 All right, let's begin. So this video is going to be a beginner's guide to investing. It's going to be pretty simple to the point and very basic understanding of what investing is What prompted me to make this video was the fact that I meet a lot of people in real life who have no idea What investing is and very very few of them actually invest in anything and they're missing out on a great opportunity to make some money So let's get started and let's just start with the contents of this video So in this video, I'll talk about what investing is The things you need to complete before you start investing the compounding effect and the summary of a few different types of different investment vehicles As well as why I prefer investing in equities Let's get started So let's start with the basic definition of what is investing? So investing is spending money on assets such as a stock market real estate or precious metals like gold and silver With the intention of their value increasing and returning a profit to you Very simple There were several reasons why you should be investing to save up for retirement to earn some extra income through dividends and as a hedging is inflation No matter what your investing goal is it is essential to start saving and investing as early as possible to take advantage of the compounding effect I'll talk more about the compounding effect later on in the video and I cannot stress this enough how important investing as early as possible is What you should do before you start investing So the three things I would recommend you do before you start investing is to a have an emergency fund Get rid of your high interest debt and have a financial roadmap So let's get started with what is an emergency fund every person specifically every intelligent investor should save money in an emergency fund The purpose of having this emergency fund is to just basically help you out to any unexpected situations that you may incur such as a hospital bill Emergency travel or unemployment It will also ensure that during such times you're not forced to sell your investments to raise liquidity and your assets can continue to compound safely This fund will should always be liquid and is insurance for yourself and your investment saving you to any financial stressors It'll also make you less emotional with your trading and investing as you have a backup plan Never ever put all your money Into the in any sort of investment always keep some liquid cash that you might need in case of an emergency So let's start how to make an emergency fund very simple start by calculating the monthly expenses that you and the people dependent on you incur This includes your total expenses So everything from rent groceries gas and all online subscriptions and recurring costs This is purely your total expenses and you should not take into account any of your income So after calculating this number you can multiply this by the number of months worth of expenses that you want saved up I would recommend anywhere between three and six months and of course is determined by your risk tolerance Number two pay off your high interest debt I highly recommend you guys to pay off your high interest that before you start investing So high interest debt in this case is that anywhere between an interest rate of over five to ten percent Most investment strategies are unlikely to pay off as well as you just simply paying off your high interest that that you may have This is because paying off your debt is a guaranteed way of making money as a dollar saved is a dollar earned If you owe money on high interest credit cards The wisest thing you can do under any market conditions is to pay off the balance info as quickly as possible Chances are that your debt will outpace the growth of your investment and you will have a net negative return despite all your effort So to put this into context the S&P 500, which is one of the best ETFs Since its inception has only given it has given a rate of return of about eleven point eighty eight percent annually And if you have a debt that's over twelve percent interest rate You are essentially just canceling out any of the investment returns that you might get So if I want to just pay off your high interest That and the third and final one would be to draw financial roadmap This is especially if you have never made a financial plan before so it takes some time out of your day Let me take an honest look at your entire finances situation The first step to successful investing is figuring out your goals and your risk tolerance either on your own or with the help of a Financial professional if an investing goal is of a longer time frame such as eight to ten years You can allocate your money to high-risk assets such as equities that have high return but are risky However for goals of a shorter time frame such as two to three years You might be better off just allocating your money in low risk assets such as precious metals like gold that have low returns But also are also less risky than these factors will all strongly influence your investing journey Which markets you pursue and what assets you buy and how often you handle these assets Now let's get to the interesting part, which is the compounding effect The compounding interest is one is is when you earn interest on both the money You have saved and the interest you earn and compounding interest produces excellent results when you give it time as a generous interest on top of interest The longer you invest the greater the compounding effect and your returns over 25 years are over five times as much as the returns over a 10-year period So all the one would assume that the returns the return difference between 10 and 25 would be about 2.5 It is not the case. So let me just demonstrate this with a quick example In this example, we will be assuming that you have put a $10,000 initial deposit with no additional contributions into the S&P 1,500 which is historically given a rate of return of about 11.88% since its inception Take a look at the compounding effect. So after 10 years or 10,000 is roughly $30,000 But after 25 years, it's a hundred and sixty five thousand dollars So it's a huge difference if you start investing at the age of 18 That's compared to when you start investing at the age of 28 those 10 years worth of compounding in the compounding returns that you miss out on is huge I've attached the link for the calculator so you can play around with your own investment plan and see how powerful compounding can actually be over time Now let's just talk about the different types of investment vehicles such as equities real estate and precious metals There are many more like crypto, but these are the three I will be just mentioning briefly and why I prefer investing in equities So what are equities? Investing in stock equities are basically the in the stock market So investing in stocks is about just buying ownership in companies Your shares in the company can increase or decrease in value depending on how well the company performs and Companies that continue to generate profits tend to provide a much higher return than those do not some simple stuff There are more volatile than investing in real estate or precious metals. So real estate requires Generally requires a higher sum higher capital allocation and precious metals while they are quite safe They also do not provide such a great return The best way would be to diversify across all these all of these three mediums So you're not just stuck in equities. So you have equities real estate and precious metals like gold That would be a very well diversified portfolio Another way in another ETFs in are basically just a bunch of basket of stocks and bonds that trade in the market These are generally more diversified and therefore less risky than just picking individual stocks So the S&P 500 is just basically the top 500 companies in the United States And when you invest in the S&P 500 your money is spread across 500 different companies rather than the one simple company What would just one individual company? So your money is much more spread out much more diversified and therefore as a result is much more safe Rather than just picking a simple picking one company And that's about it. If you guys are interested in more simple content related to investing and stocks please do let me know I will I do have plans of making more stuff like this and Just let me know if you have anything that you'd like me to cover or like anything that you are interested in that I should look more deeply into but for now, this is about it. Thank you very much