 The reason you click this video is because you wanted a full guide on the stock market for beginners in 2022, and that's exactly what you're gonna get. Now, what I'm gonna do here is I'm gonna break this down into different parts, and it's gonna be separated by timestamps, which you can see down in the description below. And so if you want to, you can skip around, but I highly recommend watching all of it because this is basically going to be a mini course. And whether you are an advanced investor that just wants to brush up on the basics, or you are a complete beginner that has never invested before, you are going to get a lot out of this course. But if for whatever reason you're really busy, there's always those timestamps down below and you can jump around. And not only am I going to teach you the basics of investing, but I'm also going to sprinkle in some wisdom and some knowledge. And I'm gonna talk about things that I think are the most important concepts for you to know as an investor. And by the end of this video, I'm hoping that I can surgically take my brain out and physically put it inside of your head. That's impossible, I can't really do that, sorry. My disappointment is immeasurable and my day is ruined. But a plus side is you will know more than any of your friends about the stock market. Now the first part of this video is gonna be more informational, but later on in the video, I am going to do a step-by-step tutorial where I spend $10,000 of my own money on stocks. And on top of that, I have three different gifts throughout this video and these are gifts that took me a very long time to make. These are going to be incredibly useful to you. So two of them are gonna be kind of towards the middle of the video and then the last one is gonna be at the end. All right, so welcome everyone. This is going to be the stock market for beginners course. My name is Shane Hummison. I go by Shane Hummison online. That's kind of like my brand thing just because nobody can pronounce my last name correctly. So I got tired of that. And so I just call myself Hummus because everyone recognizes that and I secretly just wanna make everyone hungry. So why should you be interested in the stock market in the first place? Why should you care about investing? And to answer this, I actually have a quick question for you. If you invested $1 at the beginning of your career, after 40 years of working, let's just assume you work 40 years and then you get to retire and assuming that that $1 grows at about 10% return per year, how much would you have at the end of 40 years? Now don't go online to look up a calculator or anything like that. I want you to just try to think in your head how much it would be. Do you think it would double? Would it turn into $2? Do you think it would maybe triple? $3? Quadruple? Maybe you think it would go up 10 times? Well, the answer is actually $45.26. So it would actually go up 45.2X. And this is assuming that you get 10% average returns per year, which we have consistently, basically almost for the last 100 years. And this is also assuming it's seven to 8% adjusted for inflation because we usually have about two to 3% in inflation. Now you're probably pretty shocked that it went up 45.2X. And the reason for this is because a phenomenon known as compound interest. And Einstein said that compound interest was the eighth wonder of the world. Here's a quote on the top right. It says, compound interest is the eighth wonder of the world. He who understands it earns it, he who doesn't pays it. And it's because of this compound interest that the earlier you start investing, the better, even if you don't have very much money to invest. Because the power of compound interest can turn what is not that much money into enough that you could potentially retire. So this is why in my opinion, investing is so incredibly important because sometimes it's not all that much about how much you make. It's how much you can save and then invest. So now we know why you should invest. You understand the magical power of compound interest, but why should you listen to me for investing advice? Well, I'm glad you asked and let me introduce myself. So like I said before, my name is Shane Humason. I go by Shane Hummus on YouTube. This is a picture of me in the top right that was taken in Seattle. I live in the Pacific Northwest in Washington, just north of Seattle. I'm a pharmacist and that means that I got a doctorate of pharmacy. And I've made a lot of videos on giving different college advice because let's be honest, college is incredibly expensive these days and you have to make sure that you're getting a degree that's actually worth it and you're not getting scammed by universities. And people listen to me because I've been through the whole college system from the bottom all the way to the top, getting a doctorate. And so I kind of have a very good understanding of how it works. I've also been a YouTuber since 2008. That's right. I uploaded my first YouTube video all the way back in 2008 and it was a video of me doing what's known as PKing on RuneScape, which is basically this video game that was kind of set in the middle ages, I guess, but there's dragons and there's magic and wizards and all kinds of stuff like that. And at the time, I didn't even have a computer. So I would go to the local library. I would download a screen capture application. I would record my screen at the local library and then post that on YouTube. So I actually started YouTube without even having a phone or a computer. And since then I tried starting several different types of channels. One of them was about pharmacy, for instance. I started another one about productivity, but this channel, Shane Hummus, was the one that really took off. I'm also a lifelong learner and I have a huge passion for teaching. So over the years of uploading YouTube videos, I figured out how to have a really good balance of being a good teacher, but also being entertaining. And I figured out a way to ELI-5, explain like I'm five, break things down into a way that anybody can understand them. Now I'm a big time personal finance nerd. I'm constantly studying it, reading news about it, watching videos on it, listening to podcasts about it. I would also consider myself a balanced investor. So I'm not one of those people who's just like, oh my God, you have to yolo your entire life savings into this one meme coin right now. And I'm also not one of those people that's like, you know, the only thing you can invest in is gold. Gold is the only thing that has value. Everything else is worthless and it's eventually gonna go to zero. You only can invest in gold and maybe silver. And these two types of investors are almost like memes at this point. And I consider myself to be a balanced investor. I kind of embrace both sides. And I like to find the investments that have the highest upside with the least amount of risk. And also I consider myself to be a normal guy. So I came from a poor background. I was actually homeless at one point when I was younger and I was in a situation where not only were other people not taking care of me but I had to take care of other people. So when I started investing, I had to do it with my hard-earned cash that I made. I'm not one of those channels who makes money by talking about investing and then make more money by reinvesting the money that I made talking about the investing with like an infinite monetization loop. I started investing with money I made from the real world. I'm a normal guy, I've got a normal job. And I think most importantly, my experience, the fact I've been investing for a while, the fact that I have done this on my own. It started with my hard-earned cash and the fact that I have a portfolio and the multiple six figures that I built up on my own. And most importantly, the fact that over the past year I'm up over 100% on my investments. All of this is something that I wish that I knew when I was younger. So that's what I'm kind of gonna be going over in this video. I'm gonna be talking about things that I wish I knew when I was younger because maybe I would be doing even better now. But with that being said, I do have to say that this is not financial advice and it is for educational and entertainment purposes only. So always do your own research when it comes to investing. Now let's go ahead and go over what you're gonna learn from this video. So we're gonna start off with the basics. What is a stock? We're gonna talk about the stock market basics as well. Some of the most important, fundamental things you should understand. We're gonna go over the different types of stocks, the different types of investing, investing strategies. What is a financial ratio and why it's so important. Then we are gonna go over buying your first stock and I'm gonna do this with a live demonstration where I buy $10,000 worth of stock. Then I'm gonna talk about strategies for being a successful investor. We're gonna go over short-term capital gains tax as well as long-term capital gains tax. Then the conclusion and then throughout the video I'm going to give you a free gift and there are actually gonna be several free gifts throughout the video. You don't need to enter your email in. It's nothing like that. It's legitimately just a free gift from me to you. And these are gonna be resources that again I wish I had when I first started investing and they are gonna help you out tremendously. So what exactly is a stock? A stock is basically a small share or piece of ownership in a company that can be traded or exchanged for money. Now stock in a company can be private or it also can be public. Private stock can only be bought with the invite from the company themselves. And also private stock is much less liquid aka it's a lot harder to sell. Public stock on the other hand can be bought by anybody. It's available on the free market and it is issued after an IPO happens. An IPO is an initial public offering and in order to do this companies have to basically meet certain requirements from the government. They basically have to be very open and disclose certain financial details to everyone. And this is a common way for companies to raise money. So another way of looking at this is common stock versus preferred stock. Common stock is what the public can buy, sold at fair market value. And that means it's bought and sold based off of the principles of supply and demand. And common stock is easier to buy and sell. However, if the company goes under or it gets liquidated this type of stock has very low priority. Now with common stock you do have voting rights in the company. This means that you do have some say in the direction of the company. And if you have enough of the shares you can even be on the board of the company. Sometimes these types of stocks pay dividends which is basically where you get paid out to hold the stock. And we're gonna get into what a dividend is later on. Now common stock actually does have higher upside when it comes to the potential gains. However, it's also more risky. So it has good upside but bad downside. And common stock is as the name suggests the more common type of stock. When people talk about stocks they are generally referring to common stock. Preferred stock on the other hand is usually sold at a higher amount. If the company goes under this one has a high priority when it comes to liquidation so you're more likely to get your money back. And you technically don't have voting rights with preferred stock. However, you may receive special voting privileges which would be even better than the normal type of voting rights that you have with shares. The dividends tend to be fixed with preferred stock. However, there is limited upside when it comes to the returns. A way to think about preferred stock is almost like it's a bond if you're familiar with that. Preferred stock is pretty much an instrument of debt where you're pretty much gonna get paid a fixed amount almost no matter what even if the company goes under. So it does have limited upside when it comes to the returns but it also has limited downside as well. Now, let's go over different stock categories. We're gonna go over large cap, mid cap, small cap and micro cap stocks. So some people will argue about the exact numbers here but these are just approximate. So anything that is $10 billion in market cap and above would be considered a large cap stock. These types of companies are considered to be stable established companies and they also tend to be less volatile. So a few examples of this would be, you know, Amazon, Apple, Microsoft, mid cap stocks tend to be around $2 billion and $10 billion in market cap. And these are up and comers. So these are companies that are probably headed towards being large cap but they're not there yet. So a few examples of these would be Dunkin' Donuts, American Eagle Outfitters and Grubhub. Then you've got what are known as small cap stocks. Now these are gonna be between $300 million and $2 billion companies. They're more affordable but there can be greater volatility. Now that can be a good thing or a bad thing. You could invest in a small cap stock and it could go up significantly. An example of a small cap stock would be Bed Bath and Beyond, Office Depot or AMC. Now interestingly enough, you can travel from a small cap to a large cap stock and that's exactly what the company GameStop did over the last year. They started it off as a small cap stock and they ended the year as a large cap stock. And then you've got what are known as micro cap stocks and these are less than $300 million companies. And these are incredibly risky. A lot of the times these would be what you would refer to as penny stocks. If you're familiar with the movie The Wolf of Wall Street these are the types of companies that Jordan Belfort used to scam people. They basically manipulated the price of these companies in order to make a ridiculous amount of money from their investors. So because of the fact that these companies are so small there's three different things you have to watch out for. First of all, they can be incredibly volatile. The prices of these stocks could double in a day or they could go all the way down to 50%, 40%, 30% within a day as well. Because of the fact that the companies aren't worth as much it's also easier to manipulate their prices either via the news or money if you have enough of it. Now that is technically illegal to manipulate the prices but it still happens quite a bit and people are constantly skirting that gray line of it being legal versus illegal. And then the third thing is there's low levels of liquidity which basically means that even if you do have the stock and even if it did go up in price it may be difficult for you to sell it. So with a lot of the large cap stocks if you go to sell it you can pretty much sell it immediately because it has a lot of liquidity. With small and micro cap stocks sometimes it might not sell immediately it could be more difficult. And in that time that it takes to sell it maybe the price goes back down. So there are many different reasons that these types of stocks are risky and you have to be incredibly careful if you decide to invest in them. And I'm not even gonna give you any examples of these because they would be companies that you've never heard of. But just know that be very careful with this they're extremely susceptible to pump and dump schemes and all kinds of shenanigans. All right, moving along there are other ways of categorizing stocks and this is another way that you can do it which is value stock, growth stock, as well as defensive. So value stocks tend to come from established companies with great fundamentals. These types of stocks tend to be less volatile there tends to be pretty steady sales and profits and the potential for your return on investment is probably gonna be lower. So this is not the type of stock that is gonna like double in three months or anything like that. Usually the PE ratio is gonna be less than one and we'll go over in a little bit what that means. A lot of the time value stocks actually give dividends. And basically what you're looking for with this type of investing is you're looking for companies where the perceived value AKA what the stock is currently is lower than what the actual value of the company is. So for instance, maybe a company had some type of scandal but you believe that the company is going to fully recover from that scandal but because of the negative news the company's stock price went down a little bit. However, you believe that the company's gonna fully recover and it's gonna get back on track pretty soon so you decide to invest in it. That would be an example of value investing. Now interestingly enough especially through the pandemic value stocks and value investing have really changed quite a bit because of the fact that they relied on foot traffic ended up losing a lot of their value. But with that being said one example of a value stock in my opinion would be SoFi. Some more traditional examples of value stocks might include Costco or Walmart. Now investing in growth stocks for instance also known as growth investing on the other hand is where you try to find companies that have tremendous upside. Now these companies do tend to be more volatile and these types of companies are usually scalable. So you see a lot of growth stocks in the technology industry for instance because technology related companies tend to be scalable. There also usually is a high P to E ratio and that's price to earnings we're gonna go over that here in a bit and they rarely pay dividends. A very obvious example of this one would be Tesla. Tesla went up about 10X or 1000% in a one year period. And so that is an example in recent history of something that would be considered a growth stock. Another example of a type of investing is defensive investing or defensive stocks. And these are stocks that are very stable and they're usually not cyclical. Now again, this one kind of got turned on its head a little bit during the pandemic. There were many examples of defensive stocks that are usually considered to be consumer staples that suffered a lot during the pandemic. But with that being said these tend to be very slow and steady. They tend to have high paying dividends. There's lower profit potential but there's also lower risk and they tend to be consumer staples as well. Although in many cases defensive stocks can also be value stocks. So one example of that would be Walmart. Now keep in mind guys these are not necessarily mutually exclusive. You could have a stock that's potentially all three of these things at once. You also could have a stock that starts off as a growth stock and then later on maybe five years later it turns into a value stock. Now if you do buy a stock you would be known as a shareholder. And because of this you would get to have some voting rights in a company and have a limited control of the direction that that company goes. The more stock you own the more control you have. If you own enough stock you can even get on the board of the company. Now I do wanna tell the difference between stakeholders and shareholders. Shareholders are interested in the return on investment of a stock. And usually this is in the short term. So if somebody invests in a company you know they invested in the stock they wanna see that stock go up. Whereas stakeholders tend to be more invested in the long term success of a company. Now we've seen this strategy that's been especially popular in the last few decades where companies will actually go billions of dollars in debt in some cases in order to take a certain amount of the market share of whatever market they're trying to break into. This was a strategy that Amazon used for many years they weren't making money. It's a strategy that you see Uber using right now. And sometimes this can be a good strategy. Sometimes if you take enough of the market share this can pay off in the long run. However in the short term it might make your stock not as valuable. Now sometimes those who are shareholders might make decisions that is good for the company in the short term. You know for instance they might lay a bunch of people off or they might start using cheap components instead of expensive ones. And that can end up making the company more money in the short term. But then they probably just end up selling their stock. So that was a good short term move but it wasn't good for the long term. Now in order to sell your stock as a company you have to do something known as an IPO. This is an initial public offering. And this is basically when a company decides to start selling shares of their stock in order to raise money. But it doesn't just raise money it also increases awareness of the company itself. So oftentimes companies will actually hire third party firms to figure out how to conduct their IPO in the best possible way to get the most amount of press and also make sure that their stock does hit the market at a high enough price. So an IPO can also increase awareness, gain credibility and increase the liquidity of investments. An IPO is also called going public and there are certain financial requirements that have to be met in order to do this. So for instance, you have to release a lot of sensitive financial information in the form of financial statements. And this is information that your competitors really want to know probably. So there are a lot of pros and cons to going public and many companies opt to stay private and they believe for the long term success of the company it's better to just stay private and not have shareholders. Now there are a ton of different financial statements that you see companies release but I'm gonna go ahead and go over some of the most important ones. And by the way, you can usually find these on the company website and the investor relations tab so you can just control F and search investor relations. But the balance sheet is one example and a balance sheet basically shows how much the company owns and how much shareholders have invested. So it's going to show the assets of the company in terms of how much cash they have how much property value they have even the worth of the inventory of whatever the company is selling. It also shows the company's liabilities as well. So these could be things like rent or a mortgage payment how much the utilities cost or loans that the company has taken out. And then it also includes the shareholders equity. Now an income statement on the other hand shows how much revenue a company has earned. And this is basically an indicator of the company's financial performance over a fixed period of time. A cash flow statement on the other hand shows how well a company manages its assets. So it basically keeps track of the amount of cash that entered the company as well as the amount that exited. So essentially what a cash flow statement is is it's a way of saying if I put $1 into this company how much profit am I going to get from that $1? Am I going to get like $2? Am I going to get a dollar and one cent? And so it's a way of evaluating how efficiently a company uses its cash. Next let's talk about what a stock portfolio is. And this is basically a collection of diversified assets such as stocks, bonds, cash, real estate, et cetera. Generally speaking, when you're referring to a stock portfolio these are investments that you plan to make for the long term, which is at least one year. And it's usually suggested to have a stock portfolio rather than just putting all of your money into one stock. And the reason for that is because you get what's known as diversification. Because if you put all of your money into one stock and then for whatever reason that company goes under you likely just lost all of it. However, if you put 1% of your money into a hundred different stocks and then one of them goes down you don't really feel the impact of that loss. And generally speaking, long term investing where you diversify your portfolio will almost always beat short term investments where you don't. So now we're going to go over some stock market basics. And these are things that in my opinion are incredibly important for you to understand. So we're going to be talking about risk versus reward quarterly earnings reports, economics, supply and demand, inflation, industries and sectors as well as dividends. So one thing I want you to understand when it comes to risk versus reward is investing always comes with risk. There is not a single type of investment out there that has no risk. You know, a lot of people consider bonds for instance to be the least risky types of investments. And so let's just say you take out a two or 3% bond from the US government. Well, historically speaking, almost every single empire that has ever existed eventually ends. And so if the US government issues a bond and then you take out that bond and then it ends like five years later something happens in the world and the US government no longer exists then your bond is probably going to be worthless. So even the investment that most people say is the least risky still has some risk. However, with that being said higher risk can mean higher return and lower risk usually means lower return potential. So what you really want as an investor is the types of investments that have the least amount of risk and the highest upside. And generally speaking it's better to take more risk as an investor when you are young. The reason for this is because of the fact that when you are getting close to retirement age when you're getting older if your portfolio takes a huge hit you may not have enough time to recover from that before you retire because when you retire you will of course be withdrawing money from your investment portfolio in order to pay for your daily expenses. So generally speaking you're supposed to take more risk while you're young and then take less and less risk as you get older. Now, when it comes to evaluating how a company is doing one of the biggest and most important things that you want to look at is what's known as the quarterly earnings report. This is a report that is submitted four times a year in what's known as Q1, Q2, Q3 and Q4. And this would approximately be the first three months being Q1 and then the last three months being Q4. And on this report you have some very important numbers. So you've got your net sales which is the gross sales minus the returns, allowances and discounts. And then you've got your net income which is the gross income minus the expenses. So just a very simple example of net income. Let's say the gross income is $100 million but the expenses were $10 million. The net income would be $90 million. And then you've got your earnings per share which is a company's net profit divided by the number of common shares. And this is basically an indicator of how profitable the company is. So quarterly earnings reports can be very good to look at. They're also extremely easy to understand whereas some of the other stuff we go into a little bit later on is a little bit more difficult. Now I'm gonna briefly touch on economics because I think it's incredibly important to understand and economics very simply is the study of how society uses its limited resources. And in financial terms it is the science that studies the production, consumption and distribution of goods and services throughout society. Now there is a really big distinction here between microeconomics and macroeconomics. Microeconomics focuses on the interactions between individual entities. So for instance, the interactions between consumers and a business. Macroeconomics has more of a big picture focus and it looks at broad issues such as inflation, unemployment, gross domestic product, government spending, government deficits, et cetera. So microeconomics is kind of a bottom up sort of approach whereas macroeconomics is more of a top down. Microeconomics focuses on the trees whereas macroeconomics focuses on the forest. Now I think both of these are incredibly important and I think in order to have a well-rounded perspective you should be able to look at things from both different ways. However, with that being said the most important concept to understand in economics is supply and demand. Supply and demand is to economics what gravity is to physics. And basically supply is the amount of services available on the market versus demand being the amount of goods and services that people actually want. And supply and demand is incredibly important in economics and also just making decisions in your life in general. I see this a lot with people when I'm trying to give advice on college degrees. There are certain college degrees that for whatever reason everybody goes for. Everybody wants to get into certain types of college degrees even though the demand is not there. And so they get the degree and they find out that they're not able to get a job and anything related to that degree. And then there's other majors out there that nobody's going for and there's tons of demand, right? There's tons of jobs. And this is the same for different types of products that companies look to sell. And where these two curves meet the supply and demand curve is basically the market clearing price. And if you try to go against this overwhelming force it's almost like trying to go against gravity, right? You try to jump up and go against gravity. Eventually it's always going to drag you back down. So if you try to create a business where you're selling a product that has almost no demand it's going to be incredibly difficult. Another way of looking at this is if you go into a market that's already saturated a market where there is already a ton of other businesses selling that same exact product and you don't make your product special in some way to where it's different then you're also going to be suffering there as well because there's a ton of supply and it's already met the needs of the demand. It's met the wants and the needs of the people within that market. So can't emphasize how important supply and demand is. It's basically one of the things that makes the world go round. Inflation is another thing you hear about all the time especially lately. And this is basically the decrease in the purchasing power of money over time or inversely, the increase in the price of goods and services over time. So an example of inflation is, you know in the 1970s, a cup of coffee was about 25 cents. Now it's a dollar 59. And let's be honest, if you go to Starbucks it's more like five bucks. But yeah, I think you get the point. This is where your fiat currency like the US dollar becomes less and less valuable over time. And generally speaking, inflation happens at around one to 3% per year. Many think that this is a healthy amount of inflation to keep it at around one to 3%. However, when it gets higher than this bad things can happen. And we've seen inflation get totally out of control. Like for instance, with the Zimbabwe dollar where you could barely buy like a loaf of bread with a trillion Zimbabwe dollars. And it's even starting to get a little bit out of control in the United States right now. And so I think everyone can agree that too much inflation is a bad thing. Now let's go over the difference between industries, sectors and markets because these are three terms that you are gonna hear thrown around a lot. So an industry is a group of businesses producing related products and services. So an example of this, you would hear this said on TV for instance would be the automobile industry or the mining industry or the clothing industry. A sector on the other hand is a broad group of industries. So for instance, you might have the health sector or the energy sector or the consumer staples sector. So you might have the clothing industry that is within certain stores. So for instance, you know, target sells lots of clothes. However, in that example of target the sector would be consumer staples because they also sell lots of different types of things that people need like food. And then a market is a group of customers that are interested in a specific product or service. So this is a different way of looking at it because you're coming at it from the customer's perspective. Instead of coming at it from the business's perspective where you're selling certain products or services, you're coming at it from the customer or consumers perspective where you're buying certain types of products or services. And I really like this quote from Eugene Schwartz who was an incredibly talented copywriter and it's the power, the force, the overwhelming urge that makes advertising work comes from the market itself. So this is basically just a way of saying that when a company is trying to sell a product it's much better to listen to the consumers and ask them what do you actually want rather than trying to sell a product and convince the consumers that that product is what they want. So it's much better to listen to the market rather than trying to shape the market. Now dividends, these are things that we've talked about several times in this video and you probably already have an idea of what this is. And this is basically where when you own a share in a company they actually pay you out cash payments. Now most of the times dividends are paid quarterly and they tend to be between zero and 10%. So for instance AT&T has a 9.11% dividend yield so that means they pay 9.11% per year on their dividends. And so an example here would be let's say a company says that they're gonna pay you $1 per stock that you own in that company. And this stock is gonna be paid out quarterly. So that means if you own one stock you would get paid around $4 annually, $1 each quarter. If you had 10 stocks you'd get paid $40 annually and if you had 100 stocks you'd get paid $400 annually. Now if you own stocks in an individual company usually this would get paid into your investment account and you can either leave the money in your investment account or you can have it automatically reinvested. That's probably the best way to do it is to just have it automatically reinvested. And if you own dividend stocks in an index fund for instance all of that is just automatically done for you whether you want it or not. All right, so in this next part we are gonna go over the different types of stocks. And while we go over the different types of stocks we're also gonna be talking about the different investment philosophies that go behind these. So first of all we have individual stocks and this is where you bought a share in a single company. So maybe you invested in Tesla or GameStop or Amazon or Apple. When you invest in a single company this is called stock picking. Now this can turn out really well for you in the example of investing in Amazon, Google, Tesla or Facebook. These are all examples of companies whose stock prices went up tremendously. However, this can also turn out like an Enron, Worldcom or Dotcom bubble. And these are all examples where a company's stock price crashed. And so this type of investing is very risky because you are not diversifying your portfolio. So due diligence is a must here and you have to be very careful. Now another type of investing that actually automatically diversifies for you is what's known as mutual funds. And this is basically where a company takes a bunch of different individual investors, takes their money, pulls it all together and invests in a variety of different stocks and bonds. Now they do most of the work for you, you don't have to invest yourself, they do it for you. However, they are going to charge you a fee for doing that work. This is what's known as active management. Now generally speaking investing in mutual funds does tend to be safer than investing in individual stocks because you are diversifying your money. But with that being said, some mutual funds charge you quite a bit to actively manage your money. And most of the time, it's not gonna be as good as the next option. And that is index funds. And this is where your money gets diversified throughout a specific list of securities. And index funds tend to generally follow the stock market as a whole. So for instance, there's the S&P 500 index fund and that's basically where they invest in the 500 biggest companies. And this is what's known as passive management, which means there's not that much trading and there's also very little in the way of fees. And depending on the study you look at or the person you talk to, index funds beat out mutual funds on average somewhere between 85 and 97% of the time. So there are mutual funds that are really good and they beat index funds, but they're pretty rare. And the great thing about index funds is they are incredibly passive and they don't take very much work or expertise. You don't have to spend thousands or tens of thousands of hours becoming a super intelligent investor in order to make money with index funds. You basically just throw your money in there and that you know, generally speaking, if the market as a whole keeps going up, you are gonna keep making money. And the market has gone up on average, like I said before, about 10% per year, 7% to 8% if you invest for inflation. So index funds are a great option period but they're especially good if you're somebody who doesn't want to study much when it comes to finance. ETFs or exchange traded funds are very similar to index funds. In fact, there's just a few little differences. First of all, ETFs you can trade in real time, whereas index funds you can only trade once a day. With an ETF, you have to buy the entire share, whereas with an index fund, you can put any random amount of money into it. With ETFs, you can track your return daily, whereas with index funds, you can only track it monthly. And with ETFs, the management fees are slightly lower than index funds, although the difference is pretty much negligible because the management fees are really low with both of them. ETFs are also slightly less automated. And an example of an index fund and an ETF that invest in the exact same companies would be VT Saks versus VTI. And just generally speaking, ETFs are a little bit more accessible than index funds. So you could open your phone right now, get on Weebol or Robinhood and buy an ETF. Another type of investment that isn't technically a stock but it's very similar is a REIT. A REIT is also known as a real estate investment trust. And this is basically a company that makes investments in all different types of income producing real estate. And usually if you want to invest in real estate, it's very difficult. You have to have a lot of money to put down. So for instance, you might have to have like $20,000, $30,000 in spare cash. It's also a lot of work. You have to pay the real estate agent quite a bit. And on top of that, it's not very liquid. So if you want to sell your investment, it might take you six months or a year to do it. So there's a lot of downsides to owning real estate and there's a high barrier to entry. But when it comes to REITs, it's very easy for you to own real estate. And it's also really easy for you to diversify your investment. So for instance, with a REIT, they might own a thousand different buildings and it's a good combination of commercial properties, hospitals, apartment buildings, et cetera. So if one of those different types of things goes down, let's say for whatever reason, the US medical system gets totally overhauled and the hospitals aren't worth as much. All of the other ones will still retain their value. And then on top of that, if you just owned real estate, there's always the risk that the house burns down or something along those lines. Something could absolutely happen to it. Whereas if you are invested in a REIT and one building burns down out of a thousand buildings that you own, it's not nearly as big of a deal. So basically you get a share of the rent and it's a steady source of dividend income. These are pretty easy to invest in. However, there usually is more fluctuation than you see in index funds or ETFs. Now cryptocurrency is another example of an investment that isn't technically a stock. And the definition of cryptocurrency according to Oxford languages is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography rather than by a centralized authority. And basically in very simple terms, cryptocurrency is digital money with much more functionality. Now one of the big problems with government money also known as fiat is it tends to be inflationary, which means it tends to lose its value over time. And there are several different reasons for that. One, people can counterfeit it so people can get really good at making fake money. And in that case, the real money loses its value because of the principles of supply and demand. And then the second reason is very common which is the government decides to print too much money. Cryptocurrency on the other hand tends to be deflationary because there's a set amount that's created and there will never be any more than that amount. So Bitcoin for instance, there are 21 million Bitcoins that will ever exist in the world and there will never be more than 21 million. And many of them have already been lost. So in reality, it might be more like 15 million at this point. And so over time, more and more Bitcoin will likely get lost. It might get burned up in fires or they might accidentally drop it in a river or something along those lines. And because of that, Bitcoin will pretty much always be deflationary. It will always gain value over time, at least in theory. And also cryptocurrency tends to be decentralized and it's not controlled by some central authority. So in some ways it's much more difficult to manipulate the price of cryptocurrency, especially the established ones than it is to manipulate the price of fiat currency. And so many would argue the value of cryptocurrency is determined by supply and demand rather than regulation. And one thing about cryptocurrency is it has had incredible returns over the last 10 years. We're talking by far the biggest returns out of any normal type of investment. Now I wanna really quickly touch again on the importance of diversification. And this is basically where you invest in a bunch of different types of stocks or really just asset classes in general. So you might not be a big fan of cryptocurrency for instance. You might think that cryptocurrency is just a big scam. You know, it's just fake magic internet money. And so you don't wanna diversify in it. But even a lot of cryptocurrency skeptics like to put a certain amount of their money into it. And the reason for that is because the global financial system could potentially crash. There's a chance that that could happen. And if that does happen, there's a very good chance that cryptocurrency would replace fiat money. And this is why many people recommend diversifying your money not just in stocks, not just in real estate, not just in bonds, but also in things like cryptocurrency as well. And you probably don't wanna yolo all of your money into one type of crypto, but diversification reduces your risk without affecting your likely returns. And this is why it's a good idea to have your hand in almost every different type of investment. All right, so now we're gonna get into the different types of investing. And we're gonna be talking about things like day trading, swing trading, long-term investing, et cetera. All right, so day trading, this is another one that you see a lot very, very popular. You got these red and green grass and lines right behind them. And they're smiling, telling you how much they made that day. And a lot of day traders have lots of computer screens like you see in the top right. And day trading is technically where you buy and sell a stock within a single day. So an example of this is you might start your account out with $10,000 at the beginning of the day and you have $0 in stocks. Throughout the day, you might put all $10,000 of those dollars into a particular stock. But by the end of the day, you sell all of that stock. And whatever you have left is whatever you ended up making. So if you had $11,000 at the end of the day, then you would be up 10%. You made $1,000. However, if you have $9,000 at the end of the day that means that you lost money. And some of these trades don't last long at all. You might buy and sell within a few seconds. Other trades might last for hours. Now there's a ton of different types of day trading. You've got like penny stocks, you've got forex and news makes trading fluctuate quite a bit. So one single news article from a certain outlet could make a stock go up a lot or down a lot. Now this is very, very risky. Day trading is super risky. And I want you to know this is just a straight up fact. I'm not hating on like day trading channels but most day traders lose money. It's not that they break even. It's not that they make less money than you would if you did long-term investing. They straight up lose money. And that is just a fact. So this is something that I have no doubt if you get incredibly good at it you can make money consistently from. However, most people are not good at it in order to become good at it. You'll probably have to lose a lot of money because it takes a lot of time and experience in order to get good at it. Swing trading is similar to day trading but instead of buying and selling within a single day in swing trading it could be a few days or a few weeks maybe even up to a month. So you are buying a stock with intentions of selling it soon but you might wait a few days or a few weeks. So for instance, you might have an inclination that a company did really well and they're about to come out with their Q1 or Q2 earnings or maybe they have a huge announcement that they're about to make that is going to send the stock price soaring. You don't know exactly when that announcement is going to be though. So what you would do is you would maybe buy some of the stock and then wait for the announcement to happen. Once that announcement happens the stock does end up going up maybe five or 10% something like that. That is when you would sell the stock. Now one big problem you have here is overnight risk. So you might go to sleep and the price of the stock is let's just say $100 and when you wake up the next morning it's only 90. That's not something you'd have to worry about with day trading because you always close your position at the end of the day. Now swing trading is not as influenced by the news but it still can be and in order to be profitable it does require larger price movements than something like day trading. Now it's probably not as risky as day trading but it's still pretty risky. Long-term investing. This is my favorite personal type of investing for many different reasons and long-term investing is exactly what it sounds like. You are making an investment with the intention of holding that investment for a very long time. Now generally speaking long-term investing you're going to be investing in intervals over a period of time. So for instance you might decide to invest $500 a month every single month. Long-term investing is not nearly as risky because as we've talked about before the market does go up and down but generally speaking over the long-term it goes up. It's also relatively hands off because you're not constantly having to check the stock price. It's pretty easy to automate pretty much any investment brokerage has the option for you to long-term invest. So for instance like I said before you can set it to where it takes $500 every single month out of your bank account and automatically invest it into whatever stock you want. And on average long-term investing gets better returns than both short-term investing or trading. There also tends to be a lot less in fees because of the fact that you're not constantly buying and selling and moving your money around. And if that wasn't enough there are lots of tax benefits to investing for the long-term. So we're going to go over this later but basically you pay a lot less in taxes if you invest for more than a year than if you invest for less than a year. This is called long-term capital gains tax versus short-term capital gains. Another really great type of investment that everybody should take advantage of if they can however it is somewhat limited would be retirement accounts or tax advantage accounts. So some examples here would be the Roth IRA. This is the individual retirement account. Now these accounts are all of course based in the US other countries will have similar versions but the Roth IRA for instance you can invest about $6,000 a year and it has some incredible tax benefits. The money that you put into your Roth IRA gets to compound completely tax-free. That means you don't have to pay money on the compounded interest within the Roth IRA. So you get the magic of compounded interest without even having to pay taxes on it. Now there's a lot more to these I'm going over them super fast but the 401K is really great as well because a lot of the time your company will match the amount of money you put into your 401K. So many companies for instance if you do 5% of your paycheck into your 401K they will match it. So just as an example let's say you're putting $1,000 a month into your 401K the company will match that $1,000 and so the total amount that goes in there is 2,000. And then the 401K also has some tax benefits as well. Another example is a health savings account that one can be really good too it's not as common as the other two and that one of course is meant to help with healthcare costs but there's other ways you can save money with it as well and more. There's a lot more options out there than just that those are just some common ones. And these tax incentives and tax advantages are just absolutely ridiculous and you'd be crazy not to take advantage of them. However, there's usually early withdrawal penalties, right? So this means that the investments are less liquid. So these are designed to be accounts where you don't withdraw it until it's time for you to retire. But if you do decide to withdraw early there are some really nasty benefits and that would kind of defeat the entire purpose of having all of these tax benefits. So you definitely wanna take advantage of your retirement accounts if you can. Another type of trading is leveraged trading. And this is basically where you take borrowed money usually from whatever exchange you're using and that increases the potential gain of a stock but it also increases the potential loss. So let me give you an example of this. Let's say that you have $100 and there is a $100 stock that you believe is going to be going to $200 really quick like maybe tomorrow. And you have very strong conviction in this belief. What you can do is you can trade on margin and borrow $200 so your total investment is $300. Then the next day the stock goes up to $200 per share hopefully and you sell it for $600. Then you pay back the $200 and you pocket the $300 in profit. So this is a very simplified example of course but leveraged trading is something you can do as well. Of course it's very risky because if the stock price goes down you still have to pay that back. Now let's go ahead and talk about some really common investing strategies. And a lot of these strategies are how people evaluate stocks. Now when it comes to investing strategies you have technical stock analysis and fundamental stock analysis. And the first one we're gonna talk about is technical. Now technical stock analysis focuses on charts and past price movements as well as market behavior. And this is basically where you see all those charts that have the red and the green and the graphs and traders try to predict future price movements by using past price behavior. Now there's many different indicators and tools that are used in technical analysis. The four most common ones are trend indicators, momentum indicators, volatility indicators and volume indicators. Now generally speaking it's better to focus on a few indicators that you personally believe are important with whatever type of stocks you are evaluating and master them. And one thing I will say about indicators is many of them can actually be automated by software. So obviously a robot would be able to do these types of jobs better than you. So many of these can be automated however they cannot necessarily be interpreted by a robot. So if you wanna get good at technical stock analysis you have to figure out what types of indicators can't be automated. So trend indicators basically measure the direction and strength of a stock price by comparing prices to an established baseline. So an example of this one would be the moving average indicator very common one that you'll see. And this is used to set up support and resistance levels as well as identifying trends that might be happening in the stock. So the example that I have there is a 100 day moving average, a 50 day moving average and a 200 day moving average. Momentum indicators tend to focus less on the direction and rather on the speed of the price movement. And usually it does this by comparing current closing prices to previous closing prices. So a very common example of this one would be the RSI or relative strength index. It measures the velocity of the change in trend, recent trading strength and the magnitude of the change. And there's an example here in the bottom left I'm not gonna go too deep into these because the video would just go too long but you see the RSI down there on the bottom you know it's oversold on the left and then it's overbought on the right. And again this is an indicator it's not always perfect. And if you look at the stock price and when it was oversold you can kind of see that it actually spiked in price around the time that it was oversold. And you can also see that when it was overbought that's the time when it started lowering in price as well. And then there are volatility indicators and this focuses on the measurement of the rate of price movement. So it doesn't really care all that much about the direction of price movement it cares a lot more about the rate so how volatile is the stock? And an example of this is Bollinger Bands. And you can kind of see on the screen it measures the ceiling and the floor of a price relative to previous trades. And you can kind of see that when it goes outside of the Bollinger Bands that's an indicator of what the stock price is about to do. Then we've got volume indicators and these measure the impact of the trend based on the volume of stocks traded. So when you see the volume go up a lot that means that either a lot of people are buying it or a lot of people are selling it or maybe both. And an example of this is the volume rate of change. And this highlights the increase in volume at key points in the stock cycle usually at the bottom top or breakout points of a stock's life cycle. So you kind of see on the screen here that this stock has kind of been going up down, up down and it's had this trend where it kind of goes up down and it's slightly in a downtrend. And then all of a sudden at the bottom you see this volume indicator spike. And that's when the stock just keeps going instead of continuing this downtrend it keeps going up. Now we're gonna talk about fundamental stock analysis. Now a lot of people think one is better than the other technical and fundamental. Again, I try to be as balanced as possible. I think both of them are very valuable. However, with that being said I'm more of a long-term investor and fundamental stock analysis does go a little bit better more hand in hand with long-term investing. But I'm not a technical stock analysis hater by any means. I think there's a lot of value in understanding technical stock analysis but I do prefer fundamental stock analysis. So this looks at the economic, financial and social aspects that influence the price of a stock and the value or perceived value of a business. And it involves the analysis of a company, the market that the company sells for, the industry, economic conditions as well as social conditions. And Warren Buffett is a big fan of fundamental stock analysis. And one thing that he says is he likes businesses where the products cost a penny to make. You can sell them for a dollar. You have some sort of competitive advantage like you're the only one that can make a product just like that and that it's addictive. So people just keep coming back more and more for the product, they love it. So when he is looking at companies and evaluating whether he wants to invest in them those are things that he really looks at. And that is his fundamental stock analysis strategy. So you can see that those things don't just involve looking at the numbers of a company although looking at the numbers is important. It's also having the soft skills to understand the nuances and the social side of the company as well. And then another type of investing is what I like to call following hype. And this would be something like Dogecoin goes up when Elon Musk tweets about it. This has nothing to do with the value that Dogecoin gives. It has nothing to do with underlying value that the company is giving to the world. It's just noticing that, oh, hey, there's a lot of hype on this stock or this cryptocurrency and it goes up whenever Elon Musk tweets about it. So I'm gonna be monitoring Elon Musk's tweets and then buy Dogecoin whenever he tweets about it, something along those lines. And basically this is kind of just like following other people. So, oh, I see a bunch of other people are investing in this stock. Maybe I should too. You know, I do make fun of this type of stock analysis and a lot of other YouTubers do as well but all joking aside, social signals can be really effective and really important. And we all saw this happen in early 2021 when Wall Street bets all started investing their money in GameStop and the price of GameStop went up over 100X. So in that particular case, if you were following hype, if you were listening to social signals and you were part of the subreddit, it probably turned out really well for you. But this is very risky because there are ways of manipulating subreddits. For instance, you can make a bunch of bots and have them upvote certain posts or pay a bunch of people to upvote certain posts. You know, there's so many different ways that you can manipulate the price. There's a lot of pump and dump sorts of things that happen and for every one GameStop situation that happens, there's probably dozens of others where it never pans out. So you definitely have to be very careful when it comes to following hype. But with that being said, you wanna be a balanced investor, somebody who considers all different possibilities and social signals are incredibly powerful and incredibly important. And to me, this is actually a small part of fundamental investing, which is monitoring what happens in the media, monitoring the news, figuring out like different trends that are happening, understanding why so many people are so passionate about investing in a certain stock. This is all a part of fundamental investing, in my opinion. Another part of fundamental investing is understanding financial ratios. Now, there are a bunch of different financial ratios. We are not going to focus on all of them. I'm only gonna tell you the ones that I think you really need to know. Now, the five types of financial ratios are price ratios, profitability, liquidity, debt and efficiency ratios. We're gonna start off with price ratios. So they are best used to compare the relative value of a stock and best for comparing stocks within the same sector. So basically this is an apples to apples comparison. So you really wouldn't want to compare the price ratio of a stock that is in the consumer goods sector to a stock that is like Tesla or Apple or something along those lines, something that's like software or hardware. That's just really not an apples to apples comparison. And it would basically be worthless. Now, a few examples of price ratios are the PE ratio, which is price to earnings. There's the pay ratio. There's the price to sales ratio. There's the price to book ratio. And like I said, I'm gonna go over the ones that I think are the most important for you to know here in a minute. Profitability ratios are an indicator that a company is good at making profits. So basically exactly what it sounds like. A few examples of profitability ratios are return on assets, return on equity and profit margin. Now notice I said an indicator here. Indicator means that it probably means that a company is good at making profit, but it doesn't mean that for sure. It's just a sign. However, if you look at a bunch of different ratios and they tell you good things, you know, it's one of those situations where if it looks like it, it smells like it, it sounds like it, it probably is it. Liquidity ratios are an indicator of a business's short-term health. And that basically means can the business meet their short-term obligations? So a couple examples of this would be the current ratio and the quick ratio. Current ratio is current assets over current liabilities. Debt ratios on the other hand are an indicator of a company's long-term health. And there's a focus here on a company's finances and how efficiently a company uses its capital and debt. So a few examples of this would be the debt to equity ratio as well as the interest coverage ratio. And then the last one is going to be efficiency ratios. And this is a measure of how a company is using fixed assets such as real estate and equipment. So a few examples of this one would be the asset turnover ratio as well as the inventory turnover ratio. And now I'm gonna go over what in my opinion are the 10 most important financial ratios that you definitely need to know. First of all, the PE ratio, this is probably the one that you hear about the most. And this means the price to earnings ratio. And this basically compares a company's share price to its earnings per share. So you can see the actual ratio on the bottom left, PE equals stock price divided by earnings per share. And a high PE ratio indicates that a company is very profitable. However, it could also indicate that a stock price is overvalued, right? Because you have the stock price on top and the earnings is on bottom. So it could be one or the other. On the flip side, a low PE ratio indicates that a company isn't very profitable. But it could also indicate that the stock is undervalued. So the number does tell you something, but it doesn't tell you everything. You have to use your knowledge, your wisdom and your experience to tell whether, you know, a low PE ratio means that the company either isn't very profitable or it's undervalued. The price to book ratio is the amount that you have to pay to own $1 in equity. And you can see it, it's the price per share divided by the book value per share. Now, this is another one of those ratios that you only want to compare within the same sector or the same industry. And historically speaking, the price to book ratio has been one of the best indicators of a company's value. However, especially with tech companies over the last 10 to 20 years, it has been flipped on its head. And the reason for this is because tech companies tend to have very high PB ratios because of intangible assets. So you really only want to use this as an indicator when you're comparing apples to apples, AKA similar companies. Profit margin is a very simple ratio. It measures the sales that flow through a company's bottom line. And of course, shareholders love profit margin. That's what they want to see. They want to see the company making lots of money. And profit margin is basically the net income divided by the net sales. So they want to make the most amount of money with the least amount of cost. Definitely a very good short-term indicator of a company's profitability. But with that being said, cutting costs is not always a great thing. Sometimes you cut costs too much and that hurts a company long-term. Current ratio is a company's ability to pay its short-term liability using its short-term assets. So greater than one means a company has more short-term assets than it does liabilities. And that tends to be a good thing. Less than one means a company has more short-term liabilities than assets. Now this is another one where when it comes to certain types of companies, this one is just totally turned on its head. And the reason for that is because many tech companies because they have such high upside will actually go deep in debt for sometimes up to a decade. And people will still remain invested in them because of the fact that they know that company is taking a significant amount of the market share. And once they secure that amount of the market share and they've established themselves, they're gonna start making money hand over fist. At least theoretically, that's what they think. Quick ratio is very similar to current ratio. The only difference is it doesn't include the inventory and the inventory is definitely less liquid than cash. So there are some companies that might take them a long time to sell their inventory. Whereas there's other companies where things are flying off of the shelves. So depending on the type of company you are evaluating, a current ratio might be better than a quick ratio or vice versa. Next, we're gonna talk about asset turnover ratio. And this is basically an indicator that shows how effective management is at running the company. And this basically divides the revenue or sales of a company by the average total assets. So asset turnover ratio is revenue divided by assets. Now this is important because sometimes the profit margin really isn't the only thing you should look at. Just because certain products have a high profit margin, if they don't turn over very fast, then they're just gonna sit there for a long period of time. And so this is basically a way of making sure that products aren't sitting on the shelves, collecting dust for too long before they get turned over. And it also shows how well the company is being managed. Another very similar one is the inventory turnover ratio. It's an indicator of how quickly a company is able to sell its inventory. And the inventory turnover ratio is the cost of goods sold divided by the average inventory. Now this is one of those things where sometimes profit margin doesn't matter as much as volume. So if a company has a product that has really high profit margin, but it just sits on the shelf for a long time, that isn't necessarily going to be as profitable as a product that has a low profit margin, but it has high turnover. So it gets sold really quickly. Now more turnover is a good thing because it shows the company isn't wasting money storing stuff. Now the debt to equity ratio compares the borrowed capital to capital contributed by the shareholders. Now a higher ratio tends to be a bad thing because that means a company is likely not able to meet its debt obligations. That means a company is borrowing a lot of money compared to how much it's worth. Return on assets is an indicator of how efficiently a company is using its assets to achieve profitability. So a really good example of this one that would improve your return on assets score is for some companies, it's better for you to actually just buy a building rather than leasing or renting a building. But for some companies, it's the other way around. It's better for you to lease or rent the building rather than buying it. So an example of this is let's say you live in an area that you personally believe the property prices are going to be going up a lot soon. Something like a Silicon Valley type of area. It would probably be better for you to just simply buy the building that you're in rather than renting it or leasing it because that is going to help you with your long-term profitability. And this can actually be done very strategically to increase the value of a company. You do see different companies using different strategies along this line. So for instance, Costco often owns the buildings that they use. And they actually own over 12 million square feet of real estate. And they are aggressively buying more every year. All right, so here is the first free gift and surprise. These are all free resources that I personally use to do my due diligence on different stock investments. So I will let you check these out, but there's simply wall, there's wall streets in, finance.yahoo. I think everyone knows about that one. They have a lot of really good information like PE ratio, et cetera. Google.com finance, they're actually pretty good as well. Morningstar.com for evaluating stocks and doco.com. So I will let you check these out on your own. Not gonna spend a lot of time on this slide, but these are very good free tools that you can use to evaluate all those different ratios I talked about as well as much more. And I don't usually reveal these things because you know, there's a lot of time that I've wasted looking at stuff that's not that good, but these ones are all excellent. All right, so next, what exactly is a stock brokerage? Stock brokers work at stock brokerages and it's basically a financial institution that can buy and sell securities on behalf of their clients. Some examples of stock brokerages would be Fidelity, Vanguard, as well as Charles Schwab. You've probably heard of all of these. Some of the new players on the scene are Robin Hood, Webull, and Moomoo. So we're gonna go over some of these common ones and we're gonna start off with the more advanced stock brokerages first. So Vanguard is the company that basically started Index Fund Investing and it was basically started by the legendary investor John Bogle. And in a time where there was a whole lot of sketchiness going on in the investing community, John Bogle created Index Funds, which were one of the safest but also most profitable investments that you could make. And he changed the investing game forever. So Vanguard is a very trusted company. Now, they don't have any trading platform. They're all about investing, not trading. They have no physical branches. They don't really sell credit cards. They don't do checking accounts. Some of the stuff that a lot of the other investing firms are getting into now, they're kind of expanding their financial services. So the website itself is relatively simple and I'm also gonna say it's kind of outdated as well. But with that being said, I would say if you had to pick one that is the most trustworthy, Vanguard is it. They have the longest track record. They are incredibly trustworthy. Fidelity, very similar to Charles Schwab. They're definitely a little bit more modernized than Vanguard in my opinion. They also have tried to expand out to other parts of finance besides just investing in trading. One thing I will say about them is they are incredibly user-friendly. They have a amazing website and application. They have some of the lower interest rates on margin loans if you're into that type of investing. And they are focused on integrating many different types of finance features seamlessly. They also do have the option for international trading which is great and they do offer fractional shares which is where you can buy a part of a share instead of having to buy at least one. Charles Schwab is more user-friendly than Vanguard. There's more features than Vanguard. They have lots of different options like credit cards, checking accounts, trading platform. They have a really amazing international bank account where if you ever get charged fees for using an ATM when you're withdrawing fees internationally they will actually cover those fees for you. So many people who do a lot of traveling love to use the Charles Schwab international account. They do have some physical branches which is important for people sometimes. TD Ameritrade, Thinkorswim is their trading platform. So TD Ameritrade is for investing and Thinkorswim is for trading. They are available in the USA as well as Canada and they do offer some cryptocurrency trading. So for instance, Bitcoin Futures Trading. There are no fractional shares. So TD Ameritrade is definitely up there. They're one of the biggest players. Next we're gonna go over some beginner-friendly investing applications. So those last ones are more advanced. They do take some time to learn how to use. These ones are going to be much more beginner-friendly. You can basically learn how to use all of these within just like a few hours. Robinhood, this was basically the first app to make it easy to invest for common people. So because of Robinhood, almost all companies now have dropped their trading and investing fees incredibly low. And Robinhood was the first company to do that. They started it all. Now Robinhood is ridiculously easy to use. I mean, it's honestly maybe too easy because you really don't have some of the options that you want to have because they just don't include those options because that would complicate things. They also have incredible sign-up bonus incentives. So I don't know exactly what the sign-up bonus they're doing right now is, but a lot of the time they'll offer one or two free stocks just for making an account. And I will have the bonus down in the description below if you want to check it. And it is designed to be used on your phone. So the web app is extremely basic and simple. I wouldn't really recommend using it. Webull, very similar to Robinhood. I would say Webull is Robinhood's biggest competitor. Webull is great for both beginner investors as well as people who are intermediate and even people who want to move into advanced. Webull has access to active trading as well as long-term investing as well. The Webull app on the phone is fantastic, super easy to use. However, they also have a web application that is really good as well. You also have the option to buy and sell cryptocurrency on Webull. Pretty good customer service for an app and they have absolutely amazing sign-up bonus incentives. So sometimes Webull does these promotions where they offer up to like five free stocks worth up to like $8,000. And all you have to do is just sign up for an account and fund it. Again, you can see that down in the description below if you want to check it out. It's pretty much just free money. So you might as well do it. You can fund your account and then take it out right afterwards and keep the free stocks. M1 Finance is a robo-advisor and it's extremely automated and hands-off. I currently have my Roth IRA with M1 Finance. Now there is a $100 account minimum for them and they don't really care about why you're investing. They just help you do it better. So M1 Finance is all about profit. Public is another cool account. You get to publicly show your investments. So it's almost like a social media platform mixed with an investing platform and they do focus on long-term investing. Betterment is another robo-advisor kind of like M1 Finance. However, I would say it's even more automated and hands-off if that's possible. However, they don't offer nearly as much advice as something like Wealthfront does. And then Moomoo is kind of the new kid on the block. They just came out very similar to Webull in Robinhood. They offer incredible sign-up bonuses as well. So definitely check them out. I should have them down in the description as well. Might as well get your free stocks. All right, so another free gift and surprise. What I did is I went through and I made a list of all of the best sign-up bonuses that are available in the personal finance space and I'm gonna keep on adding to this list as I find new ones. Now some of these are my affiliate links just like they would be down in the description below. Some of them are not. Some of them are just, you know, links to promotions. But these are ones that in terms of your return on investment with the time that it takes you to sign up for it with what you could potentially get in return are definitely worth it. It's essentially just like getting free money. So these are ones that I recommend looking into and I made an entire list for you and you can check that out down in the description below. It's the list of sign-up bonuses. So just for watching this video today, you might end up getting paid like $100 to $200 in free stocks. All right, so now we are gonna jump in and go ahead and buy your first stock and I am going to be using Weeble. So what you would wanna do is either use my link down in the description below if you want your free stocks or you can just type in weeble.com on Google or whatever you wanna do in order to get to Weeble and you are gonna start by creating your account. Now in order to create your account, it's very easy, doesn't take very long. However, you do have to give them certain information for them to be able to do it and this is something that they have to do by law. This is KYC laws, which means know your customer and this is basically where companies have to collect certain information from their customers in order to allow their customers to invest. So unfortunately, this is something you have to do. You have to tell them, you know, your phone number, they're gonna ask what your address is, like certain things in order to create the account. But once you've done that, it shouldn't take long before your account gets approved and then you are gonna move on to the point where you actually fund your Weeble account. Now this is something that I did several days ago because there is a little bit of a wait period after you fund your Weeble account before you can use the funds. And so that's something I had to do several days ago in preparation to make this video. So at this point, we are actually going to jump back to that time where the Weeble account was funded. So in the next little bit, you are going to see past Shane funding the Weeble account and then buying the first stock. So now we're gonna jump to Shane from a few days ago funding the Weeble account. All right, guys. So this is Shane from the past. I'm gonna be funding my Weeble account with $10,000. And so basically, you know, you create your Weeble account, not very difficult at all. Right now they're offering a really awesome promotion. Invite one friend, get six free stocks. A lot of the time, they'll give you like eight up to $1,800 worth of free stocks or even more than that. I've seen some ridiculous promotions, but it does change. So I don't wanna give you an exact number. But yeah, you know, this part right here, watch list. This is my test account. So I don't really have many on the watch list here. I use this account to do all kinds of weird YouTube videos and stuff. Markets can look at all kinds of different information here, it's really nice. And then there's community and there's messages. Now the one you wanna go to in order to fund the account is the middle one. Usually you'll have to put in a password in order to access this one. But what you wanna do here is look at the, you know, the total account value, click on details. And then you go down just a little bit to buying power, click deposit. And then what you wanna do, that was the last deposit I made. What you wanna do here is link your bank account up at the very top. Now of course, I've already linked my bank account. The most common way to do it is the ACH transfer. That's the easiest and most common way to do it. It does take a few days for the actual funds to go through to the exchange. However, they will usually pretty much right away within a few hours and honestly, usually within a few minutes, they will give you access to a significant amount of your funds. It's kind of like the honor system. They'll give you that money expecting that the money is gonna actually come through via your bank. Okay, so let's go ahead, type $10,000 in. Transfer to Webull, confirm. And that's that, boom, done. Easy as that. All right, future Shane here again. So basically I'm looking on my phone right now and the funds are available. When you're on this middle tab here, you see there's watch list, markets. You got the middle tab, community and messages. You wanna be on the middle tab here and you see that the cash balance is 20,476. So I have other cash balance on there besides this one, I'm doing another video as well. But that means I do have a lot of cash that's available to be used right now. So the account is funded. So what I'm gonna do here is I'm gonna go over to the second tab, markets. At the top, you have some options. You can go to explore, United States, crypto, global. So there's a bunch of different options to look into different stocks that you might wanna buy. Explore is always cool just to get news about stuff. But we are probably gonna stick with United States for the most part and they'll give you some different options you can use to buy stocks that are the top gainers in the last day. These are always good ones to look into. Top losers, look at stocks that have a lot of volume. Most popular ETFs. So they have a lot of good suggestions there. Can also do crypto, you can buy crypto, you can look at global stocks. So lots of good options. But what we're gonna do is we're gonna go to the top and we are going to look for some Tesla. All right, so Tesla looks like it's actually pretty high right now. You can see that in the last five years, Tesla went up about 27X. So 2,700% return in the last five years. In the last one year, it still went up about 84%. So really good returns even in the last year. So what we are gonna do here is we are going to buy some Tesla. This might not be very smart because it looks like it is almost at an all-time high. But just for the purposes of this video, I'm gonna buy some Tesla. I'm sure my accountant is gonna hate me. Gonna go to trade and I am going to do nine. So the estimated amount to buy nine shares of Tesla is $9,832. There are many different types of orders you can do here. You've got a market order, stop order, limit order. Most people who are newbies should probably stick with either the limit or the market order. So I'm gonna go ahead and just stick with the limit order right now. Hopefully it completes the whole order. And you wanna make sure everything's good, make sure you're buying it for the right price and then you click buy and you click confirm. And just like that, my order was immediately filled. So we're good to go there. Now one more thing I'm quickly gonna show you how to do before we move on in the video is I wanna show you how to use the charts on the mobile version of Webull. So again, you would wanna go back to markets, go to search. And in this case, we're gonna go to GameStop. GameStop earlier this year went up a ridiculous amount. So in the last year it's gone up about 1,603% of its height. So just an absolutely ridiculous return. The chart itself, I'm just gonna use my fingers here and kinda show you what I'm doing. So the chart itself, you can mess with kinda like this, right? So you can expand the chart, you can move the chart over. There's a lot of things you can do just by doing that alone. But if you look at the very bottom, you'll notice it says MacD and Histogram down there. So that is something that is of course a technical indicator. And we talked about technical indicators earlier on in the video, but the way you can change those is you look at the bottom right, just to the right of Macs. So I clicked on Macs, but it's just to the right of that. You click on the little line there. And you can change it from a line graph to an area graph, baseline, candlestick graph, hollow candle, hulking ashy bar, colored bar. And let's just go ahead and I'll change it to a candle stick graph. So you can kinda see what that looks like. This is what the baseline one looks like. So yeah, you can change all of those if you'd like. To the right of that, you can actually change the technical indicators. So these are different and frequently used indicators. The MA stands for Moving Average. The EMA stands for Exponential Moving Averages. The BOLL stands for Bollinger Bands. The IC stands for Ichimoku Cloud. And the VWAP stands for Volume Weighted Average Price. And then the subchart, which is the chart on the bottom, you've got volume, of course. That's pretty self-explanatory, that's the volume. You've got MACD, which is the Moving Average Convergence and Divergence. You've got KDJ, which is the Stochastic Oscillator. You've got RSI, which is the Relative Strength Index. ROC, which is the Rate of Change. DMA, which is the Displaced Moving Average. And then FSTO, which is the Fast Stochastic Oscillator. So let's go ahead and I'll change the Bollinger, so you can kind of see what that looks like. So it's very similar to what I showed you before. It puts these bands that kind of shows you the upper limit as well as the lower limit. I'll also go ahead and change the bottom one to volume. And you can actually even select multiple ones. So there's the volume indicator right there. So I'll take away the MACD and take away the VWAP. So you can see kind of how it looks. A little bit cleaner now. So I'm gonna go ahead and just change it back to what it was originally, because that's a pretty good one. But yeah, it's amazing how many different indicators you have on a phone. Like it's incredible, all the different indicators you can look at and it's all just at your fingertips on your phone. Is this perfect? Definitely not. It's better to use the online like web app version. But for a phone, this is incredible. And that's one of the reasons why I love Webull so much is you just have so many options and it's so easy to use, but it's in a phone. So it's incredibly accessible and you can just use it right away. Now, one thing that I wanted to quickly go over is limit orders versus market orders and when you should do either one. So let's go back to that Tesla example earlier where we bought some Tesla. I'm gonna go back to the part where you would set it as a limit order or a market order. Now, very generally speaking, traders like to use limit orders. And the reason for that is because you're buying and selling short term so every penny matters. Investors don't really care and they usually just do market orders instead. So depending on which one you're going for, especially if you're a beginner, you probably just wanna stick with a limit order or a market order and it depends on whether you are investing or you are trading. That is a very simplified version of which type of order to use because I know that's a question that people ask all the time on these types of videos. So that is my answer. All right, so let's say I wanted to sell the Tesla shares that I just bought. So what I would do is I would go to the main page here and you can either just click on the Tesla right from there or if you don't wanna do that, you can go to markets, search, search for Tesla. That's the ticker symbol or you can just type the whole thing out, Tesla. If you can type correctly, unlike me, click on the Tesla and then you go to trade. And then you would click sell. You would pick how many shares you want to sell and if you wanted to, you could sell all nine shares. And then you could, if you wanted to, you could do a limit order or a market order. And then you would click sell and then you'd click confirm if you wanna do it. I'm not gonna do that because I just bought them and it would be silly for me to do that. But that's how you would actually sell your stock if you wanted to. All right, so one of the reasons why I didn't sell that stock right away is because I didn't want my accountant to have to deal with what's known as short-term capital gains. And that's basically when you buy and sell an asset within one year. Now short-term capital gains tax is much higher than long-term. And long-term capital gains is when you wait a year or more to sell an asset. So we can see the differences here on this chart that was made on financialsamurai.com, really good website. So you can see here, you know, the difference between, like let's say you're just, you know, investing a little bit of money, long-term versus short-term, it could be the difference between paying 10 or 12% versus paying 0%. So you pay 0% up to about $41,000 with long-term capital gains. Whereas if you have a lot of money, like let's say you have over $539,000, you're gonna be paying 37% versus 20%. So over a year versus under a year is a 17% difference, which is ridiculous. And this is one of the many reasons why long-term investing, generally speaking, is gonna be better than short-term. All right, so my last free gift and surprise is these slides. I was watching another video on investing and they did give people access to the slides, but you had to sign up for their email list and like all this stuff and they said it was free, but if you have to sign up for an email list, is it really free? And so I decided in this video, I'm gonna give you access to these slides legitimately for free, just a gift from me to you. So if you ever want to review these slides, go over them again to brush up on your investing skills, your stock market skills. You are free to do that. It's gonna be down in the description below. And if you enjoyed this video, if you learned anything from it, please go ahead and share it with a friend. And obviously hit the like button, subscribe, ring the notification bell and comment down below because that all helps the video as well. But here are the citations that I used. I used a lot of different sites to help with this. More, more, yeah. So a lot of different sites I used to do research on this. It was a project that took over 40 hours to make this. So I really hope you enjoyed it. And come back to this video again in the future if you forget anything, just use it as a reference and check out my other videos right here. I made them just for you. Go ahead, gently tap that like button, hit the subscribe button, ring the notification bell and comment down below any thoughts, comments, et cetera that you have on the video. Thank you for making it all the way through. It took over four hours to record this. So I hope you had a good time and I will see you next time.