Who is the fastest self-made billionaire ever? While it took warren buffet 55 years to join
the billionaires club, Jay Walker literally did it in less than a year. He launched priceline.com during the dot com
bubble, and his net worth instantly jumped from zero to billions. But that wasn't sustainable because when the
bubble burst, his net worth crashed as well, while Buffet is still on the top of the list,
and he doesn't seem to go anywhere anytime soon. And that's the kind of wealth you want to
build. The game of money isn't easy. It's taught, competitive and ruthless, and
if you don't know the rules, you are doomed to fail. The problem with most people is that they
might work hard their entire lives but end up poor at the end of the journey because
they don't know how to let their money make even more money. In other words, they don't know how to invest. Let's assume that you have been saving money
and have an extra thousand dollars in your bank account. That is an achievement because nearly 70 percent
of Americans don't even have an extra thousand dollars in their bank account. So instead of spending it on another useless
gadget or a pair of shoes that you will wear once and then keep in your wardrobe for many
years before you finally throw it away, let's assume you are going to invest that money! But the question is, how do you invest your
first 1K dollars? Do you invest it in real estate or the stock
market? What kind of stocks do you buy? Is 1000 dollars is enough to start investing? We are going to answer all of these questions
and many more! So give the video a thumbs up, and lets get
started. To understand what investing is and how does
it works, consider this example. Let's say you worked so hard and saved 300K
dollars, you can pay a visit to a Ferrari store and get yourself a luxuries car and
let everyone know how successful are you or you can buy real estate (house) and rent it
out. Every month you will receive at least 2000
dollars. If you decide you no longer what to keep receiving
that 2K paycheck every month, you can sell it and get back your initial investment. In fact, the value of your investment might
even appreciate, so you will sell it for a higher price. And that's how money makes money. But you can't buy real estate for a thousand
dollars. That's not even enough for a downpayment;
however that doesn't mean you can't invest that thousand dollars elsewhere and let it
grow. The easiest way is to just deposit it into
a savings account and generate interest, but why would the bank pay you for keeping your
money in the bank? Shouldn't they charge you instead? No. You see, the bank is going to take your money
and loan it to someone else at a higher rate and would share with your a portion of that
profit. That's how banks work in short. The only problem with this strategy is that
interest on the deposits account is so low that it isn't worth it. The highest rate you probably can get is 0.8
percent. Which means that if you invest that 1k dollar
into a savings account, 12 months from now, you will receive an extra 8 dollars. Which is extremely low because the Fed targets
an inflation rate of 2 to 3 percent which means, if you are not getting at least 2 or
3 percent, overtime the real value if your thousand dollars will depreciate, which means
you can buy with it less goods every year. But why are interest rates so low on deposit
accounts? Because interest rates, in general, are low
this year since the pandemic forced the fed to lower them (interest rates) to encourage
everyone to borrow money and spend. A year or two from now, once we get out of
this recession, the fed will increase interest rates to 1, 2, or even 3 percent, which means
interest rates on the savings account will rise as well. Your second option is to buy government bonds. A government bond is a security that is issued
by the government to raise money to support government spending. Say the government wants to build a school,
but it doesn't have the money to do that, so it issues an IOU, a piece of paper that
says that whoever owns this security is owed this much amount of money plus interest by
the US government. Of course, this is an oversimplified example,
but that is the point in short. Government bonds are heavily influenced by
interest rates, so since interest rates are extremely low this year, government bond rates
are less than 1%, but two years ago when interest rates were high, government bond rates were
as high as 3 percent, which is not bad, since government bonds are the safest investments
you can ever make. Any investment carries with it a certain level
of risk, if you are loaning money to the US government, what are the chances that the
US government will default on its loan? For the US government to go bankrupt, the
entire US economy might have to fail. That's why US bonds are considered the safest
investments in the world. But if you want to make a higher return, let's
say 10, 20, or 30 percent, then you have to consider investing in the stock market. For example, amazon's stock price increased
by over 80 percent just this year. Google's stock price rose by almost 30 percent. Tesla's stock increased by 721 percent. Yes, you heard that, right! 721 percent! Then the question is, why would anyone invest
elsewhere when you can double or even triple your money in the stock market? The answer is RISK. When it comes to government bonds, for example,
there isn't much risk. In fact, it is risk-free to certain extend. But when it comes to individual companies,
there is a risk that the company might fail, it might report negative earnings, pretty
much any negative news can drive the stock price down. The company might release a product, and if
the public doesn't like it, that can make some negative headlines, which can drive the
price down, so with higher returns comes more risk. Apple is a well-established company and its
chances to fail are way lower than Tesla, but it also has less room to grow than Tesla;
that's why Tesla grew by 721 percent this year but apple by just 70 percent. What you have to determine for yourself is
how much risk you can take without going nuts. If that 1000 dollars is all that you have
left, maybe risking it all isn't the wisest option because if things turn south, you can
end up losing most of it. So one-way investors minimize their risk in
the stock market is by investing in an index. The most famous one is the SP500, which tracks
top 500 US companies, so an index fund would basically invest in these top 500 companies. Some of these companies will definitely fail,
but others will grow. Judging by historical data, the average return
rate for the sp500 since the 1920s was around 10%. This means, buying a share of these index
funds means you are buying a tiny share in the top 500 us companies. My 3 top favorite index funds are VOO or Vanguard
500 Index Fund, QQQ and index fund by Invesco and Fidelity ZERO Total Market Index Fund. All of them are great and invest in pretty
much the exact same companies. But how do you buy shares in these index funds? I mean, where do you start? First, you need to find a broker; someone
is qualified to sell you stocks. In the past, it was always someone; you had
to pick your phone and call him and ask him to sell you some shares. Remember the wolf of wall street? He would spend his entire day calling people
and try to sell them worthless stocks. But thank god we are in 2020, and things are
much better and easier. Brokerage firms created apps so that you can
buy shares from the comfort of your smartphone, such as Robinhood, Webull and so on. All you have to do is download one of these
apps and sign up, and you can start investing right away. In fact, if you use the link below to open
a webull account, you will get 2 free stocks, just a disclaimer its an afilliat link, but
there is nothing wrong with that, you are going to get 2 free stocks, isn’t that amazing? That is a good start I would say. Check the link in the description. I tried my best to make this video as simple
as possible so that whoever wants to start investing can start right away. Often what happens is that you want to start
investing, but you have a million questions and you start googling this and that and get
exhausted after sometime and then you just give up and try again a few months later so
I tried to answer all of your questions in this short video. So if you have found the video helpful, make
sure to give it a thumbs up and if you are new around here, hit that subscribe button
and the bell besides it. Thanks for watching and until next time.
