How To Invest In Stocks For Beginners in 2022 and beyond in this post i’m not going to be talking about day trading and how much money you can make investing in these three secret stocks and all you have to do is join my signal group or sign up to my 1997 course no no no we’re not playing any games like that there’s no course here there’s no upsell and the truth is good investing is relatively simple and that’s probably why nobody makes courses that promote the best ways of investing.
Okay, so i’m going to teach you what i wish i knew when i started so instead of spending money on all this stuff that you don’t need you can start making passive income from your investments in full disclosure i talked about this in a few posts made me extremely uncomfortable.
But i talked about you know how much i’ve been making in the last few months specifically i talked about december and january of 2021 and each month my portfolio went up byover 25,000 and of course, these are freak months because we are in a bull market right now.
So i don’t expect these really good months to happen in the future but i’ve designed this post to kind of be like a mini course where i highly recommend reading until the end because i’m going to reveal pretty much everything you need to know about investing,
And with the strategies that i’m going to reveal in this post you will be able to beat literally 99% of investors and that’s scientifically proven and i’m not saying that as a joke this has literally been proven to be the best way of investing they’ve done lots of research on this,
And it’s kind of simple it’s really stupidly simple and so that’s why you probably don’t hear that many people talking about it and in this post i’m going to prove it so just stick around until the end.
Why You Should Invest In The First Place?
So first of all let’s start at the beginning let’s get into it and start talking about why you should invest in the first place so this is a question everybody has to answer for themselves why should i spend my time and money investing when i could goout and have a good time with the money,
Or i could go buy gucci shoes and versace glasses and all kinds of other stuff that you don’t need and the simple answer is to build your wealth and more importantly to buy freedom okay so you’ve probably seen some of the older people in your family talking about this before they probably say you know oh back in my day a burger was like 25 cents,
and now it’s like five dollars for the same burger what’s going on well the reason for that is because of inflation so the value of money is gonna go down over time so if you’re just keeping money in your bank account for instance if you’re just like saving money or maybe you don’t trust banks right you withdraw the money and you keep it under your mattress it is actually losing value it’s probably losing like somewhere between one and three percent per year depending on how much money the government is printing which right now is quite a bit.
so the benefit of investing rather than just savingmoney is you can make your money increase in value over time rather than losing value even if you’re putting your money in a high interest savings account which i remember last year before you know all this situation happened with the pandemic there was one bank account that was giving me 2.57 interest which is fantastic,
but that’s still barely keeping up with inflation and right now i think the best one is offering about one to one point five percent now on top of beating inflation and making your money more valuable over time what’s even more important is the fact that you’re earning compound interest.
now you’ve probably heard about compound interest before einstein says it’s like the eighth wonder of the world for instance and i feel like i have mentioned this at least like 10 times in my posts before so if you’ve been it probably feels like i’m beating a dead horse but very simply if you put something like 500 a monthinto your investments over like a 30 to 40 year period you are going to end up a millionaire.
you’re gonna be able to retire so for instance if you put five hundred dollars a month into a roth ira which would be about six thousand dollars a year and a roth ira is a tax advantage retirement account that is probably gonna earn somewhere betweenseven and eight percent per year compounded.
you will end up a millionaireyou will have enough money to retirejust by doing that alone however it’sgoing to take a very long time so you have to be patient if you want to be a little bit more aggressive with your investments you can retire a lot earlier than the average person.
so in the case of the roth ira for example you would only put in around 300,000 or so but by the timeyou’re ready to retire that would turn into over 2.5 million all right so in other posts i’ve gone over in detail how compound interest works i’m not going to do that in this post you can check out other posts on my How To Invest In Stocks For Beginner post but i think you get the point here so next let’s talk about.
What Exactly Is Investing?
what exactly is investing let’s define it so there’s so many different types of investing so how do you pin it down and define exactly what it is so basically you’re putting your money into an asset with the goal of that asset generatingvalue so generating more money over time,
so real estate for example someone might put a hundred thousand dollars in a house and maybe 10 years later it’s worth 200,000 so it’s already doubled in value same goes for investing in a stock or a share of a company and that’s basically just a small piece of the company itself.
so when you invest in a share you own a small part of that company sometimes companies will actually pay you for investing in themin the form of dividends which they pay out monthly sometimes every three months six months to a year and the big reason for doing this is
because you want your money to work harder for you than if you just held it in cash you want to think of your money like little soldiers that are going out and bringing back more money for you so they’re working for you and you’re not having to actually do anything,
and this is called passive income now when you first start investing you’re probably only going to be making like i don’t know 30 cents a day or something like that from passive income but eventually you can get to the point where you’re making really good money from it and there’s actually an entire movement on the internet called the fire movement financial independence retire early that is built around this.
these are normal people who have relatively normal jobs that just live frugally invest as much as they can and a lot of them are able to retire by 35 or 40 instead of the usual which is around 67.
when should you start investing?
so the next question is going to be when should you start investing and the answer to that is your parents should have opened up a custodial account for you the day you were born pretty much right so,
the best time to start investing was as soon as you possibly could like it was yesterday10 years ago whatever and so the best answer to this is you need to start investing as soon as you possibly can so right after you read this post all the way through right and right after you smash the like button on this post go ahead you know go to weeble something like that,
and start investing the great thing here is investing used to be very difficult to get into so it used to be you know you’d have to have like five thousand dollars ten thousand dollars minim just to open an account and then you’d also have to meet all these other stipulations thanks to a lot of you know really cool inventions fintech apps for instance,
that have popped up like robin hood weeble etc it is incredibly easy to start investing the one that other companies you can use i made a post last year about like the best you know companies in my opinion acorns is really easy you could go with robin hood although there was a controversy with them sofi invest public there’s just a ton of great companies out there that you can get started investing with.
once you’re a little more advanced in my opinion the best companies are probably going to be fidelity vanguard charles schwab now there is one thing that you should technically do before you start investing okay,
and that is make sure to save up an emergency fund so this emergency fund should be cash that you actually do hold in your bank hopefully in a high interest savings account and it needs to cover at least three months of your expenses and the reason for that is because you don’t want to max out your credit cards or have to take out any payday loans just to cover your day-to-day expenses when an emergency happens,
however there are some people who argue on the internet that you can put all of your money into a tax advantage retirement account like a roth ira or a 401k instead and so the reason for that is because normally if you took money out of those tax advantage retirement accounts early you would get penalized for it,
so you generally don’t want to do it however you can apply for hardship withdrawal which would take the penalty away and a lot of the time you’re going to get it but overall i personally don’t do that i have an emergency fund that’s around six months, or so and the big reason that i do that is mostly just for peace of mind so the..
How Much Should You Invest?
next big question we’re gonna ask is how much should you invest and the truth is especially if you’re a beginner this is gonna be different for everyone and it’s gonna really rely on three main factors the first one is to be goals the second one is going to be capital and the third one is risk tolerance.
so first of all let’s start with goals maybe your goal is just to be able to retire when you’re 65 or 67. in that case you probably don’t need to invest all that much you should be able to just invest in a 401k a roth ira maybe a little bit on the side maybe buy a house something like that and you should be good to go.
let’s say your goals are a little bit different you want to be able to retire at 65 or 67 but you also want to be able to travel around the world so you want to have a lot of freedom well in that case you’re probably going to need a little bit extra money to fund your travels especially if you want to travel when you’re young enough to actually enjoy it and,
so you would want to invest a little bit more aggressively let’s say that your goal is to retire by 40. so you want to have enough money to retire by 40 and just live off of your passive income in this case you do have to invest relatively aggressively unless you’re you know a doctor or something making 500,000 to a million dollars a year most normal people are going to have to invest really aggressively,
and so you’re probably going to have to cut your expenses live a relatively frugal lifestyle and then try to invest somewhere around 40 to 50 percent of your income you also might want to look into side hustles or starting a business on the side,
or just trying to get into a career that pays more let’s say you’re extremely aggressive you’re like an 18 year old reading this and you want to retire at 25 well in that case investing in the traditional way probably isn’t going to get you there and so you’re going to have to be much more aggressive about it you’re probably going to want to start your own business as well,
and even then your chances of success are going to be relatively low but that doesn’t mean you can’t do it it’s still completely possible and later on in the post i’m gonna go over some of these other opportunities that you could look into okay,
so those are the three things you know you start with goals what’s your goal and then you think about okay how much money do you need in order to achieve that goal you know how much money would you need to just live a very frugal lifestyle,
and retire maybe when you’re 40 or how much money you’re gonna need to travel the world live more of an extravagant lifestyle figure that out maybe it’s you know forty thousand dollars a year maybe it’s a hundred thousand dollars a year most of the studies say your happiness doesn’t increase past around 80,000 to 100,000 depending on where you’re living.
so keep that in mind i always tell people to kind of aim for that 80 to 100,000 or so and then also keep in mind your risk tolerance so there’s certain types of investments that are extremely low risk and we’ll go over those a little bit later we’re talking about bonds for instance bonds are relatively low risk other investments are much more risky.
so we’re talkingabout starting your own business for instance cryptocurrency these investments are much more risky but they also have a higher upside as well the big thing here is you just set a goal for yourself.
so in my case for instance i have set several different goals they’ve always changed just a little bit but my big thing is i want to be able to retire before 40 and be able to travel the world so i figured out that in order to do that i’m probably gonna need to make around a hundred thousand dollars a year passively which using the four percent rule which basically means that you can kind of live off of four percent of whatever your total net worth is for the rest of your life,
and you can retire early from that that means i need to make around 2.5 million dollars by the time that i’m 40. now once you’ve set that goal it comes down to very simple nbers all you have to do is calculate exactly how much you need to invest every month in order to get to that goal,
and there’s a ton of different calculators on the internet you can also use a simple excel spreadsheet or google sheets in order to calculate this now keep in mind i did mention this before that longer term goals are almost always much easier to reach and you also don’t have to rely as much on luck.
if you’re trying to become like a millionaire or a billionaire by the time you’re 25 there is going to be a tremendous amount of luck that goes into that however if you’re you know trying to do something a little more reasonable like retiring by the time you’re 40 you don’t really have to rely all that much on luck.
luck does still play a role but it’s mostly minimized and the longer you give yourself the more time you give for compound interest to work in your favor so.
next let’s talk about capital now you see a lot of posts on youtube where they tell you to start investing about five to ten percent of your income but the truth is this might not be realistic for everybody reading this post maybe you don’t have any income there’s a lot of people that are not in a situation where they can put five to ten percent of whatever they’re making into their investments.
so the truth is the best place to start when it comes to investing is to figure out your budgeting situation so you really want to figure out how you can cut your costs you can almost think about this like playing offense and defense.
so making money is playing offense and playing defense is budgeting saving and cutting your costs it really doesn’t matter how much money you make you’ve seen these studies where 80 of lottery winners end up going broke 70 of professional athletes who make millions and millions of dollars also end up filing for bankruptcy.
and the reason for that is because they’re very good at making money but they’re not good at saving money right they’re not good at budgeting they’re not good at figuring out how to make their money make them money okay so like a sports analogy here is going to be they’re very good at offense,
but they’re not so good at defense and we all know that defense wins championships so you can’t ignore one or the other and the great thing about defense is you can always focus on budgeting and saving your money right,
even if you don’t have a job maybe you’re living off of unemployment right now you can always focus on making a budget and saving your money okay so defense is something you can start working on no matter what age you are or where you’re at in life.
all right so are you spending a ton of money eating out with your friends are you spending a ton of money on a car that you can’t afford are you paying for a lease that you can’t afford for instance how much are you paying for your rent you know can you get roommates for instance that are going to take away you know half or sometimes even more of that cost.
do you start drinking at late at night and start ordering stuff on amazon that you don’t need do you buy the newest iphone the moment that it comes out when it’s like fifteen hundred dollars right these are things that everybody can work on everybody can save money on it’s very easy.
but you do have to make a budget especially at the beginning you gotta track your expenses later on down the line maybe it’s not as important to budget when you kind of got it down a little bit
but chances are if you’re not tracking it you’re going to end up spending way more money than you need to and the truth is most of these things don’t make you happy at all there’s some things that actually will make you happy,
and if you cut them out of your life you’re going to kind of realize that but there’s a lot of things that kind of make you happy for a moment it’s like a dopamine spike and then two seconds later you don’t you don’t even care about it in fact maybe it makes you feel bad.
right like eating an entire pint of ice cream or something like that okay it makes you happy for the moment but then right afterwards you feel regret so pretty much no matter where you’re at in life identifying these things you’re spending way too much money on and cutting back on them is almost always going to be a good thing.
Concept of Risk
next let’s really dive deep into the concept of risk and this is something i don’t really hear all that many people on youtube talk about and it’s a really complex topic and this is going to depend on so many different factors we’re talking about whatever living situation you’re in your you know your current living situation how much you’re making.
how much do you have in savings what are your expenses what’s your overhead what obligations do you have you know do you have a mortgage do you have credit card debt do you have people who financially depend on you like kids for instance,
and the big thing here is making sure that you’re in the right position to take risk and the great thing here is most people reading this channel are relatively young and so you probably don’t have that many obligations and the younger you are the lower your expenses,
and the less obligations you have the more risk you can take and also if you have an emergency fund that covers your expenses for three months six months maybe even 12 months that means you can take even more risk,
so a lot of the time let’s say you’re starting a business for instance and you quit your job you go off on your own most of the time it’s gonna take at least six months we’re talking at least six months before you even start making money,
and so chances are if you wanted to start a business your emergency fund you’d probably want it to be six to 12 months maybe even 12 months is a better idea here so generally speaking the younger you are the more risk that you should be taking,
and let’s contrast this to somebody who is maybe the sole breadwinner in their household their entire house depends on them to be making that money every single month you probably don’t want to be taking nearly as much risk in that situation,
so you’d be wanting to put your money into much less risky investments and those are some of the ones that we’re going to go over pretty soon and then an extreme example let’s say you’re very close to retirement age you’re like 65 years old and you’re pretty close to that nber that,
you need in order to be able to live passively for the rest of your life in that case you’d want to be extremely risk-averse you would be putting most of your money into bonds most likely which are some of the least risky investments that you can make and the reason for this is because,
you never know when the market’s going to drop for all you know tomorrow the market can drop and it’s going to be down for the next three years and then what will end up happening if you invested in stocks for instance that it might take like three to five years for the market to recover to the point,
where it was when you had almost enough money to retire and so you’d probably have to delay your retirement by three to five years all right so now we’re getting into the good stuff how do you start investing well the first step is you want to choose a brokerage or an investing app,
and the one that i recommend for beginners is weeble fidelity’s great vanguard’s great charles schwab is great honestly at this point it kind of just comes down to preference when you’re looking at some of the top ones i made an entire post,
about which ones i think are the best and for what reasons i think they’re the best which you can check that out i think it’s called the stock brokerage tier list and the investing app to your list once you’ve chosen which stock brokerage you’re going to invest in the,
Choose Your Investment
next thing you want to do is to choose your investment and again where you choose to invest is going to depend on your personal situation however i see my analytics i know most people reading this channel are younger people who probably haven’t invested before they have very limited
investing experience and so i will be giving my opinion on that very shortly but just to give a short list of the possible investments you could make you’ve got…
- individual stocks
- index funds
- day trading
- forex trading
- real estate
- reit stands for real
- estate investment trust,
so first of all let’s start with investing into individual stocks so this would be something like tesla or gamestop so this one is relatively risky because you never know when a company is going to go up or down we’ve seen tesla and gamestop go up quite a bit over the last year,
and that’s why it’s gotten so much attention but what they haven’t seen is all the other companies that have ended up dropping in value so it’s very easy to see which stocks do well in hindsight you know we all have 2020 hindsight but very difficult to see which ones are going to do well into the future,
and that’s why most people recommend one investing for the long run because chances are you know a company might go down but usually it’s going to recover when things go back to normal and two making sure to diversify your investments.
so don’t just put your money into one company make sure to put your money into a bunch of different companies across a bunch of different industries and maybe even a bunch of different countries because nobody really knows what’s going to happen in the future.
now a very easy way to do this is to track the market or put your money into a stock indices this is also known as an index fund or an etf which stands for exchange traded fund now etfs and index funds are extremely similar i’m not going to go over the differences in this post,
but if you had to make me pick one of them i would say index funds are a little bit better just because they’re slightly more hands-off but they’re essentially the same thing where you’re diversifying your money throughout,
a bunch of different companies index funds are one of my favorite investments i think they’re a great combination of return you’re usually going to get about 10 returns per yearseven to eight percent adjusted for inflation if you put your money into a normal index fund,
this is the route of investment that legendary investor warren buffett recommends for the average person so index funds are passively managed so let’s say like the s p 500 index funds for instance it basically just has a small percentage invested into each of the top 500 companies in the world,
this is passively managed almost all of it is done automatically and so therefore the fees are very low a lot of the time they’re like 0.01 or 0.03 depending on the company that you go with and by doing this you’re going to be 99 of normal everyday investors and 95 percent of finance professionals,
right so these people who are geniuses they graduate from the top schools like harvard stanford wharton etc they’re finance professionals they still can’t beat a simple s p 500 index fund and that’s with all of their resources all the people they can talk to probably insider information,
let’s be honest they’re still not able to beat a simple index fund so what does this tell you you should probably put your money into index funds most of the time now there is some argent about that 95 nber some people say it’s like 85,
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but still 85 95 what’s the difference most of the time 85 95 of the time it’s going to be better for you to just set up an index fund that automatically reinvest the dividends back into the fund and also set up your bank account to have automatic withdrawals,
so you invest a certain amount into the index fund every month next we’re going to be talking about cryptocurrencies and this is a type of investment that i believe to be a much higher risk investment than something like index funds,
however the upside is also extremely high so back in 2012 bitcoin was like one dollar now it’s over sixty thousand dollars back in 2015 ethere was around one dollar now it’s about two thousand dollars and even the last year we’ve seen all kinds of random cryptocurrencies and blockchains,
you know go up like one thousand percent or more there are also risks outside of the investment going up itself there’s been lots of different hacks where different exchanges where you buy cryptocurrency from have been hacked and then sometimes people get their money back sometimes it takes years to get it back and in some cases,
they don’t get their money back on top of that if you accidentally send your cryptocurrency to the wrong wallet there’s a chance that you could lose it it’s much easier for you to get hacked if your password gets out and let’s say you keep your cryptocurrency in an external wallet,
which is recommended by most people your house could always burn down and the wallet could burn to flames as well so there is a ton of risk in investing in cryptocurrency don’t let anybody tell you otherwise i see these channels that say like oh it’s not risky at all to invest in ethere and bitcoin,
these could absolutely go to zero that is a possibility it probably won’t happen but there is a higher possibility that they would go to zero than something like investing in an index fund but with that being said i do invest in cryptocurrency,
and one of the big reasons is is i think it’s more risky to not invest than to invest the reason is there’s also a possibility that the normal financial markets in the world are going to collapse and when that happens there’s a very good chance people are going to put their money into cryptocurrency instead,
so i think a lot of advice out there would say that you should have maybe five percent of your portfolio into cryptocurrency and i think that’s pretty solid i started off with like five to ten percent or so and since then it’s grown to a much higher amount,
but also keep in mind here that you need to do your research and do your due diligence all the other things that i talked about still apply here you want to make sure that you invest in multiple different cryptocurrencies,
because chances are if you just put all of your money into one bad things are going to happen you also want to try investing with long-term thinking in mind don’t just go for the super hot one that has a lot of hype around it try to invest long term if it does end up shooting up you know 10 20 x then you know sell,
that’s great you know you’re gonna have to pay taxes on it but you know that’s you know you you made 10 20 x of your money that’s pretty awesome but if it doesn’t if it’s a company you really believed in you thought the founder was really good or the idea behind it is great then chances are in the long run,
if you do enough of those companies you’re going to have one that goes up 100x or 200x and that’s going to cover the losses next we’re going to talk about investing in bonds for beginners now a bond is essentially just an iou and it could come from a company or a government and they’re used by companies,
and governments in order to raise capital now how much you get back is gonna depend on what type of bond you invest in but generally speaking you know it’s gonna be around three to four percent per year however bonds are relatively safe,
and this is why most financial advisors will tell you if you’re close to retirement like you’re you know 65 and you want to retire at 67 to invest most of your portfolio into bonds next we’re going to talk about investing in real estate,
and there’s two different ways you can do this you can either invest in a physical property like a house or you can invest in what are known as reits which is real estate investment trusts real estate itself of course like investing in a house is one of the better investments that you can make there are some downsides to it,
because it takes up a lot of your time and you also have to have some expertise in order to invest in a good investment property real estate investment trusts on the other hand are kind of like investing in shares into a house so it’s almost like the shares of a company,
but instead of doing that you’re investing into property now i think that real estate is a fantastic investment it just doesn’t personally fit my lifestyle the lifestyle that i want to live because at the end of the day i’m aiming for freedom,
and i don’t want to have to worry about someone’s you know toilet breaking at 3am in the morning or the washer needing to get repaired on a weekend where i’m trying to have fun or anything like that however generally speaking if you are good at investing in real estate it will probably outperform even an index fund,
and then the last one that i’m just going to briefly talk about which is sort of an investment i guess you could say this is going to be the least passive type of investment and that is investing in yourself aka starting a side hustle,
or a business so this is the most risky type of investment that you could possibly make it also takes up a ton of time and it’s very difficult however if you are successful with this you can get better returns than any other investment on this list so.
Started With Investing
next i’m going to be going over some beginner tips for you to get started with investing and all of these are going to apply to pretty much any type of investment that you decide to go into and like i said before the investment that you decide to go into is going to be completely up to you it depends on your personal situation your risk tolerance etc.
so first of all no matter what you need to think long term if you are trying to get rich quick especially when it comes to investing you are going to have to rely a lot on luck okay luck is gonna play a huge role in that yes you can get lucky and you can get rich quick,
but chances are you’re not going to be able to do it if you give yourself a longer time frame which you’d be surprised it doesn’t really take all that long you know a lot of people especially on the financial independence retire early subreddit end up retiring 35 40.
but if you give yourself that time frame right 10 to 20 years in order to retire it becomes much more possible and it becomes much more realistic for the average person if you give yourself even longer 30 40 years to retire it becomes extremely easy the only thing is you just have to be very patient the second thing i want to talk about is dollar cost averaging,
and this means you want to be putting in around the same amount if you can every single month so a lot of people will hold a bunch of money right they’ve got like i don’t know 50 000 to invest they’re gonna hold it in cash.
and then they’re going to try to put it into the market at the right moment and they think that they’re going to get the most returns from that study after study has shown that it’s almost impossible to time the market even if you are a finance professional you’re the best of the best you’re a genius with 160 iq.
you have access to the best consultants the best technology etc you still cannot consistently time the market so a much better idea is whenever you get paid every single month you just put a certain percentage of your paycheck into your investment,
so when the market is going up for instance if you put it into an index fund you get to ride that wave and when it’s going down you’re getting to buy those stocks at a discount so if you were to have started dollar cost averaging two years ago into bitcoin for instance it would,
now be worth over a hundred and seventeen thousand dollars and you only would have invested eighteen thousand dollars into it and the percent change would be over five hundred percent if you started dollar cost averaging into bitcoin five years ago it would be worth over six hundred and eighty thousand dollars,
right now and that’s again with only thirty thousand dollars invested that’s a two thousand one hundred and sixty nine percent increase in value same thing goes with ethere for instance it’s even more ridiculous with that one if you started dollar cost averaging into that one around five years ago spent thirty thousand dollars it would now be worth about five million dollars.
okay so ridiculous roi on that one again that’s just 500 a month right you’re putting 500 a month into ethere and you did that for the last five years you would now have over five million okay so i’m not saying you should put all your money into bitcoin,
or ethere chances are those are not going to go up as much as they did in the past but i think you get the point when it comes to dollar cost averaging nber three we’re going to talk about understanding risk reward and luck right,
so luck specifically is something you don’t really hear people talking about here on youtube a lot of the gurus here will tell you you don’t need to rely on luck you just have to work hard and all that sort of thing i think that’s bs i think luck always plays a role,
however you can minimize the amount of luck you need by making sure that you set a long-term goal for one so you give yourself plenty of time and then also positioning yourself correctly so investing in assets that are very likely to go up over time,
so again being consistent dollar cost averaging is going to lower the amount of luck you need giving yourself more time and being patient is also going to lower the amount of luck you need and then understanding risk and reward when you’re younger you can take more risks this is the time for you to start businesses invest in cryptocurrency,
do things that are a little more risky however when you get older you probably want to put your money into you know index funds and bonds and then when you get really close to retirement you probably want to put most of your money into bonds nber four is diversify diversify diversify very important,
that you do this not only diversifying with different stocks but probably different types of investments as well you know if you invest in an s p 500 index fund that’s awesome however you might not realize that maybe the rest of the world is going to catch up with the united states.
most of those companies in there are from the united states it’s possible that companies in the rest of the world are undervalued and so maybe over the next 10 to 20 years companies from japan and the uk china etc are going to catch up with u.s stocks.
so it might be a good idea for you to also invest in an international index fund as well there’s a lot more to that part but you know i’m just going to keep this relatively short that’s basically what you need to know.
Remember Your Goals
number five is going to be remember your goals remember the goal that you originally set for yourself over time you can change these goals.
let’s say you know you’re way ahead of schedule you want to retire at 40 maybe you can change it hey i want to retire at 35 now that’s awesome whatever keeps you motivated but the big thing here is that it’s very easy to get greedy especially if you get lucky you really want to make sure that you have an exit strategy figure out how much money you need to be happy right.
because at the end of the day what are we trying to do we’re trying to achieve freedom and maximize our happiness so how much money do you need to achieve your freedom and maximize your happiness figure that out and then you know do the nbers from there use the four percent rule multiply that nber by 25 and you’re gonna have how much you need to retire,
then you can work backwards from there figure out how much you need to invest every month to get to that point by whatever age you want to retire you know one thing i want to quickly talk about here is hopelessness and the doomer culture that we sort of have around these days it seems like a lot of people that are my age are just very hopeless,
because the economy isn’t nearly as good as it used to be when people in the boomer generation for instance were young i mean they had things so easy they could go to college and pay for it with a part-time job,
and they wouldn’t have to take out any student loans or they wouldn’t have any loans after they’re done with college they could work like a part-time job and live easily from that they could even probably retire with just a normal part-time job my dad told me a story about how he worked as like a gas boy i guess you could say like the person who fills up gas back in the day,
my dad’s like over 70 years old so he’s like a boomer and he told me that he made enough money from that to buy a house so we definitely don’t have the same kind of economic situation that our parents or grandparents had that’s totally true,
so i understand why so many people are upset about that however i still don’t think that you should just give up and you know be a doomer now one thing you want to look into here is you don’t necessarily need millions of dollars to retire so i live just north of seattle washington,
so we can compare the cost of living in seattle washington versus chiang mai thailand it’s almost three times more expensive to live in seattle than it is in chiang mai and this is on nbeo.com this is a really good website for kind of comparing the cost of living in different places,
and you can live on about a thousand dollars a month in chiang mai thailand there’s tons of different channels here on youtube that talk about how you can do this so for instance a thousand dollars times 12 that’s gonna be twelve thousand dollars you multiply that by what you’re going to get on average with an index fund and you come up with about a hundred,
and seventy one thousand now this isn’t super safe but with a hundred and seventy one thousand 000 you can live for quite a while in chiang mai thailand now using the four percent rule thousand dollars a month 12 months times 25 that’s going to be 300,000.
right so i’m not saying this is the best option for everybody some people probably don’t want to live in a country like thailand although a lot of people who go there say it’s pretty awesome maybe you’re somebody who you know wants to live with your family you kind of live in a small town,
and you want to stay there that’s totally fine this is not an option for everybody but what i’m trying to show you here is you don’t have to just retire traditionally there are other options for you out there and so you don’t want to be a doom and gloom type person that just gives up,
and i know there’s going to be some urkels down in the comments section that say oh well you didn’t consider this factor and that factor and you know listen i can make another post on this if you’d like i’m trying to keep this one relatively short it’s kind of like a mini course,
Choose Investments That Don’t Take Up Very Much Of Your Time
but the sixth thing you want to look into here and this is more my opinion kind of my investing philosophy some other people would disagree on t his is you want to choose investments that don’t take up very much of your time so this is one reason why i don’t like investing in real estate i’m probably going to make an entire post about this is there are,
so many hidden costs in real estate hidden things you have to keep up with you have to fix stuff when it breaks down you have to deal with tenants if you hire a property manager you have to make sure the property manager is doing their due diligence there’s just so much that goes into investing
in real estate it takes so long to get good at it and understand all the different factors you have to look into and so for that reason i don’t really like investing in real estate because it takes up so much of my time instead i like investing in index funds and i’ve shown you guys why index funds are probably objectively,
the best investment for the average person i also invest in cryptocurrency because it has such a high upside and in my opinion it’s riskier to not invest in it than to invest in it and then the third thing i invest in is myself right so i made sure to invest in my education,
and i started my own business which is now pretty successful so if you are going to spend a bunch of time on something in my opinion you should spend time investing in skills that are going to earn you more money all of my other investments are relatively passive,
so for instance 401 k roth ira these are tax advantage retirement investments and i highly recommend investing in those they’re basically you can do an index fund within those that takes basically zero percent of my time same with the index funds that i invest in and then cryptocurrency i do have to monitor it a little bit,
because i’m not investing in like a cryptocurrency index fund but again that doesn’t take very much of my time this is why things like day trading for instance are definitely not worth it not only because of the fact that almost everybody loses money day trading but it also takes a tremendous amount of skill to even be decent at it and it takes up a ton of your time.
Use Logic Not Emotion
now that segues into number seven on the list which is to use logic not emotion and a great example of that is everybody is just freaking out about crypto.
right now and the truth is yes you can probably get some pretty good gains if you invest in crypto right now but chances are the best time to invest was about one year ago when literally nobody was talking about it you know bitcoin right now for instance is like 10x from what it was about one year ago same with ethere,
and a bunch of the other cryptocurrencies some of them are ridiculous some of them are like 100x and you see this playing out over and over again it’s like every single time it happens the same exact way nobody’s talking about cryptocurrency when the market’s down that’s,
the best time to invest in it as soon as the market starts to go up when it’s you know getting relatively close to its peak or it’s like halfway there that’s when every star everybody starts picking up on it they all start investing in it and that’s when most normal people start investing that is not the best time to invest in it chances are it’s going to you know end at some point this year nobody really knows when,
but the market is going to drop at some point this year most likely and then a lot of people are going to end up losing their money because they invested at the top and it’s so simple but people do this over and over again especially new investors and it’s almost like,
the old saying be fearful when other people are greedy and greedy when other people are fearful so most people are investing with emotion because there’s so much hype right now you know we’ve been seeing channels go from like a hundred thousand to like 500 000 subscribers in just a few months all the news networks are covering it you’re seeing articles pop up everywhere guess what there’s a reason for that because there’s a ton of hype right now and pretty soon all the hype is probably going to create a bubble