Investing For Beginners (GenZ)

1. Introduction: Investing may seem confusing, daunting, like the unknown, not knowing where to start at all. Well, I have spent the past five years working and studying finance, and I have learned so much in those five years, I'm going to share that with you today in this course. You're going to learn things from researching and picking stocks to building a diversified portfolio and even opening your own brokerage account in this course. Hi. My name is Jacob Phillips, and I have worked and studied finance for the past five years. I spent four years studying finance at Luffre University, learning how to optimize a portfolio, how the markets worked, behavioral finance, market risk, liquidity risk, all the different types of risks I learned during my finance degree. I then spent a year of my life working at a mid market private equity company, where I worked for an origination team trying to find companies that the private equity company could acquire to put it into their portfolio. I'm now currently working at one of the largest UK commercial banks, working in their business and commercial banking sector, where I'm helping to bring in deposits for the bank and lend money to other businesses. In this course, you're going to learn so much. It's nine parts, and by the end of it, you will know exactly how to invest and hopefully start investing. The first part of this course, you're going to learn about the different investment types, ETFs, bonds, NFTs, cryptos, all that sort of fun stuff. Next, I'm going to teach you about reward versus risk. Then I'm going to go over to how to research and pick stocks for your portfolio. One of the most important things how to build a diversified portfolio. I'm going to show you exactly how you can start investing today by opening a brokerage account and putting money in. I'm then going to go over the common mistakes which people make when they start investing. And then finally, the long term investment strategies. And in the final video in this course, I'll be setting you a challenge. You have to wait for the final episode to figure out what that challenge is. This course is really good and going to be targeted at Genzs. Genzs have such good access to investing tools now, but they don't know how to invest just like myself five years ago. And that's who I'm targeting this at. You will be able to invest by the end of this course. Now, before I even start this course, I want to put some things to bed, and that is the common fears and myths that you may have. This might be investing is for the rich or I'm too poor to invest. I don't have enough money to invest. Well, when I first started investing, I started with ten pounds, and I put in ten pounds a month. Yes, I did have a couple hundred pounds in my bank account, but I was scared to put this money into the stock market. I thought it would go from 200 pounds to zero in the next week. I didn't want to lose that savings which I saved up from my pot washing job, which I really worked hard for. So I was scared but with this course, I'm going to show you that there's no need to be scared. The market goes up and down all of the time. And yes, if you've got the money, put it in the market. You need to have a long term vision with the market, and that moves me on to my next thing. What do you need to start this course? And really, it is just the mindset. You need to be young, Gen Z, or even in your 30s, 40s. You need to have that consistent mindset of, I'm going to put money away each month. If you have all of those things, you're going to do so well. And by the end of this course, you're going to start investing just like I was five years ago. So without further ado, let's get into this course, and let's start with the first part, the different investment types. 2. Investment types: Understanding the different investment types. Now, like me, I didn't even know there were different investment types. I just thought that there were stocks, also known as equities. But there is a wide range of different investment types that you can invest in with the market. And the main goal of this is for me to explain the different types of investments that you can invest in and for you to try and figure out which investment is right for you. Each investment has a different risk and return characteristic. Therefore, everyone has a different risk tolerance, so you might fit in investment class better than someone else does. So that further ado, let's get into the different investment types. There are five different ones in general. You have stocks, you have ETFs. You have crypto, you have bonds, and you have real estate. Five different investments, which I'm going to explain. First up is equities, also known as stocks. And this is the one which you probably come across quite a few times. Now, stocks are a share or an equity share in a company. So let's take Apple, for example, or even Tesla because I'm sure everyone listening to this course right now knows who Tesla are. So Tesla, they will want to raise finance, also known as equity finance. What they'll do is they'll look to the stock market and they'll basically ask retail investors just like you and I or hedge funds for money for them to be able to finance their equity projects. So now they are looking for money, and they're getting money from us. So what you do is you give them 100 pounds. They'll take that 100 pounds and they will invest it into the project that they were doing. For example, with Tesla, let's say they are building the new model Y, they'll take your 100 pounds and they'll use that as research and development costs, manufacturing costs, all sorts of different costs. That is stocks. You are owning a share of a company. Now, stocks can be risky. It all depends on the company that you're invested in. If you're investing in a company such as Palantir, which has only been going for a few years, it doesn't really have many income statements, balance sheets, cash flows for you to analyze how good the company is, that's going to be a very risky stock. However, if you invest in a stock such as Johnson and Johnson, which has been around for years, they provide the same products, and they're buying everyone in the market. They have such a strong market share that they're not going anywhere anytime soon, just like BP and Royal Dutch Shell. This makes them not as risky, and some think where if you have a really low risk tolerance, that you can invest in right away, that is stocks, also known as equities. People use the two words interchangeably, but rest assured they mean the exact same thing. Now, moving on to one of my favorite types of investments, an ETF, an exchange traded fund. Now, this can be a little bit confusing for a first time investor. So let me try and explain this really simply. On brokerage accounts, you have different ETFs. You have the SMP 500 ETF, you have the Fos 100 ETF. Assuming that most of the people watching this course right now are from the UK, let's start with the Fos 100 ETF. The Fusi 101st of all, is the top 100 companies that are listed on the Fouts 100 stock market. These companies are the best companies in the UK. These are the companies which have the highest market capitalization and are making one of the highest profits. Now, as an investment, if I want to invest in the UK, investing in the Footsi 100 will be great because I have exposure to all the different sectors that are operating in the UK economy and also exposure to the UK economy's business cycle. So what you can do is you can buy the Footsi 100. Kind of. You can vide the Fusi 100 in the form of an exchange traded fund. So what you have is the vanguard Footsie 100. So therefore, you'll be holding the ETF, which is 100 companies in this fund that has exposure to the UK market. You can do this with other indexes, such as the S&P 500, the NASDAQ, the Dow Jones, for example. ETFs are great for first time investors because they provide something known as diversification, which is what I'm going to be talking about in an entire episode in this course. So don't worry if you don't understand it just yet. I remember when I didn't understand diversification fully. But an ETF doesn't have great risk because it has so many stocks, which gives you diversification benefits. That is ETF investing. Now, one of the next most common investments is known as bonds, also known or generally as fixed income. These instruments can come in different shapes and sizes. You can have corporate bonds, junk bonds. But for the interest in this video and understanding that you are beginners, I'm not going to go straight into that yet because you just simply don't need to know that sort of information. But let me quickly explain to you what a corporate bond is. So a corporate bond is essentially when a company, let's say, Tesla, want to get debt into their capital structure. What they want to do is they want to finance a new project, but rather than using equity, which you use through stocks, equities, they want to finance it with debt because debt is typically a lot cheaper. So what they'll do is they'll look to the market and they will ask for debt from different investors. What investors will do is they'll give money to Tesla in exchange for a bond. And a bond is essentially a piece of paper, which is a promise. And this promise is from Tessler. And Tesla is saying, we promise to pay you the full amount. Let's say it's 10,000 pounds in X amount of time with this interest rate. When we use bond language, it's not called interest rate, it's called coupon rate. So let's say Tesla is saying, We want 1 million pounds. So we'll look to investors and they will offer bonds to the investors, and they'll probably give you around a four to 5% coupon rate, which, in layman's terms, means we're going to pay you four to 5% interest per year on the amount that you have borrowed from us. And bonds are super easy to invest in, and they are super safe. They're one of the safest types of investments, certainly from a corporate bonds perspective and from a government bonds perspective. So if you have a really low risk tolerance, bonds is your investment to AT, and they're also one of the easiest investments to invest in as well. Now, moving on to real estate. Now, I think everyone here will understand exactly how you can invest in real estate. Firstly, you can go and buy yourself a house. You can do it up, and you can either rent it out or you can flip it on for a profit. Now, with this, you need a large amount of capital, which z Gen zis just don't have anymore. We need probably 150 to 200,000 to buy a house, which is way too much. So you can actually get exposure to real estate through investing in the stock market in an instrument called Rats. Now, these reats are quite common, but not really a common investment to get started with. I just wanted to mention this so you understand what it is, or if it comes up, you understand that you've heard it from this course before. Finally, moving on to one of the most common and most talked about investments these days, and that is cryptocurrencies. Now, the main cryptocurrency players are obviously Bitcoin, Etherium, and Solana, Bitcoin being one of the first decentralized currencies to start. And that moves me on to what exactly is a cryptocurrency? Well, a cryptocurrency is a decentralized currency which has no government intervention. This means that you can buy your currency from an exchange, and the UK government does not know how much you bought, does not know when you bought it, does not know how you bought it. They don't know anything about it. It is separate from our pound or separate from the dollar. Now, cryptocurrencies are very risky because it is in a new market. It also has quite a small market capitalization in comparison to bonds and equities and the foreign exchange market. So if you have a really high risk tolerance, this is for you. Personally, it's not for me. It is way too risky, but I have started investing in it a little bit. But there are plenty of brokerage platforms which I'll talk about if you are keen to invest in crypto. So those are the different investment types, and they suit some people and they don't suit others. What you need to think about is your long term goal. What is your goal from investing? My goal from investing was, I want to save it for a house deposit so I can buy a house. So I always stayed clear from investments such as cryptocurrency. So I challenge you right now to stop this video and think, what is my goal with investing? Is it to save for a house deposit? Is it to save for retirement? Do you want that new car? What exactly do you want? Come back to this video when you figured exactly what you want and go through the rest of the episode. Because with that goal in mind, you will know exactly which investment type is best for you and where you need to be allocating your money. Up next is managing risk. I'm going to talk about the trade off between risk and return, one of the fundamental basics of investing. 3. Risk vs reward: Risk versus reward, how do you manage your risk? Well, let's start off with some definitions to start with. What is risk and rot is reward? So risk in layman's terms, is what is the chance of you losing your money? Whilst reward is that probability of you profiting from a particular trade. It goes without saying the higher the risk, the higher the reward, the lower the risk, the lower the reward. And in finance, there is a matrix which we can use. On the X axis, what we have is risk. On the Y axis, we have reward. In the top right hand corner of this matrix, you can see that it is high stakes. This is when risk is high, and reward is consequently high, as well. This is where you have adventure. You have thrill. This is where you can be making a ton of money, but you can also be losing so much money. You also have next to that, low risk high reward, where you want to be all of the time. This is the high growth opportunity part of the matrix. This is where I want to be put in my investments. Then going below that, you have low risk, low returns, which is your safe investments. And then you have your high risk low returns, which is somewhere where you never want to be. You do not want to be in that portion of the matrix ever. So make sure you are not there. I want you to stop right now and just think, where do you want to be in this matrix? What suits you best? Pause this video, draw the matrix, and just put a cross in where you want to be. I remember when I first did this and I thought, Oh, I want to make so much money, and I put myself in the top right hand side. However, over time, I have shifted over to the left, so I prefer the low risk high reward, but it's easier said than done. On the topic of risks, let's talk about the different risks that you can experience when you enter the stock market. Now, there are four general risks. First of all, is market risk. Market risk, also known as systemic risk is the risk of a market crash with the business cycle. Now, I'm sure you are aware, but if you're not, that's completely fine of the business cycle. The business cycle is basically where you see peaks and troughs. The peaks is where business is booming. People are spending, people are making a lot of money. However, the troughs are where businesses are struggling. People cannot afford to buy as many goods and services anymore, and they're not making as much money. This can be characterized by high inflation, for example. This market risk is something you can experience when you are investing in the stock market, for example, because when you're at the top of the business cycle at the peak, you'll be seeing really high returns. Just as what we saw coming out of COVID around 2022, we'll see really high returns in the stock market, and 2024, as well, where the market returned 25%. However, you also experienced the troughs. And the troughs is the 2008 financial crisis, for example, where the market lost nearly 50% of its value in the space of a few months. Now, another risk of you entering the market is liquidity risk. Now, liquidity is the ability for you to be able to pull your money out of your investment. How quickly can you pull that money out? If you're investing in real estate, your liquidity risk is really high because it's going to take you a few months. It can't even take years for you to sell your investment property or your real estate. However, if you're invested in the stock market and you're invested in Tesla, Apple, for example, which have a really high trading volume, you can pull your money out within seconds of you sending that see order. That's something you have to bear in mind with the different investment types that you want to invest within. Another risk which I kind of touched on a little bit already is inflation. For those of you that don't know, inflation is measured by consumer price index in the UK and it is where the price of goods goes up in value, whilst your wages don't really move at all. They stay very sticky. Now, this inflation risk can affect your investments quite a lot. For example, if you are invested in bonds, then the value of your investment can actually fall because if you have really high inflation, let's say 12% and you're only having an interest rate or a coupon rate for those of you that do remember of 5%, well, then you're already losing out on that 7% of your money. So inflation is something you've got to bear in mind all of the time, and it is constantly mentioned in the news. It also lends hand in hand with the market risk because during peaks in the market, you might see high inflation, but during the troughs in the market, you might see really low inflation. And one of the final risks which I want to bring your attention to, and that is company risk or sector risk, or if you're really financing, your unsystematic risk. This is the risk of the sector going up and down. So let's go back to the Tesla example. Tesla obviously works within the tech space, but also within a niche of electric vehicles. Now, if electric vehicles are doing really well, then the market will be up. However, if they're not doing that well, the market's going to be down. So you've got to think about that sector risk when you are making your investment. And this is why diversification is so good because you can diversify away that sector risk, also known as your unsystematic risk, which we are going to get into in the episode on how to build a diversified portfolio. So those are the main types of risks, but how do you actually manage them? The first way of managing your risks is one I've just alluded to, and that is diversification. Like I was saying, if you buy one stock such as Tesla, which is in the electric vehicle market, if that plummets, then your whole investment is going to be down. You need some form of diversification. Diversification can be in the form of buying stocks in different sectors. So for example, let's say you buy a stock in the tech sector, the healthcare sector, and in consumer sector, then you are relatively diversified away from a downturn or a tech downturn. It also means that when consumer is up and Tech is down, you are basically making a net zero loss. You're not making any money at all, but you're not losing any money. So that's one way you can manage your risk, and that's diversification. And that's something which I love to do in my own portfolio. Another way, and this is really simple, and it is don't invest what you cannot afford to lose. Now, when I was first started investing, I did have a couple hundred pounds in my bank account, but I was scared of losing all my money. So I invested ten pounds to start with, and I could afford to lose ten pounds. Yes, it would really hurt if I did lose it, but I could afford to. So if I did lose my ten pounds, I wouldn't be losing sleep over it. And with my pot washing job, I could very easily repay that ten pounds after 2 hours of working. So what you really need to think about is how much money are you willing to risk in the market? And if you did lose that money, would you not be able to pay your bills? How would it make you feel? You don't want to be in the position where you can no longer pay your bills. You can no longer pay your car insurance, or your car off. You need to be in a position where, yes, you've lost the money, you're going to be a bit sad about it, but it doesn't matter because you can make it back, and it's not going to affect your life at all. Now, the third way is using something called dollar cost averaging. This is probably a new concept to a lot of you, just like it was me a few years ago. And dollar cost averaging is where you don't just buy your investment straightaway and don't buy any more of that investment. Now, what do I mean by that? Let's say you want to invest in the Footsi 100. Let's say the Vanguard Foti 100, which I was talking about earlier. Now, you could either put 100 pounds of your money into the Vanguard Footsie 100 right now or you could put 100 pounds into the Vanguard Fusi 100 over the next ten months. Now, let me tell you the second option is much better for risk management, because if you buy it right now 1,000 pounds in the market, you bought it at one price. That price could be really high or it could be medium price. Now, if you were to buy it in installments of 100 pounds each month for the next ten months, then what you're doing is you're buying at different prices each month. Yes, some month you might be buying at a high price, but some month you might be buying at a really low price. In the end, that will average out, and it should average out at a lower price than you would have paid putting 100 pounds in the market right now. That is how you manage your risk because rather than you trying to time the market and you buying at a really high price and losing money, you can buy at an average steady price so that you actually benefit from the low prices each month. That's one of the major benefits of dollar cost averaging. And that's in its name, dollar cost averaging and something I do every single month. And it is so worth it for risk mitigation. And finally, it seems so obvious, but so many people neglect to do it. And that is, do your research on the investments that you are making. Yes, it's amazing that you're watching this course right now, but if you are going to invest in Painter, for example, you need to understand what does this company do? How does it make its money? How much money is it making? If you don't know all of those things, how do you know it's going to perform well in the future? You can't just buy a stock based on your best mate telling you, Oh, Palanters going to go up in value or Twitter TikTok, saying, guess what? Palanters going up in value. You need to do your own research and you need to make your own judgment. That is probably one of the best risk mitigation strategies which you can apply. Now, that has been an overview of risk and return. I want you to stop now, I want you to stop the video or get a piece of paper, and I want you to think about these few things. I want you to determine your risk tolerance. So I want to answer these three questions. What is your investment timeline? How much money are you willing to invest right now? And can you handle seeing your investments go down? Answer those three questions, come back to the video, and then move on to the next video. The next video is me showing you how to research and pick your own stocks. 4. How to research and pick stocks: Glad you made it this far into the course because now we're getting into the real interesting stuff. Now I'm going to discuss how to research and pick your own stocks. One thing that I need to point out to you is that investing isn't gambling. You need to know exactly what you are buying. If you don't you are essentially gambling. You'll know better than the people in Las Vegas gambling on roulette on different numbers. You need to know exactly what you are investing in. Now, if you invested in dodecin a few months ago based on people saying to invest on Wall Street bets, then yes, you would have made some money to start with, but now you would have been in the minus and you wouldn't be making any money. You would have actually lost all of your investment. So what you need to be doing is research to buy quality assets which are going to increase in value over the long term. If you had invested in Tesla, Apple, Nvidia, those three stocks alone, you would have made so much money and you wouldn't have invested in those by chance. You would have done solid research and figured out that these are actually amazing growth stocks to invest in. So enough for me talking about that, what are the two main ways that you can pick stocks? Well, one of the first is through fundamental analysis, and this is more for long term investing. Rather than you looking at the price of the stock is now, also known as its market price, you need to do fundamental analysis. You need to figure out what exactly is this company's true value and what can this value of the company be in five years' time? Because the typical investment time horizon is three to five years. Now, there are numerous ways of doing this, but I'm going to make it really simple for you. You need to be looking at the financial statements. You need to be reading their reports. One of the things which you need to look at to start with is the revenue and profit. Is it increasing year on year? Is there even a profit or is it an operating loss? The second one you need to figure out is, does this company have a competitive advantage? How is this company outperforming this other company? For example, how is Tesla outperforming BYD? What is its competitive advantage? What is its unique selling point? The third thing you need to figure out is what are the debt levels that this company has? Has it got lots of debt in its capital structure, or is it mainly financed through retained earnings from the balance sheet? You need to know this because a company which has lots of debt in its balance sheet is a company you probably need to stay away from because in times of market risk, which we learned in the last video, its losses can be amplified through debt, also known as a levered capital structure. Finally, you need to figure out, does this company have growth potential? Do you think that this company can be the next Apple, Tesla, and Video? What is it about that company which you think has potential for it to grow? You need to figure out all of those things and once you have, you can determine a value, and that is your fundamental analysis. Now, the second way is through technical analysis. This is more short term investing. This is where you will look at the price of Tesla. You will look at the trading chart and you will follow the price and you will try to look for trends in the price. One of the most common ways is looking for resistance lines, which is at the top and looking for support lines which is at the bottom. If a trend breaks below support, you don't want to invest in it. But if it breaks above resistance, it may have quite a nice run, so it's something that you can invest into. This technique is commonly used with coding, so you can build your own code that can look for trends in the data and automate trades for you. It is a short term investing technique, but a lot of people do use it alongside fundamental analysis. Now, I know that is a lot of information, so I'm going to give you a step by step guide on investing in a stock from not even knowing the stock first to thinking about potential investment. Going to be doing fundamental analysis for this, further ado, let's get into that part. We want to analyze the stock. The first thing I'll do is I'll go onto this platform which I use quite regularly and it's Market Watch. Looking at Market Watch straightaway, which I pay for, you can get a free version, but you only get limited access to the number of articles. But first thing I'm seeing straight off the back is live and video earnings. I'm thinking and Video right now. But let's go down and see if there's any interesting articles. We've got D Wave breakthrough. You can see it's up 11% today, which is crazy. Anything else which we could find interesting. Nvidia stock is rebounding 7%. Let's have a look. So first thing I'll do with this is I will read through this article and try to figure out if there's anything interesting in it and which may point me in a direction that NVDA could be an interesting stock to invest in. You can straightaway see, Bank of America analysts thinks gross margins are more crucial to the stock trajectory. Let's have a quick look through this. They believe that the margins are going to fall, but they are going to start increasing past April, which will be good for profitability. They've maintained a buy rating with a price target of $200. The company can maintain the 80 to 85% share of the market. So that all looks quite promising. I don't actually know what the price of NVDA is now, so let's have a look. What I'll use for this is Yahoo Finance, because this has all other analyst projections, too. So let's accept. And let's just type in the video. Let's see what it says. So the price is 116, and based on this projection, they're saying $200, which is quite high. I'm curious now what do other analysts say? And this is a really good thing about Yahoo Finance, as you can see what other analysts are predicting. So Analyst recommendations. You can see here analysts price targets of 172. It's currently at 116, so it's looking quite undervalued. If you look at the earnings per share as well, it's beating it three quarters in a row and we're coming up to the next quarter, May 28. This is looking really interesting. Just based on this, the financials look great. It's profitable, analysts think it's going to do well. It's beating its forecasts. Now what I'm thinking is, who are its competitors and how does it compare against its competitors? Let's have a look because I believe Yahoo Finance will also show us this information. Okay, so you can see here compare to NVDo and you can see the different competors. Off the back, I know AMD haven't been doing very well in the market recently because I've been reading some articles, and that's probably one of their biggest competitors. This is a supplier or semiconductor chips. Looking at the market cap as well, and Video definitely has one of the higher market caps. It's probably a better investment for stability for sure. Let's have a look at some of the other news articles now, just to see what else has been happening in the chip market. This looks like it could come to fruition at some point in time. So just looking at all of these indicators, the news, the financials and competitors, it looks like it could be quite a compelling buy, and that's what I'll generally do to try and figure out whether this is a good investment or not. Now, that's just scratching the surface, and what you could do now is create a company summary or an executive summary of the company and do a full equity report. But you're a new investor, so you probably don't want to be doing this. This is probably a good level of research, probably reading a few more news articles. But certainly, this looks like a very interesting stock and something that would be quite good to invest in. Now you know that you need to do your own research. You need to make sure you understand the company thoroughly. You understand its fundamentals. That way you will easily be able to have a lot of confidence investing in different stocks. Now, next up is how to build a diversified portfolio, the video everyone's been waiting for. 5. How to build a diversified portfolio: So what exactly is diversification? Well, diversification is the pinnacle of finance. You need to understand diversification in order to build your portfolio. Essentially, it is not putting all of your eggs in the same basket. The act of diversification is putting your money into different investment types so that if the market does crash in the consumer market, because you are holding Tech and Tech has gone up, it means that you have minimized your risk of losses. And I'm going to get a bit more financing here so you understand diversification in a lot more detail, but I won't be getting too complex. But the actor diversification minimizes unsystematic risk. And as I spoke about in the previous episode, unsystematic risk is the market risk. It is the risk that the stock you are holding in a given market will go down. But using diversification, you can completely eliminate that unsystematic risk. So if you look at this chart right here on the X axis, what we have is the number of stocks. And on the Y axis, we have risk. As you can see on this chart, we have a downward sloping almost like a negative exponential curve, which is plateauing as we increase the number of stocks in that portfolio. What we can see here, this gap between the plateau, the flat part of the graph, and the X axis. This is our systematic risk. This is risk which we cannot diversify away. This is what I've spoken about as market risk. Market risk is economic risk, such as the UK business cycle or the US business cycle or any other country for your imagination. Now, at the top part of this, we have our unsystematic risk. And you can see that as we increase the number of stocks in the portfolio, this unsystematic risk starts to increase. This is because by increasing the number of stocks, assuming they're in different sectors, we now have lots of different sectors in the portfolio. And what this is doing is when one sector is up and one sector is down, we now have zero losses. And when you get to increase around the ten to 15 range, that's when unsystematic risk is completely eliminated. It's completely diversified away, and your portfolio now has less risk. This is why ETF investing is so good because you have complete diversification. So with the Fuse 100, you invest in 100 different stocks with this index fund. Now, what I'm talking about is when you have 15 stocks in a portfolio, you've diversified away your unsystematic risk. But with 100, you've definitely diversified away your unsystematic risk. And that's exactly how diversification works. You're essentially removing that market risk so that your portfolio doesn't have as much risk when you're investing in the market, but it still has the same level of returns, if not slightly higher, if you optimize your portfolio in the right way. Now, I've spoken a lot there about just diversifying by sector. There are three different ways that you can diversify your risk. One of those is by investing in different asset types or also known as investment types, as I was talking about in the second episode of this course. Now, you could hold a portfolio which has 70% stocks, 20% bonds, and 10% crypto. This means that you are no longer just fully 100% exposed to the equities market. You now have exposure through bonds. You now have exposure to crypto. So if crypto is booming, but bonds aren't, then you're not losing in your portfolio. But if crypto is booming, bonds are booming and stocks are a bit mediocre, at least your portfolio is still going to be performing quite well. So that is a different type of diversification, albeit probably not as good as diversification with different sectors, but it is still an act of diversification. Moving on to the second one is obviously by industry, which I've already spoken about. But just to give you a quick overview, you can invest in any sector that you like. It doesn't matter which one, but what you want to be looking for is sort of a negative correlation between two different sectors. So, for example, if you invest in the tech sector, you want to be looking at which sector has at least a negative correlation with Tech. So let's say healthcare has a negative correlation of negative 0.7. This means that when tech stops are at 1% healthcare stocks would be down around 0.7%. So you need to be looking for that negative correlation, and yes, this can be quite difficult. And yes, it's not really that easy in practice. That's where you've got to do quite a lot of research, and it's not really for beginners, but it's definitely something worth knowing. And finally, you can invest by geography. So you don't just have to be invested in the Fos 100, for example, I E, the UK market. You could also invest in the US market. You could invest in Japan, Hong Kong, Singapore, Australia, wherever you want to, because this is going to remove some of that systematic risk which I was talking about. Now, I don't want to bore you with all of the technicals, but there isn't a direct 100% correlation between the US market and the UK market. There is some lag. So you can diversify by geography, which will also bring down your risk. So as a final takeaway from this episode, what I want you to do is start off by being quite simple with your investments. You don't need to have ten different sectors in your portfolio. Maybe start off with two or three to start with, keep it simple, keep it easy so you can understand, get the concept right in your head first. Make sure you mix between asset types, such as implementing real estate, bonds, crypto stocks into your portfolio because one, yes, you get the diversification, but two, you also get the fun of choosing different investments. Now, up next is me showing you how you can get started in investing today and how you can start and create your brokerage account. 6. How to start investing today: Glad you've made it this far into the course because in this episode, what we're going to be doing is creating a trading account, also known as a brokerage account. Now, this step can seem quite daunting, but with the rise of technology these days, it is super easy to create your own trading account. Back when I was 18, I created my first trading account and it was a little bit more difficult, but now there are so many platforms which you can use to get started. Now, there are a few prerequisites which you require. Firstly, you need to be 18 and you need to have a national insurance number or some of identification number. I'm doing this from a UK perspective because I am based in the UK. I don't know much about the US market when it comes to different brokerage accounts. I'm going to do this from the UK perspective, but feel free to search online or search the app store for any other trading accounts which suits your region a lot better. What we're going to be looking at is some beginner friendly brokerage accounts. The main ones that you could use are either trading 212, which is a brilliant platform for beginner investors. It's quite good for investors that want a bit of flexibility, want a bit of freedom and be able to choose your own stocks. You can open a stocks and shares ISA and you can very easily invest in ETFs, if you want to go along that path, or you can invest in your own individual stocks. You can invest in different UK and US bonds as well. It's really good overall great platform. Aside from the investing side, you can also open a cash ISA or you can have your own investment account away from a stocks and shares ISA. It's one of my personal favorites and it's the one I use today. It's been such a great platform for me, so I couldn't recommend that anymore. Now, the other platforms are free trade. Once again, another great platform. You do have a subscription fee to be able to use this platform. However, it's really good for passive investing. If you just want to set your money aside in the Futs 100, in the SMP 500 and not have to worry about transaction fees, then this is the app for you. Free trade is brilliant for beginners. It even has online courses which you can follow, which show you the very vague investing techniques. It doesn't go into anywhere near as much detail as what I go into, but it will talk about some different investment techniques and how to use the app in some good detail. Now, another one is vanguard Vanguard is really for ETF investing only. That is exchange traded funds if you have watched all of the other episodes in this course. This is great because they have extremely low fees because as you probably noticed, I've talked about Vanguard Fusi 100 and the Vanguard S&P 500. Now, because Vanguard had their own platform and they had their own funds, it is extremely cheap to invest in these funds if you are on the Vanguard platform. If you are just looking for investing for retirement, investing for saving for a house, or a really long term investment, then vanguard is great for you. Those are the three main investment platforms. What we're going to do now is show you how to open up a train two and two account, for example, I'm going to show you how to open a trade two on two accounts. You can either do this on the web or on an app. Just for demonstration purposes, I'll show you how you do it on the web. Really, really simple just click Open Account and it will take you to a page where you need to choose the country that you live in and there's lots of different ones you can choose from. Then you can choose to open account, whether that be a stocks and shares ISA, a cash ISA or just general investment account. Input your email address and your password, and then you'll be taken straightway to a trade two on two account. In this, you'll be able to see all the different stocks which you can trade, invest in, it's really good and the next step you need to do to actually start investing is verify your identity. This would be inputting your national insurance number, inputting your phone number, your date of birth, and that can take a while to process, so make sure you do that straightaway. As a final takeaway, you need to pick which platform is best for you. They're all beginner friendly, but which one is going to suit you best? Are you more of an ETF investor, in that case, vanguard or free trade, or are you the type of investor who wants to dabble in their own investment stocks, pick and research their own trading two and two is for you. Up next is the common mistakes that people make when investing. 7. Common investing mistakes to avoid: Throughout my investing journey, I have made so many mistakes along the way and I've learnt from all of those mistakes. What I'm going to do is share with you some common mistakes which you can make and hopefully now you know the mistakes you'll be able to avoid them. The first one is not investing early enough. Now, you can obviously start investing when you're 18 and that is such a great time to start investing. The reason is because when you start off earlier, you can really amplify your returns later in your life. This is through the process of compound interest. If you start when you're 18, putting away a simple amount each month, then each month that money grows and it grows and it grows and it grows. You keep on getting interest upon interest upon interest and you'll start to see an exponential curve with your investment returns. Now, I know that's quite hard to imagine and hard to picture, look at this graph which I created. On the x axis, what you've got is the age that you are. This is starting at 22. On the left hand side, on the Y axis, you've got your net worth, the amount of money which you have. Now, assuming that you start off with 100 pounds that you invest when you're 22-years-old and assuming that you invest just 50 pounds each month for the rest of your life, let's assume that there's an average return of 5%, you can see that by the time you're 50, you have nearly over 40,000 pounds just by investing 50 pounds per month. Let's just look at the shape of this curve. It's starting to curve exponentially. And that is the power of compound interest. A mistake that people make is they start investing when it's too late. They start when they're 40, 45, 50, when they only really have ten years to now compound that interest. If you start now, if you start today, after watching this course, you're basically making a decision which is going to benefit you for the rest of your life and you're going to really see those benefits when you're 45, when you're 50-years-old, when you have all of this money in your bank account. Now the second one is definitely pointed towards Gen Z and it is not chasing hype and avoiding Fomo investing. Now, chasing hype and Fomo investing has been one of the major causes of people losing money and myself included. Now, a few years ago, there was this frenzy with GameStop where people on reedit and a sub read it known as Wall Street bets was encouraging people to invest in game stop essentially to squeeze out the hedge funds, also known as the short squeeze. Now, I saw this and I saw the price of GameStop increasing and I decided to buy almost at the peak of the GameStop bull run. What a mistake that was because all of a sudden the investment started to plummet, lots of people decided to pull their money out and I was left with almost negative investment. I didn't have my money anymore. You need to avoid chasing these hypes and the fear of missing out investments because they're not value driven. There are no fundamentals behind this other than you just listening and reading about what other people are saying about this stock. Avoid that because the only thing it's going to end up with is you losing your money. The next one is panic selling, and I feel like everyone is prone to panic selling, but you've got to remember the stock market goes up as much as it goes down. So yes, in 2020, in the UK, the market absolutely plummeted because of coronavirus. However, if you had held and not panicked and sold your investment, then by 2022, you would have had your original investment which you invested and a little bit extra. Avoid panic selling because the only thing that it's going to do is you realizing your returns way too soon and it being a loss. Another one which a lot of people do is trying to time the market. Now, nobody has perfect knowledge, so you're not going to be able to buy in at the low and sell at the high unless you are from back to the future and you have the exact prices of the stock market for the exact dates, which I'm guessing you do not because you would not be watching this course if you do. Do not try to time the market because you won't be able to do it. You need to follow the dollar cost averaging, which I was speaking about earlier, where you consistently buy the same amount of an ETF or a stock each month on the same day forever because this is going to mean that you average your investment, so you actually are buying at a low and you may be buying at a high, but you're not always buying at a high and losing money. The final one is you've got to look at the fees involved in the investment platform that you are using. By ignoring the fees, you could rack up thousands of pounds in fees over your 30 to 40 year investment time horizon. You need to look at how much it's going to cost each year, whether it is four pounds, five pounds, 20 pounds, 1,000 pounds. You need to implement this into how much you want at the end of the term and how much you're willing to spend on fees because you can rack up thousands of pounds without even realizing and by the time you do realize, it's too late. Those are the common investment es stakes that you've got to think about. Up next is the long term investment strategies that you need to be using. 8. Long-term investing strategies: Would argue this is probably one of the most important lessons which I'm going to teach you throughout this course. And that is long term investment strategies. A long term investment strategy wins every single time. Warren Buffett, who started investing when he was 11, started to see major returns a lot later on in his life. And this is really attributed to him starting so early on at age 11, which is insane. I don't even know how he managed to get a brokerage account at that age, but he did. Now, the reason is because the market has returned consistently around 10% a year. Looking at the S&P 500, for example, even for the past 25 years, it has consistently generated a brilliant return, and that is why if you start early, you have a long term investment strategy. That's how you can have great wealth, just like Warren Buffett did with his long term investment strategy. Now, what I'm going to talk about specifically is three different long term investment strategies. And one of them I've already spoken about quite a lot, so I won't go into too much detail, but the first and the most important is dollar cost averaging. So dollar cost averaging, as I was talking about, was rather than you putting 1,000 pounds in the market right now and buying at, let's say, 100 pounds per share. If you were to spread that 1,000 pounds over ten months by buying 100 pounds installments, each month, you're going to buy at on average a much lower price because if you think about it, some months the market is going to be quite high, whereas some months the market price is going to be relatively low. So you're benefiting from buying at a relatively low point, which is going to mean, obviously, that's buying at a lower point, that in the future, when it does rise, you make a greater rate of return, and you make a return on those gains each month, as well. If I bring you straight back to that graph which I created earlier, where you can see that on the X axis, you have age, on the Y axis, you have net worth, and by investing 50 pounds a month in every single month from 22 to age 50 by investing an initial 1,000 pounds in, you have over 40,000 pounds. And looking at this exponential growth, you can see how your money would grow through dollar cost averaging. It is such a great investment strategy and works great when you're investing in ETFs. That's how I use my dollar cost averaging. I use it when I invest in exchange traded funds such as the S&P 500 and the FutsE 100. Now, another long term investment strategy that you should be using is buy and hold strategy. Now, the buy and hold strategy is quite simply in its name. You buy a stock for a given price, and you just hold it and you do not let go of that stock, because if you really believe in that stock and if it has solid fundamentals, that stock is just going to increase in price. If you had bought Nvidia back at $10 per share to now look 146, you would have made an insane return. Or if you followed Warren Buffett's strategy when he bought Coca Cola at very low prices decades ago, you would have so much money just like Warren Buffett. Rather than you trying to time the market and buy the stocks at different points in time, just buy a stock and hold it for as long as possible. Obviously, if you need to sell it for financial reasons and sell it, but if you don't need to, then hold it because it is such a great, easy, long term investment strategy. One final strategy is dividend investing. Now, for those of you that don't know, a dividend is basically a profit share in the company. So when you hold a stock in a company, you are an equity shareholder, which means you have a right to the profit of that company. Now, sometimes they don't have to offer dividends, but most of the time companies do. So they will pay a quarterly or bi yearearly dividend to you. What you can do is you can buy up a lot of a particular stock. So Royal Dutch Shell, for example, has a great dividend yield. If you buy lots of Royal Dutch shell, it means that each quarter, you'll be getting a dividend. If you keep buying lots of Royal Dutch shell, you'll keep on getting a higher and higher dividend. So you need to be long term in this approach. Rather than just buying and selling a stock where you might not even be able to benefit from the dividend. By doing this, you'll be able to benefit from that regular dividend payment. So I've spoken about three long term investment strategies there. Now, the main one here is you need to be consistent with your strategy. Make sure you are sticking to it. If you're going to do dollar cost averaging, make sure you invest that 50 pounds each month and do not deviate from that because you want to maximize the benefit that you can. That's probably the key takeaway that I'd say here and make sure you do continue with that long term mindset. Well done. You have made it to the end of this course. Up next, is a final recap. And I'm going to give you a little challenge, which I hope you will be able to do. 9. Your challenge: Congratulations. You have now made it to the end of this course and you have learned so much about investing and the stock market. You have learned the different investment types such as real estate, crypto, NFTs, stocks, also known as equities. You have learned about risk and return, what risk you are willing to take, what return you are going to get by looking at that matrix. I have spoken you through how to be able to research different stocks and pick your own stocks out of a hat by looking at the different research tools. I've taught you different long term investment strategies that you can apply to your different and chosen investment strategy that you are going to go with. So well done, and I'm glad you have done that. Your next steps are you've got to open a brokerage account today. If you are the right age, if you have a national insurance number, I want you to open an investment account today. And my challenge to you is you need to make an investment today, whether that is investing in an ETF or whether that's investing in a stock, I want you to choose one investment to invest in today, and I want you to hold that investment for a good amount of time, at least three months. If you do that, you would have completed the challenge, and more importantly, you would have made your first step towards investing, which is the whole purpose of this course which I've created for you to be able to start investing. My final words or advice are stay consistent with your strategy. If you're going to do the dollar cost averaging, make sure you continue doing that. Do not deviate. Do not look on the other path or short term investing. Stay with that strategy. Also, there is no perfect time to invest. In fact, the perfect time is right now. Open up your phone, create that brokerage account, make that first investment because you can wait all your life to invest, but there's no perfect time other than the present to start investing in your portfolio. And finally, I want you to keep learning. Keep watching courses, watch YouTube videos, make sure you keep learning about the stock market, understanding different stocks, understanding what's going on. Because the more you learn, the better you're going to get, the more money you're going to make. So make sure you follow those three final words of advice. Now, I hope you've enjoyed this course that I created. If you need to rewatch the course again and make sure you really understand the concepts, yes, some of them can be difficult such as diversification of a portfolio or how to pick a stock, but I'd highly recommend now that you've watched this entire course, just to go back and watch individual episodes every now and then. And if you want something else to watch, then go check out my YouTube channel because I create lots of different financial content on there for your personal finance journey. Thank you so much for watching this course, and please watch the other episodes if you need to. Thank you for watching.