[{"@context":"https:\/\/schema.org\/","@type":"Article","@id":"https:\/\/moneydoneright.com\/passive-income\/stock-investing\/investing-for-beginners\/#Article","mainEntityOfPage":"https:\/\/moneydoneright.com\/passive-income\/stock-investing\/investing-for-beginners\/","headline":"Investing for Beginners","name":"Investing for Beginners","description":"Table of Contents ToggleIs Now a Good Time to Start Investing?An Investor’s MindsetHow Much...","datePublished":"2020-08-14","dateModified":"2021-09-17","author":{"@type":"Person","@id":"https:\/\/moneydoneright.com\/author\/logan-allec\/#Person","name":"Logan Allec, CPA","url":"https:\/\/moneydoneright.com\/author\/logan-allec\/","identifier":4,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Money Done Right","logo":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","width":488,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/investing-for-beginners.jpg","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/investing-for-beginners.jpg","height":460,"width":1900},"url":"https:\/\/moneydoneright.com\/passive-income\/stock-investing\/investing-for-beginners\/","video":[null,{"@context":"http:\/\/schema.org\/","@type":"VideoObject","@id":"https:\/\/www.youtube.com\/watch?v=oAd4Jfzjpq0#VideoObject","contentUrl":"https:\/\/www.youtube.com\/watch?v=oAd4Jfzjpq0","name":"Investing for Beginners ($100 - $1,000) | Stocks, ETFs, Index Funds","description":"Investing is putting your money to work so it can make more money.\n\nSee, spending money makes other people rich, but investing money makes YOU rich.  And who would you rather make rich \u2014 yourself or other people?  Unless you've taken a vow of poverty, hopefully the answer is yourself!\n\nThe hard truth is that the only way to build lasting wealth is by investing.  Unfortunately, solid investment strategies are not something taught in most schools or families in the United States.  Fortunately, however, investing smart isn't some mysterious science that takes years to master.\n\nEven if you're a beginner, you can get started investing the right way right now with just $100.\n\nIn this video, I go over foundational concepts about investing for beginners.\n\nFREE STOCKS:\n\n\u27a1\ufe0f WEBULL (2 Free Stocks): https:\/\/moneydoneright.com\/webull\/\n\n\u27a1\ufe0f ROBINHOOD (1 Free Stock): https:\/\/moneydoneright.com\/robinhood\n\n\u27a1\ufe0f M1 FINANCE ($10 Bonus): https:\/\/moneydoneright.com\/m1finance\/\n\nINVEST IN REAL ESTATE WITH $500: https:\/\/moneydoneright.com\/fundrise\/\n\nTABLE OF CONTENTS:\n\n0:00 Is Now a Good Time to Start Investing?\n1:59 An Investor's Mindset\n7:35 The Two Best Investments You Can Possibly Make\n10:20 Stock Market Basics\n12:44 You Don't Have to Pick Stocks\n16:37 How to Buy Stock (Walkthrough)\n18:34 Listen to Warren Buffett\n19:56 A Solid $1,000 Investment\n\nYOUTUBE LINKS:\n\n\u27a1\ufe0f WARREN BUFFET INTERVIEW ABOUT INVESTING IN YOURSELF: https:\/\/youtu.be\/mD-o8t8iP1M\n\n\u27a1\ufe0f WARREN BUFFET INTERVIEW ABOUT INDEX FUNDS: https:\/\/youtu.be\/10QoUi2PmNs\n\n\u27a1\ufe0f CHECK OUT OUR FAMILY CHANNEL: https:\/\/youtube.com\/TheAllecFamily","thumbnailUrl":["https:\/\/i.ytimg.com\/vi\/oAd4Jfzjpq0\/default.jpg","https:\/\/i.ytimg.com\/vi\/oAd4Jfzjpq0\/mqdefault.jpg","https:\/\/i.ytimg.com\/vi\/oAd4Jfzjpq0\/hqdefault.jpg","https:\/\/i.ytimg.com\/vi\/oAd4Jfzjpq0\/sddefault.jpg","https:\/\/i.ytimg.com\/vi\/oAd4Jfzjpq0\/maxresdefault.jpg"],"uploadDate":"2020-06-27T22:30:03+00:00","duration":"PT22M40S","embedUrl":"https:\/\/www.youtube.com\/embed\/oAd4Jfzjpq0","publisher":{"@type":"Organization","@id":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA#Organization","url":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA","name":"Logan Allec","description":"Logan Allec is a CPA and the founder of Choice Tax Relief, which specializes in helping people with their IRS and state tax debt.","logo":{"url":"https:\/\/yt3.ggpht.com\/43_VKqrbO06RGMcxfdQbDXosrkVRq1yf5QgSQEiR4ILUGWV9fJtTh0o2ftYMYqVo6PwnEOPRdg=s800-c-k-c0x00ffffff-no-rj","width":800,"height":800,"@type":"ImageObject","@id":"https:\/\/www.youtube.com\/watch?v=oAd4Jfzjpq0#VideoObject_publisher_logo_ImageObject"}},"potentialAction":{"@type":"SeekToAction","@id":"https:\/\/www.youtube.com\/watch?v=oAd4Jfzjpq0#VideoObject_potentialAction","target":"https:\/\/www.youtube.com\/watch?v=oAd4Jfzjpq0&t={seek_to_second_number}","startOffset-input":"required name=seek_to_second_number"},"interactionStatistic":[[{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=oAd4Jfzjpq0#VideoObject_interactionStatistic_WatchAction","interactionType":{"@type":"WatchAction"},"userInteractionCount":15944}],{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=oAd4Jfzjpq0#VideoObject_interactionStatistic_LikeAction","interactionType":{"@type":"LikeAction"},"userInteractionCount":1155}]},{"@context":"http:\/\/schema.org\/","@type":"VideoObject","@id":"https:\/\/www.youtube.com\/watch?v=10QoUi2PmNs#VideoObject","contentUrl":"https:\/\/www.youtube.com\/watch?v=10QoUi2PmNs","name":"Warren Buffett: Buying And Holding Index Funds Has Worked | CNBC","description":"Berkshire Hathaway CEO Warren Buffett speaks to CNBC's Becky Quick about this year's shareholder meeting and his best long-term investing tip.\nFor more of Warren Buffett's wit and wisdom visit https:\/\/Buffett.CNBC.com\n\u00bb Subscribe to CNBC: http:\/\/cnb.cx\/SubscribeCNBC\n\nAbout CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.\n\nConnect with CNBC News Online\nGet the latest news: http:\/\/www.cnbc.com\/\nFind CNBC News on Facebook: http:\/\/cnb.cx\/LikeCNBC\nFollow CNBC News on Twitter: http:\/\/cnb.cx\/FollowCNBC\nFollow CNBC News on Google+: http:\/\/cnb.cx\/PlusCNBC\nFollow CNBC News on Instagram: http:\/\/cnb.cx\/InstagramCNBC\n\nWarren Buffett: Buying And Holding Index Funds Has Worked | CNBC","thumbnailUrl":["https:\/\/i.ytimg.com\/vi\/10QoUi2PmNs\/default.jpg","https:\/\/i.ytimg.com\/vi\/10QoUi2PmNs\/mqdefault.jpg","https:\/\/i.ytimg.com\/vi\/10QoUi2PmNs\/hqdefault.jpg","https:\/\/i.ytimg.com\/vi\/10QoUi2PmNs\/sddefault.jpg","https:\/\/i.ytimg.com\/vi\/10QoUi2PmNs\/maxresdefault.jpg"],"uploadDate":"2018-05-07T14:30:58+00:00","duration":"PT3M15S","embedUrl":"https:\/\/www.youtube.com\/embed\/10QoUi2PmNs","publisher":{"@type":"Organization","@id":"https:\/\/www.youtube.com\/channel\/UCvJJ_dzjViJCoLf5uKUTwoA#Organization","url":"https:\/\/www.youtube.com\/channel\/UCvJJ_dzjViJCoLf5uKUTwoA","name":"CNBC","description":"Welcome to the official YouTube channel for CNBC. 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Experience special sneak peeks of your favorite shows, exclusive video and more.\n\nFor real-time news updates from around the world, visit: http:\/\/www.cnbc.com\n\nDon\u2019t miss a market moment, Stream CNBC+ now: http:\/\/www.cnbc.com\/WatchCNBCPlus\n\nFor CNBC's International YouTube channel, visit: http:\/\/www.youtube.com\/cnbcinternational","logo":{"url":"https:\/\/yt3.ggpht.com\/sS9OtcPLL1vQNfGnRudALfNzfpHVy7qwRRKTYF4HEfyICGTfXfHsfP2hhIPgKK0iBxW7p1lH1g=s800-c-k-c0x00ffffff-no-rj","width":800,"height":800,"@type":"ImageObject","@id":"https:\/\/www.youtube.com\/watch?v=10QoUi2PmNs#VideoObject_publisher_logo_ImageObject"}},"potentialAction":{"@type":"SeekToAction","@id":"https:\/\/www.youtube.com\/watch?v=10QoUi2PmNs#VideoObject_potentialAction","target":"https:\/\/www.youtube.com\/watch?v=10QoUi2PmNs&t={seek_to_second_number}","startOffset-input":"required name=seek_to_second_number"},"interactionStatistic":[[{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=10QoUi2PmNs#VideoObject_interactionStatistic_WatchAction","interactionType":{"@type":"WatchAction"},"userInteractionCount":884911}],{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=10QoUi2PmNs#VideoObject_interactionStatistic_LikeAction","interactionType":{"@type":"LikeAction"},"userInteractionCount":10025}]}],"about":["Stocks"],"wordCount":2772,"keywords":["schema"],"articleBody":"Table of ContentsToggleIs Now a Good Time to Start Investing?An Investor’s MindsetHow Much Should I Invest?The Two Best Investments You Can Possibly MakeStock Market BasicsYou Don’t Have to Pick StocksListen to Warren BuffetA Solid $1,000 InvestmentIs Now a Good Time to Start Investing?Kimberly Smith tweeted me, \u201cHello Mr. Allec, I was wondering about investing. If I had $1000.00 to invest for my first time what do you suggest. I believe you are one of the few to ask, going by your honesty and integrity.\u201dSo Kimberly, I must say that I applaud you for thinking about getting started with investing, I don\u2019t know how old you are, but I will say that the best time to start investing was 10 years ago, literally, maybe 11 years ago but the second-best time is right now.If you\u2019re young, this is especially important because you have time on your side, money you invest today has decades and decades to grow to potentially make you a millionaire if you just stay the course.Also, if you\u2019re young, you have time to recover from mistakes.If you have decades until you need to cash in on your investments, then you can throw all your investments dollars into the stock market today.A stock market that many would call inflated and artificially pumped up, and the stock market could crash tomorrow, but guess what? In 30 years when you need to cash out on your investments because you want to retire? You\u2019re going to be OK.If you\u2019re older, you have to be a little bit more careful because you don\u2019t necessarily have those working years ahead of you to make up for dips in the market.An Investor’s MindsetSo a little bit about my story, I was not exposed to investing early on in life, no one around me invested, my parents did not invest. I didn\u2019t know a whole lot about how to get started investing, so I just read books and blogs.And after a while it hit me that all these books and blogs were basically saying the same thing.Spend Less and Invest MoreSpend less than you make and invest the difference as much as you can after you cover your necessary living expenses and have a three-to-six-month emergency fund set aside. Just stay the course, keep it simple, make this much, spend this much, invest this much, and hopefully the this much is at least 10% of how much you make.And eventually, hopefully, you\u2019ll get more excited about the this much than about the amount you spend. Our culture wants you to spend, spend, spend as much as you can, to be a consumer, to make other people rich.What You Invest Makes You RichThis, what you spend, this makes other people rich.This, what you invest, makes you rich. So prioritize your own wealth and making yourself rich before you prioritize making other people rich.I\u2019m not saying you don\u2019t pay your bills, pay your bills, but if you have the choice between spending fifty bucks on some gadget to make somebody else rich or putting fifty bucks into your investment account to make yourself rich, I would say, strongly consider doing the latter rather than the former.This isn\u2019t to say you can\u2019t enjoy life, but just realize that there is a real opportunity cost to spending rather than investing. That\u2019s the first mindset you need to adopt, the mindset of an investor, the mindset of a wealth-builder, a wealth-creator, not the mindset of a consumer.I want you to get more excited about investing than about spending, it can happen. I honestly get more excited about putting more money into my investment accounts and making investments than I do about spending money, it\u2019s exciting to me, it\u2019s a thrill.Now, I took this to the extreme in my 20s. Even though I was making good money, guess where I lived.I shared a room with three other guys, a room, seven guys total in the house, I shared a room with three other guys to pay less than $300 a month for rent 10 minutes away from work.This allowed me to buy my first four-unit property in my 20s, I was able to save that down payment, but I\u2019m kind of getting ahead of myself here.Now, of course, sharing a room with three other people who aren\u2019t related to me wouldn\u2019t fly now that I have a family, and I know a lot of you aren\u2019t in a position where you can take the extreme measures that I did, but my point is that sacrifice is required, whatever that looks like for you.How Much Should I Invest?So right now, even before you know what to invest in, commit to a percentage of your monthly income, commit to putting that away, maybe it\u2019s 5% right now, hopefully 10%, maybe eventually 15%, that\u2019s up to you, whatever it is, it will require sacrifice.But get into that habit of putting that money away, if you don\u2019t have an emergency fund right now, put that toward an emergency fund of at least three months\u2019 worth of living expenses, six I would say if others depend on your income and\/or if your monthly income is unstable.Build an Emergency FundBecause what you don\u2019t want is to just throw everything into the stock market without an emergency fund, and then the economy tanks, and you lose your job, and your car breaks down and you have to pay $1,000 to fix it, and you don\u2019t have an emergency fund.You could say, \u201cWell, OK, I\u2019ll just cash out some of my stocks.\u201d But the market crashed, so you\u2019re down 50%, and usually that wouldn\u2019t be a big deal if the market crashes because you\u2019re investing for the long-term, but if you need money today to pay to fix your car, you\u2019re going to have to cash out at a loss which will significantly affect your future returns.That\u2019s why you should have an emergency fund. So commit to putting that money away now, determine the percentage, and stash it away. Once you have that emergency fund of three to six months of living expenses, and that\u2019s everything, not just your rent or your mortgage, but everything, your food, the utilities, insurance, all of it.Pay Off High-Interest DebtWhen you have that emergency fund built, and assuming you don\u2019t have credit card debt because credit cards could be charging you north of 20%.If you have credit cards or high-interest debt, pay that off first because that is a guaranteed gain of 20% on an annualized basis or whatever the APR is.I\u2019d rather you get a guaranteed 20% or 15% paying off your credit cards or other high-interest debt than a potential 7-10% in the long run in the market.Now, when you\u2019ve got your emergency fund and you\u2019ve paid off that high-interest debt, now you\u2019re ready to invest.The Two Best Investments You Can Possibly MakeWe\u2019ll talk about stocks in a bit, but first let me just say this: the number one investment you can make is in yourself.It sounds cheesy, but it\u2019s true.Investing in YourselfArguably the best investor in the world is the billionaire Warren Buffett, and don\u2019t feel bad, you can\u2019t really compare yourself to him.He had privileges that most people don\u2019t, his dad was a Congressman as well as an investor himself, so if you\u2019re not starting with that kind of family background, you can\u2019t really compare yourself to a guy like Warren Buffett, nevertheless, he has wisdom to share with all of us.Just because someone comes from a position of privilege doesn\u2019t necessarily mean that they don\u2019t have wisdom to share, and here\u2019s some wisdom from Warren Buffett:https:\/\/youtu.be\/mD-o8t8iP1MBuffett said that investing in yourself is the best investment you can possibly make.And this doesn\u2019t necessarily need to cost anything, we have YouTube and blogs and things like this, always be looking for ways to learn more to improve yourself and your knowledge and your skills.The more you learn, the more you earn, right.Investing in Starting Your Own BusinessNumber two investment, and this is optional, it\u2019s not for everybody, but don\u2019t discount the power of owning your own business, if you can meet other people\u2019s needs or wants and get paid for it, that can potentially put more money in your pocket in the long run than just throwing the money into the market.Just to give you some perspective, this YouTube channel did not make me much money before April of this past year.But then I saw a need, people were confused about the stimulus package passed in March. So I created the best, most accurate content I could regarding the stimulus leveraging my background as a CPA, and as a result, this YouTube channel has made a good amount of money for me.Now, you don\u2019t have to have specialized knowledge to make money on YouTube, we have a family channel that recently got monetized that is making us a little bit of money, and we\u2019re basically just documenting our lives, and I have no videography background whatsoever.But this is not an entrepreneurship, I may tell my entrepreneur story at another point, but suffice it to say that starting your own business is another great investment, though obviously one that carries more risk.Stock Market BasicsWhat is a stock?A stock is a partial ownership in a company.So if you go out today, set up a brokerage account and some even give you a bonus to sign up with them, but if you go to one of these and set up a brokerage account, and buy a share of McDonald\u2019s stock, congratulations, you own .000, a bunch of zeroes, .0001 percent of McDonald\u2019s.So every time someone purchases a Big Mac, you make 0.00000000000000, a bunch of zeroes .01 cents.Generally speaking, if the economy is doing well, and McDonald\u2019s is doing well, and they\u2019re beating Wall Street analysts\u2019 predictions of their earnings and all that, your share of McDonald\u2019s stock will probably go up in value.But if the economy isn\u2019t doing well, if the market as a whole is freaked out about recession, war, or virus, and\/or McDonald\u2019s itself isn\u2019t doing well on a micro level, then the share of McDonald\u2019s will probably go down in value.That\u2019s really simplifying it, but it\u2019s a general picture.You Don’t Have to Pick StocksNow, stock picking can be very tricky and stressful because there are literally thousands of stocks for you to choose from to invest in, thousands of companies, and how the heck do you know what the economy is going to look like later this year or next year or five years from now?And how the heck do you know about, not just the economy as a whole, but if a given company is going to do well later this year or next year or five years from now?There are signs, but it\u2019s impossible to say for sure, no one knows the future.But here\u2019s the good news: you don\u2019t have to pick stocks, you don\u2019t have to worry about if this stock is the best investment or that stock is the best investment for you.Investing in Index FundsYou can invest in a bunch of stocks at once by buying something called an index fund.So just like you can buy McDonald\u2019s stock, you can also buy the Vanguard Consumer Discretionary Index Fund.And if you buy into this index fund, which is a mutual fund, you can invest in 296 different consumer discretionary stocks, what does consumer discretionary mean, that just means non-essential goods and services, right, you need groceries, you need toothpaste — so groceries are toothpaste are known as consumer staples — but you don\u2019t need fast food, restaurant food, you don\u2019t need McDonald\u2019s — that\u2019s consumer discretionary.So you can see that this Vanguard Consumer Discretionary Index Fund has 296 stocks, and you can look at its top 10 holdings, and you will see that McDonald\u2019s is the #3 holding in this fund, along with other major consumer discretionary brands like Amazon, Home Depot, Nike, etc.So by purchasing this index fund, this Vanguard Consumer Discretionary Index Fund, you are essentially investing in all of these different companies at once.Some will go up, some will go down, sometimes all of them go up, sometimes all of them go down, but in the long run, in the aggregate, even if some of these companies go bust, in the long run, this pool of 296 stocks, and the population of stocks may change over the years.But my point is that in the aggregate, this Vanguard Consumer Discretionary Index Fund should go up in the long run.And you are diversifying among 296 companies rather than putting all your eggs in one basket.Now, what\u2019s a problem with this Vanguard Consumer Discretionary Index Fund? You need a minimum of $100,000 to invest in this mutual fund.Investing in ETFsBut don\u2019t be sad because there are things called ETFs or exchange-traded funds, and these ETFs track the same thing as these mutual funds, but at a much lower entry point.So if you scroll up on this Vanguard Consumer Discretionary Index Fund page, it says, \u201cAlso available as an ETF (starting at the price of one share).\u201dSo how much is one share of this ETF? It\u2019s about $200 right now, and you can see it tracks the same things, 296 stocks.So you can buy these ETFs in your brokerage account, if you have Webull, and you can get free stock with Webull.Listen to Warren BuffetYou can buy these index fund ETFs just like any other stock, and here\u2019s what Warren Buffett has to say about index funds:Warren Buffett: Buying and Holding Index Funds has WorkedYou\u2019re not hearing it from me, folks. You\u2019re hearing it from one of the top 5 richest people in the world and arguably the greatest investor in the world. Buffett didn\u2019t come up with something revolutionary like Amazon or Microsoft, he made his billions simply by investing, so that\u2019s why he\u2019s called arguably the greatest investor in the world.And he said it, index funds.A Solid $1,000 InvestmentNow, there are also index funds that don\u2019t track one particular industry, they track the market as a whole, or maybe 500 large publicly-traded U.S. companies like the S&P 500.So, if you really just want to invest in something, just to get your feet wet, I would say start with an index ETF like VTI, this is a Vanguard ETF that basically tracks the entire U.S. market, tracks 3,493 stocks.If Kimberly, if you said “oh I have $100,000 to invest”, I might be a bit more particular about exactly what to put money into, and even that would be difficult because I don\u2019t know your background, your income, your age, your risk tolerance.But since we\u2019re just talking about $1,000 here, I just want you to build a habit, the habit of investing.VTI would be a great long-term pick, it\u2019s basically just betting on the United States in the long run.The stock market could very well crash tomorrow and take VTI or any other stock or fund down with it, so if that happens, don\u2019t come back here and comment, \u201cWell, you said it was a good investment, but the market crashed,\u201d look, I\u2019m saying it\u2019s a good investment in the long term, remember, you\u2019re investing for decades, not for weeks or months.If you want fast money, start a business, don\u2019t play the stock market to make fast money.And if the stock market goes down, view that as an opportunity to buy stocks on the cheap. This last COVID-19 downturn, I dollar cost averaged in almost every day, almost every day I bought stocks.But don\u2019t let the crashes in the market depress you, view them as a fire sale to buy stocks cheap."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Passive Income","item":"https:\/\/moneydoneright.com\/passive-income\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Stock Investing","item":"https:\/\/moneydoneright.com\/passive-income\/\/stock-investing\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"Investing for Beginners","item":"https:\/\/moneydoneright.com\/passive-income\/stock-investing\/investing-for-beginners\/#breadcrumbitem"}]}]