RGT@LCM



Video Title – Introduction to Investing Aim – educate people with regard to why they need to invest for the future and introduce them to how to do itIntro – who am I and what is this video about?Okay so I’ve put this video together as a beginners guide to investing because I’m fascinated by the subject and I really enjoy talking about it. I’m putting this out there as an outlet for my own interests.I put this video Every bit of information in this video is just stuff that I’ve taken from books, podcasts, videos and articles; if that means that I can pass a bit on an help a few people along the way then all the better. Reference – Passive Index Investing of my own experience learning about it which took place as I scared into action by the realisation that one day I will have to stop working and find enough cash to fund the rest of my life.It’s usually at this point that most people find this subject so utterly dull and switch off but I decided it led me to spend the last few years reading a lot of books, listening to podcasts, watching videos which then developed into a fascination of the whole process. This is a basic guide discusses investing money for the long term, we’re not talking about quick and easy wins – just making good decisions now so you can be better off in the future.Look, the main thing is that you really don’t need a degree in corporate finance or economics to invest and grow your money. And most of all, it’s actually really, really important. We’re not talking wolf of wall street of Gordon Gekko, we’re looking at sensible, very logical ways of putting a bit of cash away, something that your future self will really thank you for.None of the following constitutes financial advice in any way, if you want advice tailored to you sitauiton, go an see a qualified financial advisor or planner. Do I need to invest my money? (use retirement as an angle)So the first question to address is – do I need to invest my money? No you probably don’t, that is if you’re going to need it in the short term for something like a car, house deposit, new guitar, home improvements or emergency fund. In fact, it’s generally advised that you shouldn’t do any investing of any kind, unless you have at the very least a 5 year time horizon. I’d suggest that you bring that closer to 10 years, the longer the better. However, unless you’re planning to sell your house to live in your shed, sell your multi-million pound business when you stop working or win the lottery – you’re going to need to think about some sort of retirement plan. Retirement is the obvious one to think and because you have the luxury of time, you’re going to have to invest your money and not stuff it under your mattress. So why do we need to bother - Discuss Inflation One of the main reasons that over the long term investing becomes such a necessity is due to inflation. Inflation is; a general increase in prices and fall in the purchasing power of your money. Let’s get technical about it:Basically, stuff gets more expensive over time. This means that the cash you have today will be worth less in the future. The Bank of England sets their inflation target at 2% a year but we can assume that inflation will be probably erode your money at 2.5% a year over the long term. So what options do you have?So you’re going to have to do something about that right? You’re going to have to think about how to grow your money in real terms – this means after inflation, given that you maybe have to make let’s say around 2.5% to break even, over 30 years this is going to make a big difference. So what next, where are you going to make that sort of return, let’s look a few options – sometimes referred to as ‘asset classes’, different types of assets that you can buy.Bank account – best paying bank account at the moment pays 1.5% (you’re short 1% a year)FSCSGovernment Bonds – basically borrowing money from the government, the UK government at the moment today (December 2019) will pay you 0.805% p/annum for a 10 year bond (or loan) - that won’t do.Property – yeah sure this can work if past prices continue but there a few issues; houses are often more difficult to buy and sell (often called liquidity) they also usually require a hefty deposit oh and also there’s fees involved and home improvements, decorating, landlord insurance, finding your tenants to consider too. Sure it could work, depending on your situation but it’s tricky to invest in property if you’ve only got a couple of hundred quid a month to put aside it may be not be viable.Invest in your business?Sure and that may be more important to you at the moment but firstly you don’t need Art/wine?What about investing in art or wine? Yeah, that could work but how much do you really know about fine wine and art? Introduce the idea of stockmarket investingIn terms of a fairly safe, easy to access asset classThere is really not many other viable alternatives left which leads us onto investing on the stockmarket. It’s usually at this point that you might think of :This guyBut it’s not – listen to this guy:Buffet Intro:Coca colaGiletteAppleDo a thing on Buffett and reference his 2013 shareholder letter to wifeWriting about the instructions laid out in his will, Mr Buffett said his advice for the cash left to his wife was that 10 per cent should go to short-term government bonds and 90 per cent into a very low-cost S&P 500 index fund.Bet with hedge fund:In 2008, Warren Buffett issued a challenge to the?hedge fund?industry, which in his view charged exorbitant fees that the funds' performances couldn't justify.Buffett's ultimately successful contention was that, including fees, costs and expenses, an S&P 500?index fund?would outperform a hand-picked portfolio of hedge funds over 10 years. The bet pit two basic investing philosophies against each other:?passive?and?active investing.Non professional investor should use passive index investing.Find a reference stat/graph for historical returns of the global markets. Use past returns is the only way we have of predicting the futureFTSE All share since 1997 – 2018 produced average 9.9% (Vanguard)S&P 500 - The average annual return since adopting 500 stocks into the index in 1957 through 2018 is roughly 8%. (Investopedia) You’re using this as an opportunity to Invest in a very broad base of companies, from all over the worldDifference between investing and tradingNow, it’s key to determine the difference between investing and trading in relation to the stockmarket. Investing is committing your money away for a prolonged period of time and automatically reinvesting any income that you receive back so that your money can compound over time. Trading however is trying to predict short term movements in price which may or may not be impacted by any number of factors; political, economic or otherwise. This is notoriously hard to do requires a great deal of research and increases your risk of losing money. This is not what you should try to do. Risk:It’s at this point it’s worth mentioning risk. Risk is a subjective thing, what you may consider risky, others may not but the main point is that ‘risk comes from not knowing what you are doing’. If you want to What is an index? A market index is a selection of companies which represents a segment of the?financial market.? (how do you buy an index) Buying Funds:Talk about units:Last thing to do is discuss platformsThe next step is deciding purchasing fund which you do through a broker. A broker is just a 3rd party through whom you can purchase stock/shares or funds. You may decide to do this using and ISA or SIPP. Go check out some best buy ‘broker’ tables, a lot of the names you may be familiar with anyway, names like: Hargreaves Lansdown, AJ Bell, Fidelity and often high street banks will offer accounts through which you can hold funds and shares. The rest is up to you If you feel tha ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download