If You've Never Invested Before - Watch These 32 Minutes
Published: 2024-06-23
Status:
Available
|
Analyzed
Published: 2024-06-23
Status:
Available
|
Analyzed
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The speaker previously created content on investing with no initial capital, emphasizing the need to first generate income.
"I made a video on my YouTube channel talking about how you can start investing with no money that way you can work to grow how much money you have but you got to start with earning some money"
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The current economic system in America, driven by consumerism, profits from people staying in debt and spending beyond their means, which negatively impacts individuals but fuels economic growth.
"we live in a consumerism culture in America which fortunately or unfortunately hurts a lot of people I mean obviously it's unfortunate that people get hurt but it's the same system that grows the economy I mean when somebody is living in a mobile home park and driving in Uber and spending money on door Dash every single day it's very unfortunate when you stay broke but when you stay broke it benefits the system"
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Spending $500 or more monthly on a car without any investments indicates misplaced financial priorities.
"if you don't have any Investments and you're spending $500 a month on your car or more your priorities are in the wrong place"
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To reach financial goals faster, increasing investment amounts is more effective than solely cutting expenses, as earning potential is theoretically unlimited.
"there's no limit to how much you can earn but there's a limit to how much you can cut back on your expenses and so as you start investing you're going to ask the question how can I get to my wealth number sooner how can I have millions of dollars sooner well if you invest more money you can grow that money faster"
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Investing carries inherent risks, including potential losses, necessitating personal research and caution against blindly following advice.
"investing has risks you're never guaranteed to make money when you invest in fact you will lose money at some point which is why you got to always your own due diligence and never blindly trust a random guy on YouTube"
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An asset, in the context of investing, is defined as something purchased with the primary intention of generating profit.
"the whole idea of investing now is you're going to take this extra money and you're going to put it into this thing this thing is an asset I'll explain what that means but it's something that you're buying for the sole purpose of making money"
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Purchases like cars, clothes, and vacations are considered liabilities because they depreciate in value or do not generate income, unlike assets which are acquired to make money.
"when you buy a car that's also a liability because when you buy a $20,000 car in a few years that car is only going to be worth $110,000 a few years after that that car is only going to be worth $500 few years after that it's going to be worth nothing not to mention all the maintenance and oil changes and gas that you had to put in to drive the car plus the insurance as well so your car is a liability your clothes are a liability when you buy a vacation to Cancun it's a liability because you can spend $10,000 on the vacation but it doesn't put some money in your pocket"
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Over the last century in the US, businesses, stocks, and real estate have been the primary drivers of wealth creation.
"businesses stocks and real estate you don't have to get super complicated but these are the three assets that have built more wealth than anything else"
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The stock market offers a low-barrier entry point for investment, requiring as little as $10 and simple digital access.
"investing money in the stock market cost the least amount of money to start because you can start with as little as $10 it's the most accessible because you just got to download an app on your phone enter in some information and you can start investing in stocks which our companies"
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Real estate provides tangible assets, significant tax advantages, and the potential for cash flow through rental income, where tenants cover expenses and potentially a mortgage.
"investing in real estate gives you a tangible asset when you buy a rental property a home or an apartment complex you own the bricks you own the land you own the windows you own things something that you can see feel in touch you also get some of the biggest and best tax breaks as an attorney who's like your attorney what I can tell you is that our tax code gives Real Estate Investors some of the biggest tax breaks that our tax code has to offer not to mention you can also generate cash flow that's the main purpose that people invest in real estate is because you can buy a property rent it out the tenants pay all your expenses and the mortgage if you have one and put some money in your pocket"
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Trading, focused on short-term profits within months, is akin to gambling and carries high risk, whereas investing involves a longer-term commitment to owning a business.
"trading is when you go out and you trying to find a stock that you can flip in 3 months 6 months or nine months that you're finding this company that you think is going to go up in the next few months and then sell it for a quick profit that is like gambling I don't trade I don't know how to trade and well you can make a lot of money very quickly with trading but you can lose that money just as fast I only talk about investing"
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Purchasing a share of a company's stock makes you a part-owner of that company, as company ownership is divided into shares.
"when you go out and you buy one share of say McDonald's you become one of the owners of the McDonald's company the McDonald's company along with every other company that trades on the stock market is broken up into shares"
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Stock prices can increase due to a company's growing profits and expansion, attracting more investors and leading to appreciation.
"as McDonald's starts to make more money the stock price might start to go up why because other investors might say oh this is a valuable company their profits are growing growing their revenues are rising they're expanding in more locations so I want to own this stock and then the stock price starts to go up that's one way that you can make money it's called appreciation"
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Companies with significant profits, like McDonald's, can distribute a portion of their earnings to shareholders in the form of dividends.
"some companies like McDonald's pay out what's called a dividend and a dividend is when McDonald's makes a lot of profit which they do and then they can take this cash and give it away to the shareholders"
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Dividends are typically paid quarterly, providing shareholders with cash deposits simply for owning stock.
"Dividends are generally paid out once every 3 months meaning once every quarter and this is Cash they just deposit into your bank account for doing nothing except owning the company"
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Building significant wealth and cash flow through investments requires consistent, long-term contributions over decades, rather than a single lump sum investment.
"the goal is to invest $100 one time and call it quits the goal is to invest money every week every two weeks every month month after month year after year decade after decade and that's how you start to accumulate more and more wealth and more and more cash flow through any of your Investments"
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Investment opportunities are best identified through deep financial education, as widespread news coverage often indicates that the primary growth phase has already passed.
"if you're hearing about it on the news then you've already missed the big bull run the big rush and if you really want to be able to find the opportunities this is where you have to get a little bit deeper and granular in understanding your own Financial education"
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Passive investors allocate their funds to diversified investment vehicles like funds, rather than selecting individual companies.
"a passive investor is somebody who's not investing in individual companies they're investing in a fund"
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Index funds, mutual funds, and ETFs are all types of investment funds that hold baskets of companies, operating with similar principles despite minor distinctions.
"there's a few different types of funds you have index funds mutual funds ETFs all three of these work similarly with some nuanced differences but they all work the same in the sense that there are all different types of funds or baskets of companies that you invest in"
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The VTI ETF offers diversified exposure to the entire US stock market, functioning as an alternative to investing in individual stocks.
"there is an ETF a fund called vti if you go and invest in this one ETF you're getting exposure to the total stock market so instead of investing in every stock out there you can invest in this fund and get some exposure to the United States stock market"
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The SPY ETF provides investment exposure to the 500 largest companies listed on the stock market, simplifying investment in this group.
"there's another fund called SP why this gives the exposure to the SNP 500 the S&P 500 is a group of the 500 largest companies on the stock market so now instead of going out and investing of all 500 companies you can just invest in a fund like spy"
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The QQQ fund offers investment exposure to the NASDAQ index, allowing investors to participate in this group of companies.
"there's a fund called q q q which gives the exposure to the NASDAQ you might have heard of this index or group of companies called the NASDAQ well if you want to invest in it you can just invest in a fund called the QQQ"
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Successful investing requires understanding financial trends, consumer behavior, and industry growth potential for the long term, not just current news.
"the key is this understanding what it is that you want to invest in and this is where it's important for you to keep up with what's happening in the financial news but even more than that the financial Trends because that helps you understand where is money going where are consumer habits going and where are behaviors going because you want to be investing in money where the money is going you want to be investing in an industry that's growing in the next 2 years 10 years 20 years not that's going to be bankrupt in the next 10 years"
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Market fluctuations are normal; long-term investors with sound assets should avoid day-to-day portfolio monitoring to prevent anxiety.
"markets go up and markets go down and a lot of times people invest their money thinking that I'm going to make a lot of money in 6 months and you're constantly watching your portfolio seeing what your portfolio is doing today and tomorrow the day after that and it's going to give you all this anxiety but what you got to remember as markets go up markets go down and if you're investing for the long term and if you have a good asset well you don't need to monitor it day by day"
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Market crashes, while frightening, present opportunities for financially educated and prepared individuals who understand market trends.
"we've seen a recession in our economy every decade for the last century and we're going to continue to see recessions we're going to continue to see Market crashes now Market crashes are scary because everybody panics people freak out but they also create opportunity and they create opportunity only for those that are financially educated prepared and understand the trends"
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During market crashes, financially educated individuals capitalize by purchasing quality investments at significantly reduced prices, while others panic and sell.
"when Market crashes happen and we've seen well quite a few in the last couple of decades we saw one in 20120 2008 2000 and every time we see a market crash the same thing happens people panic and they sell and the financially educated come in and they buy good Investments for pennies on the dollar"
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Wealth is built by investing consistently through market ups and downs, rather than attempting to time the market.
"just understanding look markets go up and down you can't time the market you want to be able to win when the markets are up and down that's where the wealth is built"
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Financial preparedness involves having cash reserves to both safeguard against downturns and capitalize on investment opportunities.
"that means you have to be prepared that means you have to be financially prepared you have to have cash to be able to protect you but also be able to capitalize on opportunities"
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Financial education is crucial for understanding what to invest in, how to analyze investments, and the practicalities of investing.
"you need the financial education right you need to know what do you invest in how do you analyze an investment how do you actually invest your money that's what Financial education is all about"
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Investment strategies should prioritize industries with demonstrated growth and a positive future outlook.
"you want to be investing your money into an industry that is growing and that will continue to grow in the future"
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Investment returns can be generated through appreciation (increase in asset value) or cash flow (payments received for owning the asset).
"you can get paid with appreciation or you can get paid with cash flow appreciation is when the markets go up and your stocks or Investments go up cash flow is when you get paid just for owning the Investments"
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Achieving substantial dividend income requires significant capital and time, as a 3% annual yield on a million dollars results in $30,000 annually.
"practically speaking it's going to take a long time before you get any significant amounts of dividends I mean if your fund is paying you 3% a year in dividends you invest a million do you're only making $30,000 a year"
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Consistent, long-term investing of small amounts over an extended period is the primary method for building significant wealth.
"the way that you really build wealth is by investing a little bit of money today a little bit of money next week a little bit of money the week after that a little bit of money the week after that and after that and after that you do that month after month year after year decade after decade"
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Many individuals lack the patience for long-term investing, as the initial years typically yield negligible returns.
"but most people don't have the patience to wait 10 years to really see any big returns because the reality is the first 3 years they're pretty much negligible I mean it's there pretty much nothing that you're going to get"
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Individuals who acquire real estate with excessive debt and insufficient knowledge often end up selling their properties at steep discounts, benefiting more experienced buyers.
"those have been the best deals ever not for you for me some of the best deals that I have purchased were from people that have purchased properties with way too much debt with way little education to know what they're doing and then the banks force them to sell their properties at a huge discount to somebody who has more cash like me"
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To invest in real estate and operate it independently, a significant cash down payment (at least 30%) and reserve funds are crucial due to the high risks associated with low or no debt financing.
"if you want to invest in real estate and you want to own and operate the property yourself you got to have some cash period if you're going to do it with 0% debt understand it is so risky have some people done it successfully yes I'm sure they have but it is so much more risky you got to have some skin in the game which means if you want to buy this property you better have at least 30% to use as the down payment and some extra cash to protect you"
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Real estate investment involves purchasing properties not for personal use, but to generate rental income from tenants who occupy or utilize the space.
"the way real estate investing works is you buy this property it could be a home it could be an apartment complex it could be a commercial building it could be an office building it could be a retail building it could be any type of property but the reason why you're buying it is not for you to live in yourself and to use yourself you're buying it so somebody else can live there or use your property and pay you rent"
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The speaker's personal goal for real estate investment is a 7% cash-on-cash return, translating to $10,500 annual profit on a $150,000 all-cash property after all expenses.
"for me my goal is a 7% cash on cash return which means if I'm buying this $150,000 property all cash I put 150 grand out of my bank account to buy this property I want a 7% return which would be $10,500 in profit every year for owning this property this after paying all my expenses after pay for the property taxes the insurance the maintenance the management fees and the vacancy"
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While expensive markets like Los Angeles or Miami may not offer favorable real estate deals, areas in the Midwest, such as Detroit, can provide opportunities for profitable property investments.
"there are parts of the country in the united states that allow for this you might not be able to find it in Los Angeles you might not be able to find it in Manhattan you might not be able to find it in Austin you might not be able to find it in Miami but guess what you can find it in the midwest I'm in Detroit"
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Real estate investors can benefit from tax advantages, including depreciation deductions, which allow them to offset taxable income against the property's value.
"you get some tax benefits because if you make $10,000 with a profit you also get to tell the IRS hey my property is one year older so I don't want to pay taxes on all $10,000 you get a depreciation dedu C you get to write off a piece of the property value against your income so you don't have to pay taxes on all the income that you generate"
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Real estate professionals should focus on their role as investors, delegating day-to-day property management tasks to hired professionals to concentrate on acquiring more deals.
"I don't recommend you go out and become a manager of the property and you start doing all the leasing and the the repairs and all the day-to-day stuff with management because you want to be an investor not a manager you can hire a manager you want to spend your time focus on energy being an investor and acquiring more deals"
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A 'decade of sacrifice' involves dedicating ten years to earning more and spending less, with the goal of accumulating assets.
"I call it a decade of sacrifice and I know it's hard but a decade of sacrifice is you work to spend less and earn more for 10 years that way you work to accumulate these assets"
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Owning rental properties can generate passive income, with property management companies handling deposits directly into bank accounts without requiring active work.
"if you own a rental property guess what you can get paid on the first of every month without having to go to work your property management company just deposits a check into your bank account"
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Dividend payments, received quarterly, are notified to investors via account deposit alerts, such as a $428 deposit.
"with your dividends every 3 months you get another check you get a notification $428 was just deposited into your account"
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Using other people's money for investment allows for retaining profits after paying interest, but incurs significant risk of losing personal capital and still owing the borrowed amount plus interest if the investment fails.
"you can use all PM other people's money use somebody else's dollars to then invest that way now you can pay them back a little bit of interest and then you get to keep the profits but when it doesn't work that means now not only did you lose your money that you put into your investment but now you still owe these people back their money plus interest"
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