Stock Market Investing

1. Introduction: Hello, everybody. My name is Timothy Taylor and I want to bring you this video about stock market investing. Now, stop market investment can be as complicated as you want it to be, but it can also be as simple as you want it to be. In this video, I'm going to break down the simplicity of investing into the stock market. With the prices of everything increasing over the last couple of years, some people actually feel that stock market investing is not just an option anymore, but a necessity. Now, whether you are one of those people who believe that it's not an option and it's a necessity or you still feel like it's an option, I think it's important that we at least know how to invest into the stock market. In this video, I'm going to show you how to through retirement accounts, taxable brokerages, and I'm going to also show you how to find the fund. 2. Retirement Accounts: One great way of investing into the stock market is through retirement accounts. All retirement accounts have penalties for withdrawing any money before the age of 59.5. Now there are some circumstances where you can withdraw before that age without a penalty, but we typically want to remember the age of 59.5. Now, typically the retirement accounts come from your job in the form of 41k, four oh three B, or 457 B, then outside of work, you still have your traditional IRA and roth IRA, and then also the OPMA account. I'm going to go over all these different options. Many jobs offer retirement accounts in the form of four oh one K, four oh three B, 457 B, just depending on if your corporation is public, private, or government institution. Now, the job takes a portion of your income and places it into the fund. The fund is just holding center. You must instruct the holding center what to do with the money. If not, it will just sit as cash. Now review how this is being invested. Never trust an advisor outright. What I mean by that is if an advisor is coming to your job and telling you about these different accounts, you can take the information, but make sure that you do your research on the back end because remember, it is your money. Many jobs will match your contributions up to a certain percentage. Some jobs will say, Hey, if you put in 3%, we'll put in 3%. If you put in 5%, we'll put in 5%. As an example, if every time that you get your check, you put in $100 into this retirement account, your job will put in $100 into this retirement account. This is basically free money. For retirement accounts such as these, the investment limit this year is $23,500. Now you may be thinking, Hey, what about retirement accounts outside of my job? The amount that I'm putting into my job, I can't increase anymore because my job just doesn't allow me. Well, we have traditional and we have Roth IRAs. Now, the difference between the two is very important. Now, with traditional IRA, the contributions are tax deductible and your taxes are paid on the withdrawals. Still remember 59.5. Now with the Roth IRA, your contributions are made with after tax dollars, and then the withdrawals are tax free. 59.5. With both the traditional and the Roth IRA, the contribution limit is 7,000. Now, if you're married, it's 7,000 per individual. A question that may arise within you is, hey, what if I want to pull some money before 59.5? Are there any other accounts that I can put it into? Yes, there are. There are some non retirement accounts such as the taxable brokerage or the UTMA, which is the Uniform Transfers to Miners Act. But you also want to remember that taxes will be applied to the long term and short term gains on both these accounts. But the great thing with these two accounts is that you would not be assessed any penalty. 3. Taxable Brokerage: The final account that I want to discuss in regards to stock market investing is the UTMA account, which is a Uniform Transfer to Miners Act. This account is so great because it can create wealth for your child. I would ask everybody or advise everybody to go onto Google and use an investment calculator to see how great of an account this can be based on the compounding interest over time. Remember, it's not about time in the market, but time in the market. You can create one of these account as soon as your child is born. Basically, it's a taxable brokerage account for your child. Remember, there's no contribution limit. But until your child becomes 18 or 21, depending on your state, you're going to be the custodian of this account. You're going to do everything within the account, and then once that child becomes 18 or 21, depending on your state again, then you're going to transfer that over to your child and they'll become the custodian. They can do whatever they're going to do within that account. Now, what some people will do is have a taxable brokerage account under their name and then once their child becomes 18 or 21, then they'll transfer it over. Only thing with that versus the PMA account is that they're going to be charged for that. They're going to be taxed for that. They're going to have penalties to transfer that over to their child. With the UMA account, there are no penalties for that. You fill out a document, you send it in, to show your ID, things of that nature, but it's a pretty seamless transaction because that is what the account is for. 4. Finding a Fund: All right. Now we know the different accounts that you can put your money into. But remember, those are just holding tanks. Those are just holding centers. You still have to do something with that money. You have to invest it. So while they're in those accounts, you have to tell it what to do. Remember, at the beginning of this video, I said, we want to make it as simple as possible so that simplicity comes here, index funds. What are index funds? All right, index funds tracks the performance of a market index such as the S&P 500 by holding the same stocks or bonds or a representative sample of them. What it means is, you look at the S&P 500 and it may have 10% of Microsoft, 7% of meta, 8% of Apple or something like that. What the fund is going to do is going to try to replicate that. I S&P 500 is up by 15% or 20% for the year, then if your fund is basically copying that then it's going to be up close to that same amount and returns for the year. The great thing about index fund is that you're not putting all your eggs into one basket. It's a lot less risky than stock picking. And what I mean by that is if you have $1,000 and you put into an index fund that tracks the S&P 500, you're not just going to get one Tesla stock. You're going to get a piece of a Tesla stock, a piece of Microsoft, a piece of Apple, a piece of Navdia all wrapped up into one, and then obviously a lot of other accounts, piece of small other accounts. So if something was to happen to Tesla or that one account, and it goes down, you still have those other accounts that can keep you afloat. And that's the great thing about index funds. Index funds basically diversifies your portfolio. You can put it into one index fund, and it's diversified between 400 or 500 different stocks. All right? Remember, it's a lot less riskier than stock picking. If you're great at stop picking, awesome. And that's where we get more complicated. But in this video, we want to keep it as simple as possible because I want everybody to be able to be able to invest into the stock market. I