How to Invest in Stocks for Beginners In 2025 [FREE Course]

[0:00]So, you want to invest in the stock market but you're new? Intimidated by all these fancy words, or maybe you heard it's risky and you don't want to lose all your money. No worries, we're tackling all this and more in the ultimate guide on how to invest for beginners. This is the beginner-friendly video my wish I had before I started working on Wall Street. And we're going to do this by breaking this into a few key topics. And the first one is telling you what investing is not. I still remember the first time I bought Apple stock years ago. My palms are sweaty, knees weak, arms were heavy, maybe even a bit of vomit on my sweater already. Everyone was talking about how much money they made from investing, and I was blinded by all these stories. But understand this, investing is not a get-rich-quick scheme. It is a safe and smart way to grow your money. But investing isn't just about making money, it's also about not losing it. Take this $100 bill for example. Next year, although this will still be a $100 bill, how much you can actually buy with it or its effective value will be less because of inflation. A 5% inflation rate makes your $100 effectively be worth $95 in one year and just $85 in three years. So unless you like cutting up 5% of your money every single year, investing in stocks is one the best ways to make sure this doesn't happen. The easiest way to understand how the stock market actually works is with lemons. Also, make sure you get my free investing starter kit, it has all the tools and strategies you need to start investing, link down below. So let's say you own a lemonade stand in your neighborhood called Super Lemon Drink. It's doing really well because your secret recipe is limes instead of lemons. You're confident that you can grow your super lemon drink business, but you just need more money to expand. So, you go out and ask all your friends for money. They give you what you need, and you use it to build a second lemonade stand and hire someone to watch over it. But your friends are fake, they're expecting something in return for the money they gave you. So in exchange, you give them some ownership or stock of your lemonade business. And since you and your friends now own shares of the stock, y'all are shareholders of Super Lemon Drink. A stock refers to the business that you're investing in or have ownership in. A share is more specific and refers to the smallest amount of stock that you can own. To keep things simple, let's say you split ownership of Super Lemon Drink into 100 shares at $10 per share. That means if I owned 100 shares of the business, I own 100% of it. If your friend Johnny buys 15 shares for $150, he owns 15% of the business. Sally buys five shares for $50, so she owns 5% of the business. Although they both own Super Lemon Drink stock, they have different levels of ownership. But how does a stock's price increase? Let's say your lemonade business is doing really well, people are hyped about it, and strangers want to buy its stock because they believe it's a great business opportunity. Even though your secret recipe is just using limes instead of lemons, but whatever. So the strangers will go up to your shareholders, your friends who own shares of your business, and the strangers will offer to buy their shares from them. Since now there's demand for Super Lemon Drink stock, your friends can ask the strangers for more money than what they originally paid for the stock. So although Johnny bought each share at $10, these strangers said that they're willing to pay $25 cash for a share. And now Johnny has the option to sell each share for $25. If he doesn't sell, he has $15 in unrealized gains, meaning he hypothetically gained $15 in wealth because someone is willing to buy his shares at $25. But the $15 is not considered real yet until the transaction actually happens. If he does sell it, his $15 gain becomes realized or real because he gets cash in exchange for his share. 150% gain, not bad. But there's actually another exciting way where Johnny doesn't have to sell his shares and still get cash from his Super Lemon Drink stock. Let's say Super Lemon Drink is making a ton of profits and you, the main owner, wants to reward your friends, the shareholders, for believing in the company. So you take some of the profits that you made and you give them to your shareholders in proportion to how many shares they own. Since Johnny owns more shares than Sally, he'd get more money, and this money gift is called a dividend. If you want to grow your wealth in the stock market, I'll show you how to buy and sell a stock step by step later in the video. But first, you need to know the two main types of stock investments that you can own, and the second one is my favorite. First, individual stocks, think of this M&M as an individual company, a stock that you can buy and own, which is great, but super risky. And it's not because it's yellow, apparently no one likes yellow M&Ms. Let's say you only have $1,000 and you just buy one stock of company A worth $1,000. So, in total, you have $1,000 invested in your investment portfolio. If company A's stock price drops by 25% and goes from $1,000 to $750, your entire investment portfolio immediately goes down by $250. 25% of the money you invested, not good. And if you don't love risk and being volatile with your money, then this is a better approach. Instead of buying one stock worth $1,000, you could get 10 stocks worth $100 each. Your total investment portfolio will still be $1,000, but this way, you'll be exposed to much less risk. Even if company A's stock price drops by 25%, so for you from $100 to $75, your total portfolio only goes from $1,000 to $975. So just 2.5% drop of your total portfolio. Diversifying or spreading out your investments is a great way to reduce risk. But the biggest problem is researching, buying, and managing 10 different stocks at the same time is a lot of work. Which is why my favorite way to start investing is with this, a fund. Think of a fund like this jar of M&M's. Just like before, each M&M represents an individual stock, which means that this jar or fund holds a bunch of different stocks. So instead of buying a different stock one by one, you could just buy one fund and you automatically get access to all these M&M's. I'll even tell you later on which funds are my personal favorite. There are three main types of funds that you can buy, and the third one is an absolute game-changer. First, mutual funds, mutual funds have an actual person called a fund manager who actively picks which M&M's or stocks and investments belong in the fund. Since there's someone actively managing it, mutual funds will charge you higher fees for holding it. Depending on the mutual fund, there might also be minimum investments amounts that you need before you can actually own the mutual fund. Plus they're only traded once at the end of the trading day, so even if you tried to buy a mutual fund at 11:00 a.m. Eastern, your trade doesn't actually execute until the market closes. Second, ETFs or exchange traded funds, ETFs or exchange traded funds are mostly passively managed, meaning there's not an active fund manager that goes out and selects the stocks. So fees are generally lower than mutual funds. ETFs also require a lower minimum investment amount to start, and unlike mutual funds where you can't actually buy it until end of day, ETFs can be bought and sold whenever. Now, my absolute favorite funds are index funds. Index funds are passively managed with lower fees because these funds just invest in whatever the associated index tracks. An index is like the S&P 500, NASDAQ, Dow Jones, it's basically a scoreboard that shows how a group of stocks are doing in the market. As an example, the NASDAQ 100 is an index or scoreboard that tracks the performance of 100 big tech companies. And so, an index fund that tracks the NASDAQ 100 index would just invest in whatever the index is tracking. But what determines what stocks get tracked in an index? Each index have a bunch of different criterias, but some of NASDAQ 100's criterias include: One, the company should have an average minimum daily trade volume of 200,000 shares. Two, more than 50% of its shares need to be owned by the public. So this is the NASDAQ 100 index and these are some of the stocks that the index is tracking. Some examples include CrowdStrike, DataDog, and Face Energy or Honeywell, Microsoft, Meta. So if we check out QQQ, which is an ETF that tracks the NASDAQ 100, we can actually see a breakdown of all its holdings. The top five holdings include Microsoft, Apple, Amazon, NVIDIA, as well as Google Alphabet A. So for Microsoft, this means that 12.51% of this ETF is tracking Microsoft, and then for Apple, it's 12.21%, Amazon is 6.11% and so on and so on. And if we look back over the past 38 years of this index, which includes market crashes and recessions and depressions, the average annual return for this index was still between 15% to 17%, which is pretty amazing. The trick here is to find index funds with a great track record, and I'll tell you my favorite funds in a bit. But knowing all this stuff is completely useless if you don't have the right strategy, which I'll be sharing three of the best investment strategies. And I personally prefer the second and third one. First, technical analysis, it's basically looking at a bunch of stock charts and lines to find specific patterns and trying to predict what will happen next. The theory behind this is that history repeats itself. But there have been many studies that prove the natural randomness of the stock market overshadows any patterns and predictions that could be made. And your chance of accurately predicting a stock movement with technical analysis is basically nonexistent. But on the other hand, technical analysis could just be a social thing. If 10% of investors believe in it, and together all make the same move, that might be enough to impact the stock to go in certain direction, becoming a self-fulfilling prophecy. Now, here's one of two of my favorite investment strategies. This is the easiest way to get into the stock market and it doesn't take much effort, the passive fund strategy. All you'll need to do is find a fund, and again, I'll share some of my favorites later, and then just start doing this thing called dollar cost averaging or DCA. And it sounds way more technical than it actually is. DCA is just an investment strategy where you consistently buy X worth of a stock during a fixed interval period. For example, you invest $200 in Microsoft every single month for five years. If you're investing a fixed amount of money each time you buy, you'll get more shares when the stock price is lower, and less when the stock price is higher. Over time, this tends to minimize the cost per share that you pay for a given stock. For example, let's say you're looking at a volatile stock and you have $300. In the first month, it's at $10 a share, then the second month, it's $5 a share, and then the third month, it's $20. If you could tell the future and think you can time the market, then you would buy all the shares in the second month. But remember, you can't tell the future. And here's where dollar cost averaging comes in. Say you want to invest $100 a month. At the end of it, you bought 10 shares in the first month, 20 shares in the second month, and then five shares in the third. So now you got 35 shares for $300 for an average price per share of $8.57. Your price per share isn't the cheapest at $5 a share assuming you can predict the future, but it's also not the most expensive at $20 per share. By dollar cost averaging, it helps ensure that you're not dumping all of your money in at a high price point. And it's especially powerful during volatile times because it stops the psychological fear that makes you too scared to invest. The second of my two favorite investment strategies involve identifying undervalued stocks. For example, a company stock should be worth $100 per share and the stock market is only trading at $80 right now. And this strategy is called fundamental analysis, which you can learn more about with my free investing starter kit. Get it with the link down below. So let's apply fundamental analysis with ExxonMobil, the world's largest publicly traded oil and gas company. In the third quarter of 2022, they reported $112.07 billion year-on-year revenue, beating its expectation by $9.11 billion. Within the same year, the company gave out a further $15 billion in dividends to their shareholders. All this information came during a recession, and history shows oil and gas prices dropped drastically during a recession. There were other aspects that affected their earnings, but all that looked quite positive for ExxonMobil. So a fundamental analysis approach to this is looking at the fact that the company itself will still doing really well. The US also added more sanctions on Russia, increasing oil prices and providing more reason to believe that ExxonMobil was undervalued, and it was. Over the next month and a half, ExxonMobil's share price jumped by nearly 20%. Now, finding undervalued stocks take time, but there are financial ratios and metrics that can help you do it much quicker. One is the P/E ratio or price-to-earning ratio, it measures a company's current stock price relative to its earnings per share or EPS. In simple terms, it's a way to evaluate how much investors are willing to pay for each dollar of a company's earnings. So I'm on Apple's stock profile right now, and if I go to analysis and I scroll down, I can see that the current P/E ratio is 27.44. Let's just say 27. This means that Apple stock price is trading 27 times its earnings per share, in other words, investors are willing to pay $27 for every $1 of earnings generated by Apple. Now, a higher than normal P/E ratio may indicate that the stock may be overvalued, and a lower than average P/E ratio may indicate that the stock is undervalued. So, is Apple overvalued or undervalued? The short answer is, it's unclear. Because although data points like P/E ratios are helpful, they shouldn't be considered in isolation and will need to be compared to other companies in the same industry. So, hypothetically, if the average P/E ratio in tech is 10, then sure, Apple may be overvalued. But again, you'll still need more data points. Here's a list of other important data points, and I actually explain all of them in the free investing starter kit, which you can get linked down below. Now, here's how to buy and sell your first stock. First, you need an investment platform like Schwab or Robinhood. I'm using MooMoo and no, I'm not sponsored by them, I actually really like them because they give you a lot of key information for free that other platforms normally charge you for. It's also free to buy and sell stocks and it has everything that you need. Plus, if you sign up with my link down below, you can get 15 free stocks. Each stock is valued up to $2,000, so technically, you could get up to $30,000 if you sign up and meet the funding requirements. And it takes just a few clicks, if you're interested, link below. Now you need to add money to your investment account so that you can use the money to buy stocks. You can connect your bank directly in the app and make the transfer. I already moved $5,000 into this new MooMoo account that I made for this video. Next, you want to go up here to search for the stock that you're interested in or index or whatever. And again, I'll share my favorite investments later on, but for this purpose, let's just say you're interested in Apple stock. So you would simply type in Apple. And now we're on Apple stock profile, all you really need to focus on here is going to be the stock price as well as this chart over here. But actually, the reason I like MooMoo so much is because if we go to the analysis tab, it kind of has all this information already done for you. You can look at stuff such as the P/E ratio compared to the sector or industry average, look at what it's historical percentile is, what institutions are actually holding this stock, such as the Vanguard group or BlackRock. And then also very quickly accessing what the analyst ratings are for this particular stock, what their target price, and just a bunch of really neat information like the fundamental analysis on on this side as well. This is all information that normally investment platforms will charge you for, but again, MooMoo is giving this away for free, which is pretty neat. Okay, so let's say I like what I see and I'm really interested, and I actually want to buy Apple stock. So what I do is I go, click on trade, and then I click on buy. Okay, so now I'm on the buy trade order screen, and I know it looks really complicated, but there's only a couple of things that you really need to focus on. One is going to be the order type. And with an order type, there's really only limit order and market order that you have to know as a beginner. A market order means that you want to buy the stock at its current price, which is $160.68. A limit order on the other hand is basically an order to buy at a specific price or better. So for example, let's say, I don't know, I do a limit order $150, then my trade would only execute if Apple's stock price goes to $150 or lower. But for this video, we're just going to do a market order and keep things simple. Um, so now that I'm on this screen, simply what I would do is go enter the quantity of shares I want to buy for Apple. We can see the stock price up here, it's like trading between $160 and $70 something cents. Uh, let's just say for example, I want to buy two shares of Apple. Now, what that shows is this total amount that I'm going to be potentially spending, which is $321.58. Time in force, just put day, keep things simple. Then you want to click on buy. Uh, they're going to give you a reminder. Don't remind me again, remember this is a new account that I started just for this video. Um, so now confirm, confirm. And if you were following along, congratulations to you for making your first investment. And now, if we go back to the account page, we can see that we own two shares of Apple. But now, let's say that you want to sell the two shares of Apple. Essentially, what you would do is you can click on Apple, you click on trade again, and then this time you click on sell instead of buy. Now, same thing over here in the sense that there's a lot of information, all you really need to focus on are the order types, which is going to be sell limit order or a sell market order, which is essentially the same thing that we described with the buy order. Um, for this case, we're going to keep it simple again, and we're just going to keep it at market, meaning we're going to be selling Apple at its market price. You can see over here down here, it's max quantity to sell, which is two, so at most, I can sell two shares of Apple because I only hold two shares of Apple. So if I just put two, then on the amount, it shows that what I could potentially receive, uh, the Apple shares for after I sell them. So simply I would click on sell, and then you would confirm if you want to sell the two shares of Apple, and then the whole confirmation page happens again. I'm not going to sell it for my purposes, and I'm going to explain why a bit later. But that's pretty much it. Um, if you're still nervous about buying your first stock, remember, you can get 15 free stocks, potentially worth up to $30,000. Now, the big question is, when is the best time to start investing? And yes, there is a best time. I know this because I worked on Wall Street and have been in the finance space for many, many years. And here's the secret, the absolute best time to start investing was yesterday. The next best time is today. But only if you can check off these four boxes. One, did you pay off all your super high interest debt? If your debt's interest rate is greater than 10%, I'd prioritize the debt first. Two, do you plan to invest for the long term with money that you don't need for the next 3 to 5 years? Three, do you have a safety net and an emergency fund in case you do need money? And four, do you understand your financial goals? Look, I know what you really want deep down inside. I know you're someone who's eager to make your money work for you, but you're not really sure where to begin. And you're worried that you'll make a mistake and lose all of it. I know you want to feel empowered and knowledgeable so that you can transform your wealth. I know these things because I wanted those things too. And I can tell you that, without a doubt, you're in the right place. But here's the truth, you won't ever be able to achieve your financial dreams if you just save your money. On average, saving accounts give you 0.06% interest rate. And at that level, if you put $15,000 in your savings account and you still contributed $500 every single month, it would take you 157 years, 157 to reach $1 million. And this is where investing comes in to significantly speed up this process. What if instead of only gaining 0.06% a year, imagine if you can gain 10% a year, which is the average annualized return of the S&P 500 since its inception. Then it would only take you 26 years to reach $1 million. The power of investing significantly shortened your journey to becoming a millionaire, from 157 years to just 26 years. I know investing can seem intimidating and feel like you need a lot of money to make money, but that's not true. It all depends if you're thinking this or this. These two things are so important that it will guide the direction of your investing journey for years to come. First, thinking about investing short-term. Short-term investing is any investing time frame under three years. If you're new to the stock market, I would personally avoid short-term investing because there's a lot more risk and volatility and more taxes. Data shows that 90% of people who take on day trading or super short-term investing lose money. Some studies even say only 1% of day traders are profitable. Long-term investing, investing anywhere over 3 to 5 years, is way better, it's less stressful and easier to start with.

[22:03]Look, the truth is, there really is no bad time to invest if you plan to invest long-term. Let's check out the NASDAQ 100 again. Let's say you bought the QQQ ETF at its peak for just under $52 in October 2007. Then the 2008 financial crisis hits and the ETF plummeted down to $26. And it sucks. Yeah, but remember, you're thinking long-term. You haven't actually lost anything yet because you didn't sell your stock. If you just kept holding and your money invested, then in October 2010, you would have made your money back. By September 2012, the ETF jumped to over $70 a share, and in 2021, it was over $403 a share. That's nearly an 800% gain, and that's the beauty of long-term investing. A study by A. Stotz Investment Research observed a 10-year period from November 2005 through October 2015. And after running the data through several simulations, they concluded that if you miss the 10 best market days over the specified 10-year period, you would stand to lose, on average, 66%, 66% of the gains that you would have captured by just staying in the market. This means that when the market moves up, it moves up quickly. So whenever you're scared to invest and your money is just on the sidelines, you risk missing some of the best days the market has to offer. So the thing you need to realize is that you cannot time the market, and the best strategy is to just stay invested and not panic. And I get it, look, the media will always have some scary, the world is ending headlines, that the market is going to crash, blah, blah, blah. But here's a trade secret, most successful investors and professionals on Wall Street, in the finance industry, they don't buy into this kind of fear. They know that the stock market will go up in the long term, regardless of the ups and downs in the short term. Despite all the crashes, all the recessions, all the crises, the stock market goes up in the long term. So focus on the long term, not the short term. But why invest in funds? Why not just invest in individual stocks that did well in the past? No doubt you've heard about how much money people made by investing in Tesla and Apple, right? And sure, you can, but the past doesn't always represent what will happen in the future. Take Nokia for example. In 2010, they were the leading phone brand in the mobile market with a 37.58% market share. By 2020, 10 years later, their market share dropped to less than 10%. In that same time frame, their stock price plummeted by almost 70%. Now, I don't say this to discourage you from investing, but rather, make sure you don't just blindly follow the hype as a beginner. On the other hand, the fastest and easiest way to start investing is with funds. Here's a list of my favorite funds across sectors, but they might not be right for you. Make sure to follow these four steps to determine which fund you should go with, and the fourth step is undoubtedly super important. First, set an expectation on how much risk you're willing to take. Some index funds are riskier than others, depending on how concentrated they are by sector. Second, look at the companies they're invested in. Do you like them or not? Third, look at the historical performance and compare it to similar funds in the industry. Is there a better option? And fourth, look at the fund's expense ratio. The expense ratio is the percentage of its assets that the fund charges as a fee for managing the fund. For example, if an index fund has an expense ratio of 0.2%, it means that the fund charges 0.2% of its total assets each year. If you have $10,000 invested in the fund, you would pay $20 in fees for that year. It might not seem like a lot right now, but the fees do add up as your money grows. But there is still one more fee that you need to be aware of before you do anything. Since your investments are a form of earning money, the US government is going to want a slice of your pie. And the size of that slice is determined by how much money you gained or lost after selling your stock. So let's say I bought Apple stock a year ago for $1,000, and things went really well. I sold it today for $1,500, that would count as a capital gain of $500, meaning I'll be taxed on $500. If the reverse happened and things didn't go well and I sold my Apple shares for just $500, that would be a capital loss of $500. Meaning that I can deduct $500 from my taxes. But here's a twist, you will be taxed higher if you invest for the short-term over the long-term. And the government makes this distinction at the one-year mark. Meaning if you bought and sold Apple in under a year, your capital gains will be taxed at your maximum tax rate. But if you held Apple for longer than one year before you sold, your capital gains are taxed at a much lower rate, which could be 0%, 15%, or 20% depending on your taxable income and your filing status. Without a doubt, investing is one step to growing your wealth. But what if you could grow it significantly faster? Here are the best ways to make $10,000 per month to supercharge your path to financial freedom, and surprisingly, no one is talking about these ways. So get on it before it becomes popular.