How to get started investing in the Stock Market for beginners in 2023

Hello, welcome back to a new video. So

today I want to talk about stocks and

investing for beginners. I've been

investing into the stock market since

about October of 2020. So it's been nearly

over 2 years that I've been doing this

stock market stuff. And I thought I'd just

make a video talking about the basics of

investing and how to get started. Now,

obviously, if some of you know about my

investing history over the last past 2

years, you would know that I lost quite a

lot of money. And that was mainly because

I made one massive mistake that should

never do when investing into the stock

market, and that is basically taking on

too much risk and putting all of your

money into just a few stocks, which is

what I did in October and the beginning of

2021 and 2020. I put all of my money

into basically 2 penny stocks, which was

very risky, but I was very greedy at the

time and I was in this gambling mentality.

What I'm going to teach you in today's

presentation is how to not have this

gambling mentality and how to not make the

same mistakes I made. So So basically, I

would like to teach you the basics of

investing today and how to trade and

invest in a responsible way and how to not

take on too much risk and also about risk

management and portfolio diversification.

So one common myth about investing and the

stock market is a lot of people believe

that you need to be rich and you need to

have loads of money that you've either

made by some kind of business or you

inherited by generational wealth and

you've got a load of money that you can

invest in and that's the only way you can

do it. Some people believe that poor

people can't get a foot in the stock

market and you need huge amounts of money

to get started. That's just simply not

true. You can actually start investing and

buying stocks even if you only have about

£10. Even if you only have $1, you could

actually make a very mini portfolio where

you just basically split, split the dollar

into 10 stocks, 10 cents each. You could

theoretically do that, although it would

be kind of stupid. It seems like a lot of

people think that investing and getting

stocks is a really difficult and

complicated process, when in reality it's

very easy. So first of all, what you need

is you need some kind of investing app

that you can find on your mobile phone.

The one I use is called Freetrade, but

it's only available in the UK. I think

they are branching out into other European

countries, but the, the rollout is very

slow since they are quite a new company,

quite a young company. People in America

use stuff like Webull. It kind of depends

which country you live in. Every country

has their own kind of number one most

popular investing app for your country.

You're gonna have to Google it or research

yourself. If you live in some obscure

country like Zimbabwe, then I don't know

what kind of app you would have to

download if you live in some country like

that. So you have to do your own research

there. So you have your investing app

downloaded, all you have to do now is

connect it to your bank account and then

transfer some money into your investing

app. Now I was a bit worried about putting

a lot of money into these investing apps

at first because I thought Couldn't they

just take my money and then never give it

back to me? What kind of rights do I have?

But it's quite protected and regulated by

the government and law. Well, it is in the

UK in any case. Maybe it isn't in some

countries, but I guess it depends which

country you live in. But it usually is

pretty safe to have your money in these

investing apps because if they just take

customers' money, they'll get sued to

Timbuktu. So now you have to think, how

much money do you want to invest into the

stock market? That's completely up to you.

You could put £10, you could put £50 or

£1,000 or £10,000, depends how much money

you're willing to lose or invest into the

market. Now you've got your money in your

investing app. Next, you have to pick what

kind of stocks and things you're going to

buy to create your portfolio. So a

portfolio basically means the kind of

stocks you have in your portfolio, and you

really need to diversify your portfolio.

You can't have 100% of your money in one

thing like mining stuff or crypto stuff or

tech stuff or travel stuff or food or

restaurants. Because the thing about the

stock market is there's different sectors

in the economy and these sectors kind of

go up and down in cycles. In some parts

of the year, maybe food stocks or drinks

like Coca-Cola will do really well. And

then other parts of the year, tech stocks

do really well. But then the next year,

in the beginning of the next year, maybe

tech stocks will go down and then suffer

really badly because of something that's

affecting the economy at that point in

time. So you need to diversify over a

broad sector of different industries in

the economy so that when things go up,

you can benefit. And when things go down,

you aren't really hurt too much because

you've got your money spread out into

other sectors of the economy. And there's

no such thing as a bad sector of the

economy. All of the different sectors like

food, industrials, travel, tech,

commodities, they're all good at certain

times. They all have times when they're

doing really well and they're kind of like

in a bubble, which is when you should

avoid buying them. And then there's times

when certain industries are doing really

badly and they'll go down in price a lot

and the stock will drop loads. And that

might be a time when you might want to

think about picking up some stocks in that

industry. It's very difficult trying to

time the market. So really what people say

is to dollar cost average into the market,

which basically means If you've got

$10,000 that you want to invest in the

market, don't invest all of it all at once

because that's kind of risky. Instead,

spread it out. So you basically just put

maybe $500 every month into a certain

stock, or to make it even safer, just put

$100 every month slowly, bit by bit into

the stocks and sectors that you want to

invest in. That way you spread out your

risk much better and it's much safer, but

it does take a very long time that way to

actually get your money into the markets.

Basically, you want to inject your money

into the markets as quickly as possible,

but in the safest way as possible. If you

just put all the $10K into Apple right now

today, that's extremely risky and wouldn't

be a great idea because Apple stock is—

well, it could be considered to be very

overvalued right now. And a lot of people

might avoid buying Apple right now because

it could be considered to be in some kind

of Nasdaq tech bubble. You've also got to

think about things like your investing

timeframe. So if you're thinking, okay, I

want to make a lot of money now, today,

this week, and then you put $10K on one

stock, then that's basically gambling.

And yeah, you could make a lot of money,

but then on the flip side, you could also

lose a lot of money. What you've got to

understand is there's different types of

investing. There's investing over the long

term, over decades and decades and decades

of just buying and holding, buying and

holding, which is what the infamous Warren

Buffett did. And that's how he got rich.

And then there's also trading and

scalping. So day trading is very risky.

You're using these lines and charts and

stuff to try and get a good price to buy

in and sell out or short the stock. If it

goes down, you make money. And that is a

completely different style of trading that

I'll have to do in a different video. But

this is mainly the basic principles of

investing that I want to talk about. So I

don't really want to get into the concept

of day trading or scalping today. But

let's say you've got 20 or 30 years.

Maybe you're a young person. You've got

your whole life ahead of you. Like 40

years, then if you just put in $5K and

then lock it in there, you never touch it.

Don't, don't sell when the stocks crash

and you panic sell and sell at a loss.

And don't sell if the stock goes up and

you made loads of money because it might

go up even more in, let's say, 20 years.

So if you just buy and hold for like 40

years, your money could have multiplied by

5x or 10x. Actually, they say that the

people who make the most money in the

stock market are the people who forget the

password for the investing app or they die

because they can't actually touch their

stocks. The worst thing when it comes to

investing is that people get scared and

emotional and they keep fiddling. You

know, they see the market crashing, they

go, oh no, I'm going to sell everything.

And then they sell at a loss and then the

market starts going back up again. And

then they panic and go, oh no, I need to

buy again. And then they FOMO buy back in,

which means fear of missing out. And then

they buy back in at a higher price. If

they just never touched it, they would

have been better off. So the people who do

best in stock market are basically people

who have incredible patience and

self-control. So the goal of the game here

is to buy low and then sell high. That is

if you're going long. To go long means

you're investing into a stock or a

commodity or an index fund. I'll explain

what an index fund is later. And you want

the stock to go up. Going short means you

want to do the opposite. You want the

stock to go go down. I'm not going to

explain exactly what shorting is because

there's no need. Basically means that

you're betting on the stock or the thing,

the asset, to go down, and then you make

money. So what you want to do is if you're

going to go short, you want to buy when

it's high. When you think something's in a

bubble and you think it's about to burst

and crash, then you might want to go short

and then profit as it falls down. Now,

how do you know how to buy low and sell

high? Well, that is the trick of the game,

isn't it? If everyone knew how to do that,

then it'd be easy, and then everyone would

be doing this, and then no one would get a

job, and then society would collapse

because everyone would be pro-investors

and traders getting rich. And that's just

not going to work. It is difficult and

there's a lot of risk, and that's why it

is so difficult, and that's why so many

people stay away from it and avoid it,

and probably for good reason, because a

lot of people would lose a lot of money if

they don't take the proper steps and learn

how it— this works. So So there's many

ways to find out how to buy low and sell

high. You can use technical analysis and

use stuff like lines and candles and try

to learn how to read the charts and that

it can work. A lot of people say technical

analysis is a load of rubbish and it's not

entirely true because a lot of the time

the technical analysis stuff does work.

You can draw trend lines and you can see

on my left-hand side that this stock is

actually the S&P 500 and is getting

rejected off this upper yellow line,

which is called a resistance line. And

it's not going to be 100% fail-safe.

There's like a probability that it will

obey these trend lines. It's not 100%. It

might, might be 50% or 60%. It's still a

bit of a gamble, but at least you kind of

have like a guideline based on what you

could do. It's kind of like a jungle

trail. There's a trail in the jungle.

You're going to follow the trail. But you

could slip and fall off the trail.

Anything could happen. There might be a

big scary snake or a big rock and you fall

over and you break your ankle. And no

one's going to say the jungle trail is

100% safe, but following the jungle trail

is better than just trying to make your

way through the jungle. But at the end of

the day, trying to time the bottom and

trying to time tops perfectly is probably

impossible. Most people say that there's

no way you can time the bottom. You can

try and make an estimate, an estimation,

and try and guess where the bottom is.

And maybe you'll get near to where the

actual bottom is. Maybe you'll start

investing into a stock when you think it's

bottomed, but then it keeps going down

another 5 or 10%. That means you've kind

of missed the bottom by 10%. But if you

want to just hold on to it and wait for it

to actually reach the bottom and then

bounce back up, you could do that if you

have patience. Or you could have a stop

loss which triggers automatic sell if

the stock you've invested in has dropped

below a certain percentage point. That's

completely up to you to decide. I mean,

you could try to time the bottom and to

try to time tops. It's completely up to

you. I think it's a better idea to try to

time the bottom than just not trying at

all and blindly investing whenever you

feel like it. Actually, there's a study

that shows that investing tiny bits of

money, tiny amounts of money every day or

every month over a long period of time

actually outperforms if you were able to

magically time the bottom and top

perfectly and buy and sell at the bottom

and the top every time. It actually works

out that you'd make more money if you just

invested $10 every day, no matter

where the stock is, no matter if it's in a

bubble or if it's really low. If you just

keep buying consistently every day or

every week or every month with tiny bits

of money, that actually turns out to be

more profitable than perfectly timing the

bottom, which is an interesting study.

You could Google that if you want to know

more about it. Basically what it means is

that the overall mentality of investing is

that the person who is the most patient

and doesn't impulse buy, doesn't get

emotional, is going to do the best. The

reason why Warren Buffett is such a

legendary investor is because he buys

stuff and he never sells. Basically his

whole motto is to buy and hold forever.

He only sells if he analyzes the company

maybe a few years later or 10 years later

and the company isn't performing in the

same way that he thought it would perform

or isn't performing as well as it did when

he first invested into the company. But

Warren Buffett has invested into stuff

over 50 or 60 years, basically his entire

life. And if you invest in stuff over 60

years, the chances that you've invested

into— well, it depends if you invest in a

good company, first of all. If it's a good

company over 50 or 60 years, then that

stock's going to do really well. But on

the flip side, if you invested in a crap

company and you just left your money in

there, there's a good chance it might go

to zero after 50 years because a lot of

companies do start off really strong and

then just kind of fail along the way due

to many reasons like management reasons or

maybe just the concepts of the company or

the product they sell didn't really work

out that well. So the key is you've got to

be patient. Insert your money and your

wealth very slowly into the market, like

you're backing up a very big truck or

lorry into a tight space. You don't want

to just shove it in there, shove it in

that hole, and then just cross your

fingers and hope that nothing will be

damaged. No, you want to do it very

slowly, very carefully, bit by bit, inch

by inch. Just slide it in. That's what you

want to do with the stock market. It's

like a gambler's mentality if you start

putting huge chunks of money all at once

into certain risky assets and things.

Okay. Next, I want to talk about index

funds. So index funds are basically— it's

kind of treated as one stock because it's

just like it does the same thing as what a

stock does. It goes up and down, but it's

not just one stock. Basically, it's like a

big combination of multiple companies and

there's loads of different types of index

funds. The most famous index funds, or

ETFs as also known, Uh, the S&P 500,

which is basically just 500 American

companies, the top 500 American companies.

And you can think of the S&P 500 as

basically the American economy. If you

invest in the S&P 500, you're investing in

stuff like Apple and Amazon, but also

things like McDonald's and Pepsi and

Coca-Cola and just all the famous American

brands and stuff like that. And it covers

a whole range of industries— food, tech,

industrials, travel, Boeing, American

Airlines, banks— basically everything. So

if you just want to be lazy and not have

to pick out individual stocks, which is a

good idea because a lot of people say it's

very difficult to pick individual stocks

because you've actually got to analyze the

company and know if it's a good company to

invest in over the long term, and not many

people can do that unless you're like a

massive nerd who's really into analyzing

companies and their balance sheets and how

much money they make and lose every year.

It's kind of boring for most people to do

that. Something Warren Buffett is very

good at because he's weird and he actually

enjoys doing that stuff. So if you just

want to invest in 500 companies spread out

over the entire economy, then the S&P 500

is the one you want to invest in. Now,

there's other popular ETFs like the

Nasdaq, which is like the S&P 500, But it

only has tech stocks like Apple and Google

and Facebook. There's so many ETFs.

There's basically an ETF for practically

anything. You can have a lumber ETF or a

gold ETF that has a load of gold mining

stocks. There's a water ETF. There's an

ETF for banks and financial stocks.

There's different kind of ETFs for

different countries as well. So America

has the S&P 500. England has the FTSE.

Japan has the Nikkei 100, Hong Kong

has the Hang Seng or something, and then

China has something. I can't remember the

name. So you could just be an ETF investor

and maybe that's safer. The good thing

about ETFs is because there's so many

stocks within the ETF or the index fund,

it doesn't really matter that much if one

or two of the stocks in the ETF crashes.

So it could have like a stock that goes

bankrupt and goes to zero. You won't

really be affected that much because

there's like 500 other stocks within the

ETF. So the risk is spread out since

there's so much stocks in the same thing.

But on the flip side, if one stock goes to

the moon and like does a 3x, you're not

really going to notice that much because

it's only just one stock in the entire

ETF. So you can choose if you want to be

risky and pick and choose individual

stocks and companies. Or you want to play

it safe and just spread out your risk over

a diverse portfolio of ETFs. And you can

also pick and choose countries you want to

invest in. So if you think the UK might do

well in the next year or 2 or in the next

5 or 10 years, then you can invest into

the UK's ETF, which is called the FTSE

100, or you could even short the FTSE if

you think the UK is going to do badly in

the coming years. Okay. Next, I want to

talk about dividend stocks. So dividend

stocks are a very special type of stock.

Basically, it's just when a company pays

you a dividend if you hold the stock over

the ex-dividend date. So some stocks don't

offer a dividend, and these are usually

known as growth stocks, and they don't

offer dividends because they don't want to

give their money to the shareholder. They

want to reinvest the money they've made

into themselves, into the company, to grow

the company, to make it bigger. There's

basically 2 types of stocks in the stock

market. There's growth stocks, things like

Tesla or Amazon or— well, it used to be

Apple, but Apple also offers a very small

dividend now. So Apple is not really

considered a true growth stock like it

used to be. But there's like startup

companies and newer companies that are

considered to be growth and they don't

offer a dividend. And then there's a

second type of stock called a value stock.

And these are very old companies like

Coca-Cola, McDonald's, and very old

companies like this will usually offer a

dividend because they're not really

expected to grow a huge amount. So why

would you invest in them if they're not

going to grow? So they offer a dividend

instead of promising to grow a lot in the

future. And different companies offer a

different percentage of a dividend. Some

companies might only have a 2% dividend

yield or Some companies might have a 5%

dividend yield. Basically, a dividend

yield is how much money they're going to

give you every year. So if a company has a

10% dividend yield and you've invested

$1,000, that means they're going to pay

you $100 every year in dividends

and they're going to pay this 4 times a

year. Usually they'll pay it quarterly.

So every quarter after they announce

their earnings, they're going to give you

a payment, a dividend every end of

quarter. So that's usually 4 times a year.

Other companies do it annually, just once

or twice. It really depends on the

company. There's also things like oil

companies which have extremely high

dividend yields like 10 or 11%. And you

might be thinking, why don't I just put

all my money into these high dividend

yield stocks? Why would I get a 2%

dividend yield stock? And that's because

the higher the dividend yield is, the more

of a dividend trap it is. Because it might

have a very high dividend yield for a bad

reason. It might be because they're trying

to lure investors to invest into the stock

because it has a high dividend yield. And

then you might be getting 10% dividends

every year, but then the stock just keeps

going down and down and down. You don't

want to invest in a dividend stock that is

just going to go down because it's like a

dying industry. Like tobacco stocks have

very high dividend yields, but the future

of tobacco is kind of shady. People don't

really know if tobacco is going to do well

in the future. The nice thing about

dividend stocks is that it doesn't matter

if the stock goes up or down, they will

still keep paying you a dividend as long

as the company isn't in some kind of

crisis or going bankrupt. It doesn't

matter if the stock goes down 10% or 5% or

even 50%. It sucks that your initial

investment goes down 50%, that's true,

but you'll still be getting the dividend

payments every quarter, which is kind of

reassuring. So if you just put all your

money into dividend stocks, you might be

getting a nice fat paycheck in dividends.

But the thing is, you need to put a lot of

money into dividend stocks to actually get

a lot of money back. Even if you invest

like $10,000 into a 5% dividend yield

dividend stock, you're only going to be

making about $500 a year in dividends.

$500 a year is nice bit of pocket

money, I guess, so you can buy some new

video games, but it's not really going to

be a very impactful amount of money.

Really, to make dividends worth it,

you're going to have to spend— you're

going to have to invest like $100,000 or

$200,000. So imagine you put $200,000

into a 10% dividend stock, then you're

going to be making $20,000 a year in

dividends, and it's just going to be paid

into your account. Every quarter. But the

problem with that is a 10% dividend yield

is pretty high. You might think that's

kind of risky putting it all into a stock

that offers a 10% dividend yield. So

realistically, you want to aim for an

average of about 4% or 5% dividend yield

and get some stuff like Coca-Cola or

McDonald's, which are more reliable

companies, but they have a much lower

yield like 2%. And 2%

isn't a lot really unless you've got

millions to put into the market and then

you can get 2% on your millions. Over

every year, they'll get like a couple

hundred thousand maybe. So although

dividend investing does seem kind of easy

because you don't have to worry about

timing the market, you just get paid

dividends. You need a lot of money to

actually make anything noticeable in

dividends. I have a few dividend stocks,

but I've only got about maybe £5,000 or

£7,000 invested into dividend stocks and

only get like a couple hundred pounds

every quarter in dividends, which is a

nice little bonus to help pay the bills

and stuff, but it's not really going to be

enough to live off of or make any big

payments with. It's just like a nice

little bonus. Okay, so I think that's

enough for today's video. I covered ETFs,

dividend investing, the basics of

investing, how to buy high and sell low,

and also about technical analysis and the

different kind of stocks like value

stocks, growth stocks, and ETFs. So those

are basically the basics of investing.

That covers the very fundamentals. Hope

this video helps some people and is useful

in some way. Thanks for watching and