every day.
But with the majority of my investments, I don't actually do any of this. That's because I allocate most of my money to index funds. This is definitely the best strategy for most people. So what's an index fund? It's a way for the average person to make more money than the professionals with very little effort.
I'm a big football fan, and if you've ever followed any sports, you'll be familiar with a lead table like this. The better your team performs, the higher up they'll be on the list. On the other hand, if they do really badly, they might be removed entirely from the league. This is almost exactly the same as an index.
All you have to do is switch out the teams for companies. Let's take the S&P 500, for example. This is a list of around 500 of the largest public companies in the USA, with the big dogs being Amazon, Google, Apple, and Tesla. Just like the league table, if a company does poorly, then they run the risk of being removed from the list.
With this league table or index of companies, You could go and buy stocks in some of them individually. However, if something bad happens to those companies that you've picked, then you can wave goodbye to your money. The idea of an index fund is to be a little bit sneaky, as it allows you to invest in every single company on the list with just one click.
Even if a few businesses perform poorly, the overall success of all businesses will balance it out. The average annual return of the S&P 500 over the last 10 years has been 13.6%. Although this is slightly higher than the average over time, no one has ever lost any money if they've bought and held an S&P 500 index fund for more than 20 years.
The truth is that the average actively managed fund returns 2% less per year than the market in general. This means that the professionals on average are doing worse than index funds, and even if they end up losing you money, they still charge you high fees no matter what. The reason that index funds can charge really low fees is because they're passively managed, which means they look after themselves and don't need an expert to keep adjusting them.
Meaning the fees can be as low as 0.02% per year. When I tell people about index funds, it often blows their minds. However, when they go onto an investing app, they get confused by the different options and ask, What's the best index fund to invest in? Well, as I said, I'm not a financial advisor, but I have had a lot of success with three different types of index funds.
Number one tracks the S&P 500 index. This is the one we briefly mentioned before. The historical return of eight to 10% has allowed me to generate a fortune over the years. This is due to the power of compound interest. The S&P 500 tracks 11 different industries and sectors, and no sector is more than 30% of the index.
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However, it is worth pointing out that it's a bit tech-heavy these days, with five tech stocks dominating 23% of the entire fund. It's up to you if you see this as a positive or a negative. I personally don't mind, as I believe in the future of technology. There are so many different index funds that track the S&P 500, so here are some of my favorites.
The best I found in the USA is the V-FIAX Index Fund, or the VOO ETF. The best in the UK would probably be the VUSA ETF. The only real difference between an index fund and an ETF is that the ETF can be purchased or sold at any time throughout the day. Just like a stock, index funds can only be purchased in full.
So, for example, if the price is $500, you must pay $500. An ETF, on the other hand, can be purchased in fractional shares, which means you don't have to buy a full share and instead you can invest whatever amount you like. This is great if you are just starting out or want to average out the dollar. Personally, I've set up a direct debit every month, so the money leaves my bank account without me even noticing.
Really and truly, there isn't a huge difference between an index fund and an ETF. Just consider which one is best for you and take the plunge. Number two is a total stock market index. The total stock market index has returned investors an average of 13% each year over the last 10 years, which isn't bad at all.
It's the definition of diversification. You can't really get any more skins in the game for a lower cost. If you want to invest for a long period of time without having to even check or even think about it, then this is most likely the fund for you. Investing in everything means you can experience gains across the entire market, and unless a crazy crash happens, you should be okay. But even if it does crash, with time, things tend to bounce back.
I've seen three crashes since I've been an investor: the.com bubble, the 2008 financial crisis, and the 2020 COVID crash. I'm not going to pretend these crashes didn't hurt, but long-term, every market I've invested in has bounced back. The downside to this index is that it depends on the entire market trending upward.
This means there could be an individual stock that you really believe in that goes to the moon, but you might not experience those gains because that stock doesn't play much of a role within the index fund. The best I found in the USA is the VTSAX Index Fund and the VTI ETF, and the best in the UK is the VWRL ETF.
Number three is the emerging markets index. Whether or not I agree with the predictions of some experts that emerging markets are on the rise, I believe it is crucial for me to have at least a little exposure to these markets. It's all well and good to buy the S&P 500, but when China or another emerging country has some great gains, you'll end up missing out.
Just as an example of this growth, when I first traveled to China around 20 years ago, I looked into buying an apartment in Shenzhen. That real estate was $47,000, and now it's worth over a million. This just shows the potential for growth in these markets. Emerging market funds are definitely the most risky type of index fund we've discussed.
These funds include stocks from lots of different growing markets and could be very heavy on Chinese companies. Take a look at a list of the largest economies in the world. A lot of them are emerging markets, so it just makes sense to me to throw a little bit of money in for diversification. The best I found in the U.S. is the VEIEX ETF and in the UK, the VFEM ETF, but there are also lots of other emerging market funds available, so it's worth having a look around.
Now, I know at some point I need to address the biggest question around investing, which is, of course, is investing risky? It really depends on how you define risk. You may be scared that you'll lose money. However, you also face this risk by not investing. As my father Mervin found out, if you have a diversified portfolio of index funds and keep investing at a gradual rate each and every year, then even if there is a stop-market crash, historical data shows you should be able to endure the storm.
A great way to make sure you're protected in the event of a market crash is to mix in a few bonds within your stock portfolio. These are just different types of investments that are far more stable than stocks, and you can buy them on the same investment platforms. In your twenties and thirties, I wouldn't worry too much about them, but as you move closer to retirement, it's a good idea to have more bonds and stocks.
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In my opinion, in your younger years, the biggest risk you can take is not taking enough risk. Now, for the question on everyone's mind: when should I sell my stocks? It's possibly one of the most common questions in the stock investing world. Knowing when to sell stocks or hold onto them mostly depends on your age.
If you're older, you've likely been investing for a while and can live off them during retirement by gradually selling when needed. However, if you're younger, this usually isn't the case. In fact, if you are in your twenties or thirties, there are only three good reasons to sell your investments.
Number one, you need money for an emergency. Hopefully, if you followed the video so far, then you won't need to worry because you've got an emergency fund to help you out in times like this. Number two, you made a bad investment. If you have individual stocks that appear to be underperforming consistently, it may be time to cut your losses before those losses stack up even higher.
Before panic selling, take a good look at the wider industry. If other goods like it are also in decline, then you know it's the industry, not just your stock. If everything's going poorly, this gives you a bit of extra context. Number three, you've achieved a specific goal, although I don't really recommend it.
If you are investing for short- or medium-term goals like, I don't know, saving up for a dream vacation, then it would be a great idea to set a target price. This is a figure at which you would feel satisfied selling the stock and enjoying your gains. The most important thing to remember is to not sell your stocks for as long as possible, so they have the longest time to grow.
Just invest and forget about it until you want to stop investing and take your profits. This thinking will also help you avoid panic selling. If you want to know exactly how I pick my individual stocks, then you can check out this video next, but don't click on it just yet. Make sure to subscribe if you want to grow your wealth.
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