How to Invest for Beginners

So let's say you want to get started with this investing thing. You might have a bit of money saved probably not enough for a house but you think you should probably invest in this, and you read about tesla and amazon if you'd invested 10 years ago in tesla you'd be a millionaire by now or things like that. and on top of that, you have the anxiety that we know investing is risky and I don't want to lose all that money. So for that, this is the ULTIMATE GUIDE on How to get started with investing.

1. WHAT HAPPENS TO MY MONEY OVER TIME?

Inflation is generally around 2%-2.5% that means every year stuff costs about 2% more than it did before the year! now let's say you have got about $1000 in your hand right now and for the next 10 years you gonna stash it under the mattress and never look at it again, but every year the value of your money is falling. Even if you put in your savings account which gives around 0.2% interest, Which is also going in a loss in comparison with 2% inflation.

2. HOW DO WE MAKE MONEY?

Now if that savings account is giving us a 10% interest rate (hypothetically) in that if you have $100 the next year it's $110, its next year will be $121 $259 so this is very good we have more than doubled our money in 10 years. sadly these 10% interest rate accounts don't really exist, because it's just way too high and real life is not that nice. this day, savings accounts around the world offer approx 1% interest, which is you are actually losing money.

3. WHAT IS AN INVESTMENT?

An investment is something that puts money in your pocket, for example, buying a house for $100,000 and renting it for $850/month, within 10 years you'll have paid off the $100,000 that you've put in and after that, it's just the profit. but secondly, it's an investment where the value of the house will itself rise in 10 years so maybe your house price is $200,000 in 20 years, here you have made money by Capital gains. But buying a house is itself annoying, it's management, mortgage, renting and all that kind of stuff. If only there were a way of investing if you don't need to put that much amount of time and energy into managing the assets as well. That brings on to investing in Shares.

4. WHAT ARE SHARES AND HOW DO THEY WORK?

So buying shares is gonna get you close to this magical savings account. By buying a share you are buying part ownership of the company that you bought the share in. Here the Dividend thing comes where a company decides to issue a dividend as a way of returning some of its profits back to the people who have invested in the company and there you make money through dividends. The 2nd way is sort of like houses in that you get the capital gains over time. At this point, you've probably got a few questions about how much money you need to get started with.

5. HOW DO I DECIDE WHICH SHARE TO BUY?

The easy and to that is you actually don't want to figure out, you do not wanna buy individual shares. Generally speaking, to invest in individual stocks is kind of risky, but historically speaking that people were like, "OMG, this is amazing, this is a thing to invest in" and then that company went bust. So you're automatically exposing yourself to more risk, and trying to predict the future for an individual by looking at the past performance is no real indication. So the advice for beginners is to not invest in individual stocks. You should invest in INDEX FUNDS

6. WHEN SHOULD I GET STARTED?

Here the answer is pretty simple and basically all investment advice check out The Motley Fool. Basically, you should start investing as soon as possible. It doesn't matter how young or old you are! The earlier you start investing the better!

a- make sure your debt is paid off.

b- have an emergency fund in cash (3-6months)

c- don't invest money you might need in the next 3-5 years. let's say you're 24, thinking of getting a mortgage and buying a house and you need money for the deposit. Don't put that money into shares and the market because no one knows whether we might a market crash tomorrow. After checking these conditions and points, absolutely everyone should be investing something into the stock market. If you start investing from 20's it makes such a huge difference to your bottom line

7. HOW MUCH MONEY DO I NEED TO GET STARTED WITH INVESTING?

Basically, start with whatever you can with various apps and websites start with $5 or $10 and it kind of depends on which country you are in. its good to invest a small amount of money because compounding is always good and the sooner you start investing the sooner it becomes a habit. The process of making the account and researching stockbrokers in your country and figuring out how to actually do this stuff is like the most valuable thing with your time. this is basically a set it and forget it, your money will magically grow over time provided you don't touch it think, some of my friends were compulsively checking their phones "Oh crap, the stock market is going down a bit I shout take out my money to avoid loss" but then very quickly you understand your investing for a long term here.