From $0 To Millionaire | Investing For Beginners

what's up you guys it's Graham here so as many of you know I the thing for talking about investments for some reason it's what I've been obsessed with doing over the last decade like I wake up early in the morning I make myself some 20 cent iced coffee and then it's been a few hours reading through every single financial website in existence going through my favorite YouTube channels trying to learn as much as I can and then sorting through the newest real estate listings to get an idea of what's coming on the market this has been my routine every morning it's helped me tremendously in terms of how much money you make and it also happens to give me something to talk about here on YouTube three times a week make sure to hit the notification bell but with this video I thought it might be helpful to get back to the investing 101 basics because I'm still getting comments from people who know that they should be investing but have no idea where to start or what to look into so I wanted to make a video talking about my own personal favorite investments why I invest in them and how you can get started doing something similar as well and hopefully that will serve as a template and a catalyst for you to begin investing from and then if you stick with this for a long time and you save your money by not going and buying overpriced Starbucks coffee then one day you might have enough invest in to buy this really cool 2019 lamborghini aventador svj coupe that goes 0 to 60 in under 3 seconds and if you think that's impossible like no grim I can't afford to half a million dollar well it's really as simple as a $10 a day investment compounded at a 7% return over 35 years there you go and if you want anything more expensive than that then keep watching and I'll share with you exactly how to do it first I just want to start by saying this when it comes to investing there's nothing out there that is guaranteed or risk-free and typically the more profit that you aim for the more work is involved or the higher the chances will be that you'll end up losing money even something as guaranteed as a high interest savings account has the risk of you losing money to inflation or having that interest rate go down over time like pretty much every online bank has been doing to me over this last year so with this there's never gonna be a magic pill or just like this one-size-fits-all approach when it comes to investing not to mention investing is almost never gonna be consistent and how much money you make will definitely fluctuate over time even though we can look back and see historically that some of these investments have performed pretty well long term in the short term it's usually a pretty wild ride there might even be several years in a row where you just continually break even on your investments and then pull out your hair and question your very exist as an investor or most likely they're gonna be times where you smash the like button for the YouTube algorithm if you've not done that already but no seriously I just really want to preface this video by making it very clear that investing is going to be a messy operation and it's really gonna be a true test of your willpower not to get too excited when things go up and not get too disappointed and sell and panic when things go down all of this is going to be cyclical and it's important that's sticking with it becomes just as much of a consistent habits as going and brushing your teeth every night so understanding these dynamics is going to make you that much better of an investor and get you one step closer to going zero to 60 in under three seconds so now without further ado here are my all-time favorite investments the first and something I advocate non-stop here in the channel is wait for it index funds and the reason I'm such a huge proponent of this both for myself and almost everyone watching is that it offers the ultimate diversification the ultimate selection of almost anything you want and some of the best returns out there now for anyone who is not aware what an index fund is it's pretty much a portfolio of certain investments that you could buy into and then you own a small amount of all of them for example you could buy into the entire S&P 500 which covers the top 500 publicly traded stocks here in the United States for the low price of three hundred and seven dollars and fifty eight cents that way you could own a small fractional percentage of everything without you needing to go and buy each stock individually in its full price and historically an investment like this over the last 100 years has seen a return of about seven and a half percent annually adjusted for inflation with dividends reinvested what you gotta say is pretty decent for something you just buy once and then hold on to forever without needing to lift a finger this is the reason why Warren Buffett suggested that the majority of investors out there just keep 10% of their money in cash and the other 90% in a low-cost S&P 500 index fund like this one his reasoning for this was that long-term index fund investing should see a higher return than just about any other broad investment out there all for a fraction of the price this is also something that I agree with which let's be real like Who am I to ever disagree with the almighty Warren Buffett so obviously I listen to his advice and this is something I personally invested in throughout the last 10 years I keep it incredibly simple just throw it in a mix of V T Sachs V Phi X visible licks and VIX which covers a wide variety pretty much everything out there and then after I do that I do absolutely nothing of course though just like with anything there are pros and cons to this approach and this is what they are starting with the bad at first because this is not an actively managed investment you're at the whims of the overall market for better or for worse that means that other more specific investments could end up making you way more money depending on how much work you're willing to put in so doing this could limit your profits to a certain extent the second index fund investing is meant to be a long-term strategy meaning that if you just want to get in and make money super fast it's probably not recommended because the markets are way too volatile to ensure you're gonna make a profit short term so if you wanted to do something like this I recommend you hold your investment for at least ten years or longer and the third downside is that there is no third downside on the other hand no index fund investing does have some pretty solid advantages for anyone who's willing to give it a shot first it's really easy to do and anyone can get this set up within minutes websites like Vanguard fidelity or Charles Schwab all offer you extremely low-cost or even free index funds that cost you nothing to buy and almost nothing to maintain that's pretty much as free of an investment as you're gonna see so in terms of simplicity this is the best second it takes very little work to figure out where your money is going unlike picking individual stocks trying to time your buy-in and then figuring out the right time to sell index funds take pretty much no work at all all you got to do is buy at once hold it for a really long time and then comment down below when you get to this point in the video and third studies have shown that index funds actually generate a higher rate of return than hedge funds and the majority of individual investors so from a money making standpoint index funds just seem like the clear winner this is why I like them so much and why I recommend them for anyone who wants to take a really easy passive approach with investing who still wants a really good return it wants to do as little work as possible for their investments this is really one of those investments that can make you money long term while you just sit there relaxing tanning on the beach and watching my videos and this is why I throw money into this as well just so I can cash in on the markets moving up whenever they do second we have another all-time favorite investment of mine and at this point this is pretty much where all my money goes and that would be real estate now this type of investment is insanely more intricate time-consuming and risky than just going and buying an index fund and then doing nothing but the returns that I get from doing this are so much higher and when you really know what you're doing you have the potential to me a lot of money but it comes to myself my entire investment strategy really just boils down to this and here's my entire blueprint with real estate investing one buying an undervalued property that I know I can get a good deal on so you buying a property in an area that I expect will be going up in value over the next 10 years 3 get a fixed-rate low-interest 30-year loan on the property or renovate and fix up the property so it's gonna be worth even more by the time I'm done with it five rent out the property and the rent should cover all of my expenses plus some profit and then six repeat the process and do this over and over again no joke I've made over a million dollars doing this as a side investment and now my rents are exceeding $15,000 a month gross plus each of these six steps makes money in a different way so I'm not entirely dependent on just one way of making money first buying an undervalued property where I could get a good deal this is where you can make an instant profit just for buying a home less than what it's actually worth for example imagine buying a home for four hundred and fifty thousand dollars that's worth five hundred thousand dollars in a way you just made fifty thousand dollars of equity just for buying it that is entirely possible with real estate investing when you have the patience to wait for the right deal second I always try to invest in an area where there's upside potential and values are expected to rise for example I like to invest in areas that are seeing a surge of new buyers new investments and new businesses I also like these areas to preferably be selling for less than other nearby areas because from my perspective the cheaper home should see more demand from buyers they should be more affordable and also have more room for upside third I always get a low interest fixed-rate mortgage on the property and in a way this is one of the techniques that I use to essentially borrow free money for example I could go and get a loan from the bank for 30 years fixed at three and a half percent but when I go and rent out the property that three and a half percent interest rate is a tax deduction against the rental income plus the net amount that's remaining after taxes is further whittled away by inflation at a rate of about two percent a year meaning that after everything is all said and done that three and a half percent interest rate loan is essentially costing me nothing to maintain and hold over 30 years now forth by going and renovating the property you could get what's called forced appreciation this is where you go and remodel the home and make it more desirable and in return it's worth more money than what you paid for it for example this might be the equivalent to be going and buying a $500,000 home then spending fifty thousand dollars fixing it up and now it's worth six hundred the thousand dollars or $100,000 more than what you have into it then fifth is you go rent out the property hopefully you're making cash flow every single month is profit this is also it's gonna be known as what's called your cash on cash return or how much money you're making from your money after all of your expenses so if you invest a hundred thousand dollars in a property that makes you five thousand dollars a year that works out to be a five percent cash on cash return it's six when you go and make your mortgage payment every month a portion of that payment goes towards home equity and paying down the loan it's kind of like saying every month that you make your mortgage payments you will now own half a percent more of the home until eventually you own the entire thing with this you're building up your net worth each and every month and the best part about this is that your tenant is the one who's helping you pay it off and lastly number seven by investing in real estate you should see some appreciation of your home's value long term over time on top of everything else so you much like picking a stock that goes up in value over time real estate should - now the amount your home goes up in value is entirely dependent on the area that you buy in - and some areas might see your home actually go down in value but long-term into high-quality areas you should expect to see a two to four percent increase in your home's value year after year and that also increases your net worth I could easily talk about this for another hour or two because this is really just the tip of the iceberg in terms of what's possible but overall I've incorporated everything that I mentioned here into my entire real estate career and that's allowed me to make way more money than I would have otherwise in just about any other investment however there are some downsides to doing this because like I said any returns like this don't come without an equivalent amount of risk first I'll be the first to admit it's a lot of work even as someone who's been doing this professionally now for almost 12 years it could still take me three to six months or longer to find the right deal I'm constantly searching the markets to see what's coming up I'm seeing open houses every weekend and it spent a lot of my time managing renovations in the beginning it's definitely like you're buying yourself another part-time job a second there's also a high barrier to entry because you will need a down payment a good credit score and sufficient income to get a loan from the bank without that you're either not gonna get the loan in the first place or you're gonna end up paying a much higher interest rate which has cost you more money third this type of investment is fairly illiquid meaning that if you need cash it's probably gonna take you a few weeks to maybe even a few months to sell the property or pull out your equity in cash so why really recommend this if you're the type of person who likes to be really hands-on with what they do this is not like an index fund where you could just click cell and within minutes you have all the money you need to go and buy that 2019 lamborghini aventador at SBJ and forth to dealing with tenants is not for everybody even though you can't hire a property manager to take on a lot of the work it still requires some effort on your end to manage the manager so to speak and otherwise just make sure everything is running smoothly but still for me despite all of the negatives real estate investing holds a special place in my heart I enjoy because they like having complete control over my investment and getting some cash flow every single month not to mention some pretty good tax advantages if you keep reinvesting the profits the amount of money that you can make from this can be a lot however if you're the type of investor who wants something completely easy and passive without ever needing to lift a finger or pick up the phone to deal with another person then chances are real estate investing is not for you and instead you might want to look into this third option and that would be individual stocks no admittedly this is not something that I do very often because I believe that overall index funds are generally the best for the majority of people out there however every now and then I do dabble and buy individual stocks like with Tesla as I mentioned here in the channel I'm not gonna go so far as to say that buying individual stocks is riskier than going and buying real estate it's certainly not as time-consuming and the upside can be way better but the likelihood that you'll lose money long-term is really just as equally present this is because you're placing your money within a few specific companies that you do not directly control and your entire investment is dependent on those businesses doing well now I personally recommend if you're gonna go and do this to do this within a Roth IRA or a 401k to make sure you're not paying any more tax and you absolutely need to but again this is not required you could also just as easily open an account with the multitude of free stock trading platforms out there deposit some money and then go and trade away and if you pick well combined with maybe just a little NC weensy bit of lock you could end up making a lot of money for example AMD is up over a hundred and twenty percent in the last year test slows up a hundred and forty percent in Apple is up about 88 percent so as you can see if you pick well you could do substantially better than investing in an index fund and even better than investing in real estate and for anyone watching feel free to use the link down below in the description and the free stock trading platform weeble is going to be giving you 2 free stocks who need to posit $100 in the platform and one stocks could be valued up to $1400 this is one of the stock trading apps that I use myself personally and even though it's a little bit complicated to use it first it's got some really great features and I would highly recommend it so again for anyone who wants those two free stocks the link is down below in the description however just keep in mind that this is significantly riskier and you also have the potential to lose a lot of money so you're really gonna need to do your research to make sure your investment performs well over time but individual stocks can be a great way to invest if you have the interest in going for it and you don't lose as much sleep as I do just constantly checking prices of course I just want to say a quick disclaimer for this is that the typical investor is really really bad at doing this and will not outperform the overall market long-term even when it comes to myself I only buy individual stocks with money that I could afford to lose and even though it might work out sometimes in my favor I do not count on it and I do my best to invest as safely as possible so if you want to go in down below all means do it just know your odds and understand that you're really gonna have to put in your work if you want this to be successful the fourth I want to throw this one in here because even though it's not an investment by any means it's certainly something that I use every day that helps me with that and that would be a high interest savings account here's the thing it's always a good idea to keep cash sitting on the sidelines while you wait for a good investment to come up or to pay the bills or even for your emergency fund and there's never a situation that I'll be in where I don't keep at least $50,000 in cash sitting in one of these high interest savings accounts at all times to cover anything that might come up and I recommend if you want to make the most of that sitting money that you put it in a high interest savings account making at least one point six percent on your money at the bare minimum I use banks like Ally Bank wealthfront PNC Bank and HSBC that all pay between 1.6 and 2 percent in interest and even though it doesn't make a ton of money and it basically just keeps pace with inflation it's still making money that would have otherwise just have been sitting there and that way by the time I actually go and use that money for an investment at least it's made a little bit of money or at least not lost any to inflation there is literally no point in you not doing this for any money that you have sitting right now in a bank account so if you haven't done this already I'll link to a few my other videos down below in the description that go over the best high interest savings accounts that you can get right now lastly know this one might be kind of lame but it's true the fifth favorite investment for myself has always has been in myself this might be in the form of buying a book or going and traveling somewhere to meet someone I could really enjoy learning from it could be an investment of time to go and get a new experience or broaden my perspectives or to see a new point of view not all investments have to be money related and in terms of what will generate the best return whatever you invest in yourself will usually get the best outcome like for myself right now my time investments tend to be the best and that does not cost any money use your time to go and learn a new skill use your time to go and volunteer for somebody you want to learn from or you could go and use your time to smash the like button for the YouTube algorithm if you have not done that already for real though just using your time and going out networking with other people will often make you way more money than your investments ever will I also consider it a smart idea to reinvest back into yourself in ways that just make you genuinely happy for me this could be a gym membership or going and pursuing a hobby or spending time with people I care about that type of activity is gonna make you feel so much better and in return you're gonna do better work and therefore end up making more money as a byproduct of that those types of investments are really gonna help you and if you're just about money money money money eventually you're gonna lose sight of everything else and everything else is going to suffer so keep this one in check continue broadening your horizons and you're gonna end up making more money at the very same time and that you guys are my five favorite investments and how you could follow a similar path as well you know doing this is not gonna be without a little work upfront and a bit of a risk that maybe in the short term you might end up losing some money but long term rest assured you're gonna be so happy you got this set up and running now and that you started as soon as possible so the one day you can mop around and that paid off 2019 lamborghini aventador sv j coupe with all that index fund in real estate money that you made profits from so what that said you guys thank you so much for watching I really appreciate it as always if you guys enjoy videos like this make sure to subscribe and hit the notification bell also feel free to add me on Instagram my posts are pretty much daily so if you want to be a part of it there feel free to add me there as on my second channel the Graham Stefan show I post there every single day I'm not posting here so if you want to see a brand new video from me every single day make sure to add yourself to that and then lastly like I said if you guys want those two free stocks the only because down below in the description Weavile is going to be giving you those two free stocks and deposit $100 on the platform with one of the stocks being valued up to 1,400 dollars so again link to that is down below let me know what to free stocks you get thank you so for watching and until next time

Channel: Graham Stephan

Views: 905,596

Rating: 4.9530015 out of 5

Keywords: investing, investing for beginners, investing in your 20s, how to invest, how to invest in stocks, how to invest in real estate, how to build wealth, how to build wealth fast, investing 101, credit card, credit cards 101, credit score, credit score explained, high interest savings, best credit cards, real estate, real estate 101, real estate investing, stock market, stock market for beginners, how to make passive income, robinhood app, how to be a millionaire

Id: 2KgH0UpiRiw

Length: 17min 39sec (1059 seconds)

Published: Fri Feb 14 2020