You might have a bit of money saved, it's probably not enough for a house, but you decide you should probably invest it in something.

You could invest in stocks, shares, equities, government bonds, corporate bonds, real estate, foreign exchange, crypto, NFTs, futures, fine art, watches, there seems to be tons of stuff out there.

And you might have even seen those ads on YouTube from the gurus talking about day trading and trading foreign exchange and how you could make money in that way through investing.

And on top of all of this confusion, there's the very real fear that you might lose all of that money that you've worked so hard to save up.

So in light of all of that, this is the ultimate guide to investing for beginners.

And we're going to split this video up into four parts, which are going to be timestamped down below.

So you can skip around if you feel like it.

Part one is going to be about the basics and the philosophy behind investing.

Part two is about why and how to invest your money in stocks and shares.

In part three, we're going to be addressing common fears and questions and concerns about investing.

Like what if I lose all my money?

And then in part four, we're going to talk about fast lane investing, which is an alternative approach to the traditional investing thing to build wealth.

Part one, the philosophy and basics of investing.

So let's start by talking about what is the point of investing.

The point of investing is for your money to be able to make more money.

So let's say you start off with a thousand dollars that you saved up through your hard earned labor.

Now you could put that money under your mattress, or you could put it in a bank current account.

But the problem with that is that there's this thing called inflation that you might have been reading about on the news.

And so your thousand dollars might be able to buy you a MacBook Air right now.

But a few years from now, when inflation goes up, that MacBook Air is going to cost $1,200.

And so over time, your money loses its purchasing power, which is why you want to ideally invest in something because when you invest in something, your money grows magically on its own.

More on that later.

And that means you can combat the effects of inflation.

And that brings us to the next question, which is how does the money magically grow in the first place?

And generally, the philosophy behind investing is that you buy something now and that something makes you more money over time.

And there are two ways in which the thing that you buy can make you more money.

Let's say you buy a house.

It costs a certain amount of money to buy a house right now.

But there's two ways the house makes you money.

Number one, you can rent the house out.

And so you're getting rental income every month.

And secondly, hopefully, in theory, the value of the house will also rise over time.

If you hadn't bought the house and you just had that money sitting in a bank account, then over time, you're going to be losing money because inflation is going to eat away at your savings.

Now, houses are an interesting example because you get rental income.

And it's very easy for us to imagine what that looks like.

You're like, everyone pays rent.

And so you're making money.

But with most other asset classes, you don't have this equivalent of rental.

Instead, a lot of these things you're buying and then you're going to sell them for a higher price over time.

The main exception to this is some stocks and shares, which we're going to talk about a little bit later in the video.

And these asset classes is a long list of things that you probably have heard of, but you might not be entirely familiar with.

You know, we've got stocks, shares and equities, which are kind of the same thing.

We've got hedge funds.

We've got index funds.

We've got bonds, government bonds, corporate bonds.

You might have heard some people investing in watches and in fine arts.

You've probably heard of people investing in crypto and either gaining lots or losing lots.

In my case, losing quite a bit of money because crypto has crashed recently.

And a lot of this can get very complicated quite quickly.

And so we're going to simplify things.

And for the rest of this video, we're going to talk about investing in stocks and shares, because that is the main kind of investing that normal people like you and me can unlock fairly easily.

You don't need to have large amounts of money, which you need to invest in a house.

You don't need to take on huge amounts of risk and gambling and stuff like you need to do with crypto.

And you don't need to be an accredited investor or anything like you need to invest in like angel investing companies or all this fun stuff.

So stocks and shares are kind of the basics of investing.

And usually when people talk about investing their money, what they're referring to is I want to buy some Tesla or I want to buy some Netflix or I want to buy some Amazon.

And so we're going to talk about that.

Part two, why and how to invest in stocks and shares.

So when you're investing in stocks and shares, for example, you're basically buying a percentage ownership in the company that you're investing in.

So let's say I wanted to buy shares in Apple, for example, Apple is a publicly traded company, which means the public can trade Apple stock.

Now in a dream world, I would just be able to go to apple.com forward slash and buy and I'd be able to buy a stock of Apple.

And now I own some percentage of the company.

In reality, I can't do that directly.

I have to go through a middleman, which we call a broker.

But once I've gone through this middleman platform, I now personally own a piece of Apple.

Now I can make money from stocks and shares in two different ways.

Firstly, I can make money because I'm hoping the price of Apple or whatever stock I've invested in is going to rise over time.

So 10 years later, I could sell it for a lot more money than I bought it, fingers crossed.

But the second way in which you can make money through stocks and shares is similar to how you make a rental income on a house, because certain companies will pay what they call dividends.

So for example, in the UK, there's a company called BT, British Telecom, and they pay dividends.

So when you own a piece of BT, you're not just hoping that the price will rise over time.

They're also literally paying out some of the profits that the company makes to their shareholders.

And so if for example, you were ridiculously rich, and you owned 20% of BT, then every time they declare a dividend, which might be every three months, you would get 20% of the profits that they are distributing to shareholders.

In reality, you and me, we're probably not going to own 20% of a huge company like that, because that would cost absolutely billions.

But instead, we might get you know, $10 $15 $20 like $5 $5 47 here and there.

If we invest in lots of companies that are paying out dividends, then it feels like you've got this free kind of rental income.

But really, it's profits from these companies coming into your account every month.

And that's pretty cool.

So at this point, okay, cool, you can now buy stocks in these different companies, you can own a small percentage of said company.

But how are you supposed to choose which companies should you put all your money in Apple or Netflix or on Disney Plus?

Or should you go with Shell or British Petroleum or Ralph Lauren or like, I don't know, Unilever or you know, these brands that you might be familiar with.

Now at this point, people have varying different opinions on the matter.

But I'm going to cite Warren Buffett's opinion on this, which is also my opinion on this, which is that if you're a beginner to investing, unless you are legitimately a financial professional who literally does this full time for a living, you should not try and pick stocks.

The average person will not know enough to know which stocks to buy.

They won't know enough to know when to buy them.

But they don't have to.

Because they can buy all of America through an index fund.

Because realistically, you and me, we're not really going to have an insight into, oh, I reckon Apple's going to do really well because whatever, or I reckon Disney's going to do really well because whatever.

There are literally financial professionals whose full time day job it is to do that kind of analysis.

And even then, they don't get it right a lot of the time.

And so what you can instead do is instead of worrying about stock picking, what you should do, probably not financial advice, lol, is invest in an index fund.

And that begs the question, what the hell is an index fund?

Well, an index fund is a fund and a fund is a basket, like a group of stocks and shares or other things, but stocks and shares, for example.

And the index component means that this fund tracks a particular stock market index.

For example, in the US, there is a really famous index fund called the S&P 500.

And this is basically the top 500 biggest companies in the US.

And you can see here, these are the components of the S&P 500 right now.

So Apple makes up 6.4% of the S&P 500.

It's a big company.

Then we've got Microsoft, Amazon, Alphabet, which is Google, Berkshire Hathaway, which is Warren Buffett's company, Alphabet, Class C, which is also Google, Nvidia, Tesla, ExxonMobil, you might be familiar with quite a lot of these companies.

But if we Ralph Lauren and Hasbro, and didn't realize Hasbro was in the S&P 500.

But you can see that Hasbro makes up 0.21% of the S&P 500 compared to Apple's 6.4%, because those companies are hugely different in, I guess, market cap or valuation, right?

So the point of the S&P 500 is that it gives you a single number that you can graph over time of like how valuable the US stock market is.

Because to be honest, most of the value of the US stock market is in these 500 companies.

And so if the value of these 500 companies is slowly increasing over time, which it generally does, that means the US stock market is doing well.

And these companies are doing well and life is all good.

If for example, you're in a recession where the stock market is going down, or if for example, COVID has just become a thing and the stock market has gone down.

That means that collectively people have decided that the value of these stocks is lower than it once was.

And so the graph will go down in those moments.

So what does this all mean for you and me as normal retail investors?

Well, basically what means is we can invest in an index fund.

So let's say I put $1,000 into the S&P 500 index fund.

That's very good, because it means that my $1,000 is now split between 500 of these companies.

And crucially, it's split based on the weighting in the S&P 500.

So of my $1,000 that I've just put into the S&P 500, 6.4% would be in Apple stock.

And so now I own $64 worth of Apple stock.

And that's pretty cool.

I now own a bit of Apple. 5.4% of that would be Microsoft.

So I now own $54 worth of Microsoft stock.

And 0.015% of that is going to be Ralph Lauren, which is 498th on the S&P 500.

And so I now own $14 worth of Ralph Lauren stock.

Now, this is a very good thing.

And this is what Warren Buffett recommends.

In my view, for most people, the best thing to do is to own the S&P 500.

He says that, hey, if you had an extra $100,000 to invest, you should just put it straight into the S&P 500 or some other big index fund, because over time, your money is going to track the market.

You're not trying to say, hey, I have a crucial insight into the market, and I know that Apple is going to outperform all of these other companies.

Instead, you're thinking, you know what, I'm just a normal person.

I don't have time to spend 80,000 hours a week trying to research the shit out of all this stuff.

I'm just going to kind of diversify my money across all these top 500 big companies in the US.

I think overall US companies are going to go up over time, and therefore I don't have to think too hard about this.

So what's the alternative?

Well, we talked about how you could theoretically pick stocks yourself.

So you could say, you know what, I'm going to ignore the S&P 500.

But chances are, you're not going to beat the market.

Chances are, unless you just get really lucky, you're not going to be reliably able to get the returns that you would get by just investing in all 500 of these companies.

Now, there've been a bunch of studies and surveys, and Warren Buffett even did a challenge experiment thing about this that basically show that very few funds overall actually outperform the S&P 500.

And if you've got a fund that beats the S&P 500, i.e. it does better in that year than the S&P 500 did, it's unlikely to do the same the following year.

And so a lot of funds are trying to, quote, beat the market.

But as Warren Buffett and a lot of these other people say, you cannot beat the market.

So let's just invest in the market directly.

Just put your money in an index fund and don't think too hard about it.

Every single person I know who has invested by picking stocks has lost money.

And every single person I know who has invested by just investing in an index fund has made money over time.

The next question that this raises is, okay, cool, I want to invest in a stock market index fund.

How the hell do I do that?

Do I just go on S&P 500.com forward slash buy and buy some index funds?

Again, it's not quite how it works.

You need a bit of a middleman.

And that's where these kind of online platforms come in.

Now, this is going to vary depending on whatever country you're in.

So if you want to find a stocks and shares investment platform in your country, then just Google that.

In the UK, for example, there are loads.

The ones that I personally use are Charles Stanley Direct, because that's the first one I started using in 2015.

I also use Vanguard.

Vanguard is super big and super legit.

You can check it out.

And the app that I use personally for investing in individual stocks these days is Trading212.

And in fact, incidentally, this video is now sponsored by Trading212.

This is kind of fun.