 Hey guys, welcome to the channel Shane here and this video is going to be a full step by step guide on investing where at the end I'm going to invest $10,000 of my own money. Now this was a very highly requested topic and it's really more of a mini free course than a video. So I highly recommend watching the entire course. It's going to be best for you to watch it all the way through because the beginning is going to kind of build into the middle and the middle is going to build into the end. So that's the best way to understand it. However, I understand everyone's extremely busy and that's why I have detailed timestamps that you can look at down in the description below. And to be honest with you in doing research for this video, I saw a lot of really bad investing advice. And so I realized it's important for me to make the best possible video that I could the video that I wish I had when I started investing. And so that's what I have done and overall when you include the research, all of the scripts, the PowerPoint, the gifts and surprises that I'm going to have for you later in this video, all of that took over 30 to 40 hours to make. So this truly is the ultimate guide and it's going to take you from a complete beginner all the way to knowing more about stocks and investing than probably 99% of people in the world. And even if you already know quite a bit about investing, you're still going to learn a lot from this video. And I know that that's a very bold claim to make. So what I want you to do is when you finish this video, comment down below what you thought about it. So people who actually finish the video, make sure to comment down below and tell me what you thought about it. Give me some feedback. And then other people are also going to be able to see your comments as well. All right. So jumping into the presentation here. And the first thing you're probably thinking is why should I listen to this guy? Well, allow me to introduce myself. My name is Shane Humason. I go by Shane Hummus here on YouTube just because of the fact that nobody pronounces my last name correctly. And one of my biggest passions is personal finance. I love everything about it from side hustles to investing to cryptocurrency. For some reason, I have just been obsessed with finance for the longest time. And on top of that teaching is one of my biggest passions. I was a tutor for years. I even had a kind of a teaching slash consulting business that I ran for a while as well. And for some reason, it's just something I really enjoy doing. And then my third passion is filmmaking. So I started my first YouTube channel all the way back in 2008. It was a channel about this silly little video game called RuneScape. But since then I started many other channels about all kinds of different topics. And this particular one you're watching, Shane Hummus was the one that really took off. And I started doing it just for fun. And then it turned into a cool little side hustle. And then it turned into a full blown business. I also have a doctorate. I am a pharmacist. So I got my farm D. And the reason that that's important or relevant is first of all, I spent a very long time getting it. And then second of all, this shows that I am able to read extremely technical and difficult language and break it down in such a way that anybody can understand it. So as a healthcare professional, you have to be able to talk on several different levels. So the way you talk when you are explaining something to a doctor is completely different than the way you talk when you're talking to a patient, you would use very technical language when you're talking to a doctor. But when you're talking to a patient, you have to use analogies and metaphors and explain it to them in a way that they can understand. And so I got really good at breaking down complex information and explaining it to people in bite sized chunks. I've also been a serial entrepreneur my entire life. I've started so many different businesses all the way from a eyeglass cleaning business, like I started the business where I sold this liquid that cleans your eyeglasses and it also prevents them from fogging up, which sometimes I wish I was still doing that just because it's even more of an issue with people wearing masks, it causes your glasses to fog up all the time. People who wear glasses, you know, I'm telling the truth all the way to trying these things you hear about all the time like Amazon FBA and all other different types of online businesses. Now coming back to the personal finance side of things, I am somebody who considers myself a careful investor, but not a doomer. So the two types of investors you see a lot of these days on social media are people who are just like only invest in gold, right? Gold is the only thing that actually has value. And then a year later, your gold is worth like 2% more or something like that, you know, you don't really get big gains, you know, they don't trust the government, new technologies, companies. And so the only thing they trust is investing in gold and silver. And then on the other side of the spectrum, you've got these people who want you to YOLO all of your money into a penny stock or a meme coin. They don't have any concept of risk tolerance or anything like that. And of course, the truth is the best way to invest is somewhere in the middle. And that's something I think that's really lacking on YouTube is people who have balanced and nuanced opinions on investments. And I also have a six figure investing portfolio. And this is coming from somebody who earned their money in real life. You know, I'm not somebody who got really lucky after 2008 to 2011 crash that happened. And then I made money from that. And then I make more money talking about the money that I made from that. And then I make more money talking about the money that I made for making that. And it's like an infinite monetization loop. I'm somebody who earned my money in real life. I did it the hard way. I'm a relatively normal person, you know, I have a job just like everyone else. And then I invested that and I built it up slowly over time. Now, one thing that I will say is this video is not financial advice, and you should always do your own research. And I'm hoping that with this video, I can teach you how to think for yourself when it comes to investing. All right, so really quickly, this is going to be an overview of what we're going to cover. So we're going to talk about what is a stock categories of stocks, like index funds, etc., or individual stocks, the types of stocks, so value stocks, growth stocks, similar investments to stocks, so things that you might think are stocks, but they technically aren't, but they're very similar. Then we're going to go over where you can buy them. Then we're going to go over what a brokerage is, the different types of brokerage accounts, like an options account, a margin account, etc. Then we're going to talk about the most popular types of brokerages like fidelity, Vanguard, Webull, Robinhood, we're going to go over what I believe to be are the beginner friendly stock brokers. Then we're going to talk about robo advisors because that is a way for you to basically automate your investments. Then we're going to go over different investing strategies like swing trading, day trading, or long term investing. And then we're going to talk about the most common types of trades. So things like market orders and limit orders. Next is stock trading terminology that you absolutely have to know. So these are things that you're going to be hearing all the time. And it's really important for you to not only understand what the definition is, but what it really means. Then we're going to go over the step by step part of the video, as well as spending $10,000 on stocks in this video. And I'm going to be spending money on Webull and Fidelity. And I'm also going to go over how to buy stocks on Robinhood. And then we're going to talk about how to sell a stock. So I'll be selling some of the stocks that I bought. And throughout the video, there are going to be several free gifts and surprises that they also took me a very long time to make. And what I did is I thought in my head, what references, what tools would I have wanted when I first began that are obviously free? And I decided to make these into gifts that I'm going to be giving to you throughout the video. So first of all, why should you invest in stocks? Now stocks are a great way for you to build your wealth. And of course, there are other ways that you can do this. You can buy houses, invest in real estate, invest in cryptocurrency, but investing in stocks, in my opinion, is one of the easiest and most predictable ways for you to build your wealth. And the reason for this is because of the power of compound interest. Now on the top right here, you basically see a graph that demonstrates what compound interest looks like. And this is an exponential graph where they start investing, you know, it's year zero and by year 50, their investments are going up a ridiculous amount. And with the way that the stock market works, it has gone up on average about 10% over the last 100 years or so. And that's seven to 8% if you adjust for inflation. So just to demonstrate how incredible compound interest is, if you were to invest $1 at the beginning of your career, when you first start, and then 40 years later, you're ready to retire that $1, according to the stock market going up 10% per year and seven to 8% if you include inflation would be worth over $45. So you deciding to invest that dollar instead of, you know, of spending it, then you don't have anything at all, or keeping it under your bed or something like that, like hiding it in your walls means that that $1 would turn into $45. So over a long period of time, you would be making an extra dollar every single year, whereas if you kept it under your mattress, it would actually lose value because of inflation. So by investing your money in stocks, your money is working for you and not against you. Now you might be thinking, well, I could just invest my money in real estate instead. So why stocks? Well, first of all, stocks have a very low barrier to entry. And if you want to invest in real estate, you're going to have to have depending on where you live, probably at least $20,000 to put down. Whereas with stocks, you can start investing with $100 or less. Another great thing about stocks compared to real estate is stocks tend to be extremely liquid. So if you were to put a bunch of money down on a house, first of all, you're going to have to probably take out a 30 year mortgage. And so it's going to be 30 years until you own the whole house. But let's say you do own it at the end of 30 years. And if for whatever reason, along that line, you need to sell the house, it can be incredibly difficult to do that. A lot of the time it can be up there for six months a year before you're even able to sell it. Whereas with a stock, you can sell the stock just about any time you want. And usually it'll just take you a few seconds, especially if you use some of the stock brokerages that I'm going to recommend later in this video. And then stocks, on the other hand, are also some of the most profitable investments that you can make as well. Head to head when you put stocks up against real estate, they both perform incredibly well as investments. However, stocks are much easier to invest in than real estate as well. So it's incredibly easy for you to make a bad real estate deal. There's all kinds of different things that can go wrong. And then even after you make the deal itself, you're going to have to rent that house out. And so you're either going to have to deal with the tenants yourself, or you're going to have to hire a property manager, which will take a significant amount of the cut. And a lot of the time it's very difficult for you to find a good property manager as well. So these are some of the reasons why investing in stocks is such a good idea. There's a low barrier to entry, you can start investing at any time, it's relatively easy, and it's a great way for you to build your wealth. And by building your wealth, it will give you so much more freedom and flexibility and you'll be able to retire early. Now that we know why you should invest, let's talk about how much you should invest. Now, generally speaking, most experts recommend you start off somewhere around five to 10% of your income. Now you might be thinking, why not just invest everything I have right now? Why the heck would I start off at five to 10%? Well, first of all, you need to have some cash flow to cover your day to day expenses. And second of all, it's really good to have what's known as an emergency fund. And an emergency fund should get you through at least three to six months if something happens like you lose your job. So it should be able to cover your expenses for at least three to six months. Now, how much you invest also depends on your risk tolerance. Generally speaking, experts recommend that when you are younger, you take more risks. And as you get closer and closer to retirement, you invest in less and less risky stocks. A lot of the time they'll tell you to put most of your money into bonds because bonds generally speaking are not very risky. However, if you're living at home, so you don't have to pay rent, you don't have kids, you don't really have very many expenses in general, you will likely have a much higher risk tolerance than somebody who has to take care of an entire family. But generally speaking, my recommendation is to invest a small amount as early as you possibly can. And I'm really hoping that by the end of this video, you decide to start investing now if you haven't done it already, even if it's just a small amount. And if you don't have anything to invest at all, this video is still going to be great for you because you can use what's known as a demo account. And a demo account is basically where you simulate investing and it goes up and down just like it does on the stock market. So you can pretend like you invested $1,000 into Tesla or GameStop or whatever you want to, but you're not actually risking any of your money. And so this is a way for you to basically make a bet on the market without actually risking anything. And it's also a great way for you to practice. All right, so now we're getting down to the good stuff. What exactly is a stock? So here's the official definition. A stock, also known as an equity, is a security that represents the ownership of a fraction of a corporation. And that's from Investopedia. But why would companies give a fraction of their corporation away to other people? Will companies issue stocks for one in order to raise capital? But that's honestly not the only reason they do it. Another reason they do it is because it gets their company a lot of attention. But we'll be getting to that later on in the video. And then investors that bought a share of stock in the company get to buy and sell that on the market. And stocks are bought and sold based off of present value and future expectations. And investors can make money by selling the stock at a higher price than what they bought it for. And generally speaking, stock share and equity are all pretty much used interchangeably. So when you hear those three things, they're pretty much the same thing. And by purchasing a stock, you are basically saying that you believe that company is undervalued, and the value of that stock is going to be going up. And really what you're saying is not only do you think it's going to go up, but it's going to go up when you compare it to other stocks as well. So you're saying that you think this stock is undervalued compared to other stocks. Now here are a few different categories of stocks. We've got individual stocks, mutual funds, index funds, exchange traded funds or ETFs, and then penny stocks. Now when you invest in individual stocks, this is also commonly referred to as stock picking. So this would be when you invest your money into one stock like Tesla or GameStop. And these investments can be fantastic. I've known people who have made tons of money by investing in Facebook or Amazon or Tesla at the right time. But it can also be a really bad choice as well. You could invest in a company like Enron or WorldCom or one of those internet companies that suffered after the dot com bubble. So this is incredibly risky to put all of your money in one stock or just several different stocks. And due diligence is a must here. And due diligence is basically when you thoroughly analyze a stock before investing your money in it, and you don't just listen to the research of other people, you do your own research or D y or. Now to give you an example of some of the money you could potentially make with a stock like this GameStop went all the way from $7 to $325 in less than a year. That is a 46x gain in less than a year. So if you were to have put let's say $20 to $30,000 into GameStop, you would be very close to being able to retire at this point. An example of a type of investment that is much less risky than stock picking is going to be investing in mutual funds. And basically what mutual funds do is they pull investors money together and then they diversify that money throughout a market. Now mutual funds are very hands off. And if you wanted to diversify your money throughout a market, let's say you wanted to do the S&P 500. For instance, it would be very difficult for you to go in and manually invest your money in all those different companies. And on top of that, the fees would probably be pretty high as well. In this particular case with mutual funds, they do all of that work for you. And in mutual funds, it's what's known as active management. So they are actively evaluating a bunch of different companies and they're saying, you know what, we were really bullish on this company last year, but I think it's made most of its gains at this point. So we are going to go ahead and sell. And they spend all of their time analyzing stocks. And these are some of the smartest people in the world. They have access to incredible technology. And so that's what they do all day long. They just analyze stocks and they figure out how much of their portfolio should be in this stock versus that stock. Now this is usually safer than investing in individual stocks. And the reason for that is because it is diversified. However, they do charge fees. And this can be pretty horrendous depending on which mutual fund you sign up for. And most of the time, traditional, actively managed mutual funds are not as good as the next option, which is very similar. And that is index funds. So index funds diversify your money throughout a specific list of securities. And generally speaking, index funds follow the stock market as a whole. So one really famous example of an index fund would be the S&P 500 index. This invests a certain amount of money in all of the top 500 companies in the United States. Now the difference here is in the last example with mutual funds, it's actively managed with index funds, it is passively managed. So very little work has to be done within the index fund itself. So there are less trading fees as well as less management fees. Now one thing about index funds and these statistics will be argued a little bit, especially if you're somebody who owns a mutual fund, because obviously you want to convince people to invest in your mutual fund rather than index fund is index funds actually beat mutual funds somewhere between 85 to 97% of the time. Now you might be looking at that and you might say, you know what, I'm not going to touch mutual funds, I'm only going to invest in index funds, or you might be looking at that and you say, you know what, there's like a 15% chance that a mutual fund might beat an index fund. So if I do my homework and choose a really good mutual fund, then I'll get a better return from that. And you're not necessarily wrong or right with either perspective. But one thing to know about index funds is they are extremely passive. There's not much work required, and they are relatively safe as well, because you automatically get to diversify your money without paying someone to do it for you or spending all the time to do it yourself. The next one on the list is what's known as an exchange traded fund or an ETF. And this is very similar to an index fund. They're really almost exactly the same with just a few little differences. So first of all, ETFs, you can trade in real time versus index funds, you can only trade them once a day with an ETF. You must buy an entire share. So if the ETF costs $150, you have to pay at least $150 to buy an entire share with ETFs. You also get to track your returns daily versus monthly for index funds for ETFs. The management fees are slightly lower, although they're both so low that they're basically negligible. ETFs are also slightly less automated. And an example of an ETF versus an index fund where they're invested in the same exact companies is going to be VT sacks versus VTI. And there is a nice little diagram up on the top. So you can kind of see what the differences and the similarities between the two are. And honestly, both of them are excellent choices. And it really doesn't matter which one you invest in, I will say that ETFs are slightly easier to invest in because they're available on pretty much every single stock broker app out there. And then we've got penny stocks. And a penny stock is a publicly traded stock that's usually worth less than $1 per share. Hence why it's called a penny stock, because you have to measure it in pennies. And penny stocks are what Jordan Belfort used in the movie Wolf of Wall Street in order to scam people. And he did this via what is known as a pump and dump scheme. That is where there's a lot of excitement over a penny stock and a bunch of people decide to invest in it. And then the people who created that excitement in the first place or paid somebody else to create it dump all of their money when it gets to a certain point. And then all of the people who naturally organically invested in it end up losing their money. Now there is high potential upside for a penny stock, because, you know, you could have a stock that starts off at about $1. And it could go up to $300. I mean, there's a lot of upside. But it's also very easily manipulated because if it has a low amount per share, and it also has a low market cap, that means people who have a couple million dollars could potentially manipulate the stock or people who have access to media, they could pay somebody to make a really positive article about the stock and that could manipulate it. Whereas huge companies that are worth, you know, tens of billions of dollars, it's much more difficult to manipulate them. So penny stocks are incredibly risky, very, very, very risky. And you will very likely lose your money if you try to invest in penny stocks. However, with that being said, there are people out there, in my opinion, that are good, honest people who are incredibly good at penny stock investing and may have taken them years to get there. But I do believe there are people who can consistently make money with penny stock investing. But with that being said, the chances of you becoming one of those people is pretty low. So that's just my warning on penny stock investing. Definitely not for me. Now we're going to go over different types of stock. We're going to talk about private stock, new issue stock, individual stock, growth stocks, value stocks, defensive stocks, and then dividend stocks. And these are different types of stocks you're going to commonly encounter and hear a lot about if you follow any personal finance content or you get into investing. First of all, private stock. This is a type of stock offered without an initial public offering. It's offered exclusively to founders, investors and employees. And you have to be invited in order to purchase this type of stock. Now this can be very lucrative. There is very good returns. You see a graph on the right that kind of shows you how private stock performed against public stock overall. And you do see that private stock did outperform public stock. So it can be very lucrative. There can be really good returns. However, it's very difficult to get invited. And it's also very difficult for you to diversify your stock investments because you have to be invited in order to invest in the first place. On top of that, it is more difficult for you to sell. And although you technically don't get voting power in the company like you would if you bought public stock, oftentimes, especially if you have a lot of it, you can have more involvement in the company itself, which would make sense if you're a founder investor or employee. The next type of stock is what's known as new issue stocks. And this is what happens when you do an IPO. An IPO stands for initial public offering. And this is where a company makes their stocks or shares available for anybody to buy and sell on the free market. And this is what's known as a public stock. Now companies do this not only to raise money, but a lot of the time doing an IPO creates a lot of buzz around the stock as well. And people are more likely to get excited about your company and talk about your company and invest in your company if they actually own shares in it. And oftentimes companies that are planning on going public, which means they're planning on doing an IPO and offering their stocks to the public will hire consulting companies to get them through the process of doing an IPO. And the reason they're doing this is because they want their new issue stocks to be worth as much as possible. And they also want to create as much buzz as possible and get as much free media attention. So depending on how well they do this, sometimes when the stock hits the market, it may be undervalued or overvalued. And depending on whether you think it's undervalued, and it's going to go up right away or overvalued, and there's way too much hype about it, and it's going to go down right away, you may want to buy a new issue stock. And then of course we have individual stocks. This would be a public stock after the new issue period. And we already talked about this investing in individual stocks is also known as stock picking. Now another type of individual stock would be a dividend stock. Now dividend stocks are a type of individual stock. And this is basically where you get distributions from a company in profit in the form of payments to its shareholders. So a company makes profits and it actually gives some of those profits back to people who own shares in the stock. Now most of the time these profits are paid out quarterly. That means once every three months or so. And dividend yields tend to be about zero to 10% of whatever your stock is worth AT&T. For instance, when I was doing research for this video has a 9.11% dividend yield. So just as a very simplified example so you understand how dividends work, let's say you get $1 per stock that you own, and you are paid out quarterly. And so if you own one stock, you would get paid $4 annually. If you own 10 stocks, you'd get paid $40 annually. And if you own 100 stocks, you would get paid $400 annually. And let's say each one of these stocks costs about $100. That would mean that one stock, you get $4 annually. That's $4 per $100 in terms of the share price. And that is a 4% dividend yield. So I hope that makes sense because it can kind of be difficult to understand that. Now another type of stock is called a growth stock. And these are stocks in companies that people believe to have a lot of future potential. And usually growth stocks are companies that are incredibly scalable. And so these are usually companies that are involved in technology. Now these stocks also tend to be much more volatile as well. Very rarely are you going to see these types of stocks paying dividends, and they usually have a high PE ratio, which is price to earnings. That's something we're going to go over in a few slides. And an example of a growth stock over the last few years would be Tesla. Tesla was worth less than $100 just a few years ago. And now it's worth over 1000. And when I looked up the PE ratio, when I was doing research with this video, it was over 200, which is really high. Now these types of companies generally have very high sales and profit numbers that are getting bigger and bigger each year. Now the funny thing about growth stocks is, you know, what if a company is undervalued, and it's growing, and then all of a sudden it gets to the point where it's kind of plateaued, it's like reached its highest peak, then is it a growth stock? Sometimes it might turn into a different type of stock at that point. And so these types of categories kind of take them with a grain of salt. Sometimes the stock can be a growth stock for a few years, and then it switches into a dividend stock later on. So with that being said, Kathy Wood is in the top right with ARK Invest. She's very well known for investing in growth stocks. The next type of stock is known as a value stock. And these are usually companies that have really solid fundamentals. They're really steady, they're stable, they've been making a good amount of money for a long period of time. And you believe as the investor that the actual value or the price of the stock at this time is lower than it should be. So it's undervalued. Now these types of stocks tend to be much less volatile than growth stocks. Usually these are types of companies that have relatively steady sales and profits, but there's also less opportunity there. So it's usually going to have a lower potential ROI or return on investment. These stocks tend to have a lower PE ratio as well. Usually it's like less than 20. And many of these types of stocks pay dividends. Now an example of a type of stock like this would be Coca-Cola, but I do want to say here again, take it with a grain of salt, there are stocks that are value stocks during a certain period of time, and then they're not anymore. Now Warren Buffett is a famous investor that loves value investing. He's the one who is pictured in the top right here. And he is probably the most famous example of a value investor. The next one on the list we're going to go over is what's known as a defensive stock. And this is a stock in a company that tends to remain extremely stable over time. There is slow but steady growth and many of them offer high paying dividends. And you might be thinking, this sounds exactly like a value stock. So what the heck is the difference? Well, they're usually even less volatile than a value stock. And there's usually lower profit potential, but it's also less risky. And generally speaking, defensive stocks tend to be consumer staples or utilities. So an example of a defensive stock would be Walmart. Now some people might say that Walmart is a defensive stock, but it's also a value stock. And that could be true. Some people also might say that Tesla right now is a growth stock, but in a few years, maybe it's going to be a value stock. And again, that might be true as well. Who really knows? But these are just ways to temporarily classify different types of stocks and also classify different philosophies for investing in stocks. Now we're going to go over a few different things that are not a stock, but they're very similar and they honestly get confused for each other a lot. So we're going to be talking about REITs, cryptocurrencies, and bonds. So REIT stands for Real Estate Investment Trust. And this is basically a company that makes investments in income producing real estate. And this is very similar to a mutual fund where you put your money into a big pool of money that a bunch of people invested in. And then the company automatically diversifies that money throughout a bunch of different real estate investments. And they usually focus on commercial real estate, office buildings, apartments, and hospitals. So you get to own many different types of real estate, almost like it's a mutual fund or an index fund. And basically you get a small share of the rent. So it's very similar to a dividend payment. Now one positive to this is it is easy to invest in compared to buying your own real estate. One negative to REITs is they do tend to have a lot more fluctuation than you would see in index funds. But you also don't get a lot of the same tax benefits that you would get from investing in real estate. So there are definitely some positives and some negatives to investing in REITs. But it is one type of investment that you should consider. Next on the list is going to be cryptocurrencies and the technical definition for cryptocurrencies is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography rather than by a centralized authority. So that's a lot of big words there and you probably don't understand what it means. And that's totally fine. Basically cryptocurrency is digital money that has much more functionality. Also generally speaking many cryptocurrencies have a limited supply which means the government can't just print more money. And it's pretty much impossible for somebody to duplicate a cryptocurrency whereas with government money people who are really good can actually make fake money. So because of that instead of being inflationary like money is it tends to be deflationary where it actually gains value over time. And the value of cryptocurrency is determined by supply and demand rather than by a central authority or regulation. Now when it comes to all different types of investments cryptocurrencies have had by far the best returns over the last 10 years. I mean Bitcoin has beat out literally every company out there. Now does that mean it's going to have the best returns over the next 10 years. Nobody really knows. There's so many different variables that affect the price of cryptocurrency as well as the stock market. But I do believe that everybody should consider cryptocurrency as one of their investments because if you think of all the different things that could happen for instance the United States just like all empires that have come before it could potentially end and that would mean that many companies within the United States would likely lose their value. And in that situation cryptocurrency that's outside of the United States that's totally decentralized and not connected to any government would likely keep its value. Now of course that's very unlikely to happen you know during the next 10 years or even during your lifetime but it is possible that that could happen and so cryptocurrency is used as a hedge and it's yet another way for you to diversify your investments. But with that being said cryptocurrency does fluctuate a lot and I believe it is very risky. Most cryptocurrencies in my opinion will be worthless they will go to zero. And so you need to be incredibly careful if you're investing in this. This is something that I did make an entire video about as well you can check that out highly recommend checking it out if you are considering investing in crypto. Another type of investment is bonds and this is basically a promise by a borrower to pay a lender the original loan plus interest. A lot of the time the government or companies issue bonds and generally speaking the returns are often somewhere between two to five percent per year. So you could buy a thousand dollar bond for instance where they promise at the end of one year they are going to give you one thousand and fifty dollars back and that would be a five percent per year bond. Now these are considered to be very low risk and many financial advisors will tell people to invest more and more in bonds as they get closer to retirement. But with that being said even though bonds are considered to be very low risk there still is some risk there. Again if the company that issued the bond goes under you may not get your money back and there have been several examples where cities or municipalities issued bonds and then something happened to the city there was some type of scandal with the money and then the people who bought those bonds did not get their money back either. And even in the case of buying it directly from the US government again if the US government ceases to exist you may not get your money back. So there is always risk to any type of investment and don't let anybody tell you otherwise. Now I want to talk about what's known as logical investing and this is an incredibly important concept and the reason for this is because emotional investing almost never turns out well and you see this happening over and over and over again. You see this trend repeating itself all throughout history again and again and again. When markets crash people panic sell. We saw this in 2008 we saw it in 2020. So when everyone else is selling human beings tend to follow the crowd and sell as well. And when markets are up many people buy at the top and we see this happening again and cryptocurrency the dot com bubble that happened in the late 90s. So when something is really high when something has had incredible returns the news starts covering it people start talking about it in coffee shops. And so therefore you're more likely to hear about it. And then you get emotional you get the fear of missing out FOMO. And that's when a lot of people decide to invest in the stock or the crypto or whatever it is. And that usually coincidentally happens to be the time where the stock is at its highest because that's when you hear about it when everybody else is talking about it and the stock is at its highest. And then right after you buy it ends up crashing for the people who have invested you've probably made this mistake yourself. That's how common it is almost everybody does this. And so that's why it's important to keep calm and make rational decisions when it comes to investing. And there's one great quote by Warren Buffett when somebody asked him what their investing philosophy is. He said we simply attempt to be fearful when others are greedy and to be greedy when others are fearful. So a lot of the time the best investors are people who go against the crowd. They go against the grain. And this is why again it's so important for you to always do your own research. Get opinions from other people be open minded about new ideas. But at the end of the day always evaluate things yourself and do your own research. And another word for doing your own research is due diligence. Always investigate a stock to make sure that it's worth investing in. Don't just follow the crowd because there are a bunch of people who are just super excited about the stock and don't make emotional investing decisions. Always make sure you make logical decisions. And there's a great book by Charles Mackie called Extraordinary Popular Delusion and the Madness of Crowds. And in this book he basically talks about you know people in crowds do things that are 10 times crazier than any individual within the crowd would have done. So when you get people together in groups they end up doing things that are much crazier than any individual in the group would have done. And he goes over tons of different examples. Some of them are you know financial related. Some of them are not related to finance at all. But it's a great book and it really just goes over human psychology and it makes you understand why people do things. So where do you buy stocks? You can technically buy stocks directly from a company. This is called a direct stock purchase plan. But it's very rare and it's very hard to set up. And so most people buy stocks from what's known as a stock brokerage. And stock brokerages are also referred to as stock brokers or just brokers. However there are people within a stock brokerage that are called stock brokers as well. And they also can be referred to as brokers. So that can be a little bit confusing. Just know that those two terms are basically used interchangeably. And basically a stock brokerage is a financial institution that can buy and sell securities on behalf of their clients. Now three really well known established stock brokerages are Fidelity, Vanguard and Charles Schwab. However there are three new types of stock brokers that came on the scene that are much more beginner friendly and easy to use. And these are Robin Hood, Webull and Moomoo. And we are going to be going over these later on in the video. And I'm going to tell you what their strengths and weaknesses are and which ones I think are the best depending on what you want. So what exactly is a brokerage account? This is an account that a client would have with a stock broker. And it serves as an agreement on how you are going to buy and sell a particular type of security. And this account would hold different types of financial assets. And there are many different types of brokerage accounts depending on what your specific needs are as a client. So some of the most common accounts that you're going to hear about are cash, margin, options and then retirement slash tax advantaged accounts. So let's go over cash accounts first. All the transactions made within this type of account have to be with cash that the client put into the account. So basically in layman's terms, if you put a thousand dollars into a cash account, you can only invest that thousand dollars. And on top of that, you can only engage in what are known as long positions. This is basically where you are investing in a stock and you are betting that the stock is going to go up. So this is your most basic type of investing. Pretty much everybody who invests in a stock is hoping that the stock is going to go up. There are no short positions allowed, which is basically where you are betting against a stock. And this is where you think that a company is overvalued. And so you basically place a bet against that company. Now how this actually works is kind of complicated. And I made an entire video explaining it, but just know that if you do a short position, you are essentially betting against a stock. Now the big thing about a cash account, which by the way, this is the most common type of account is that you can only lose the cash that you are trading with. And it tends to be much safer and also more simple. The next one is called a margin account. And this is where you can actually use what's known as margin, which is essentially a loan from a company. So in layman's terms, this means if you put a thousand dollars in a margin account, you could potentially invest 2000 or $3,000 into a stock. So this means that you can enter long positions still, but you can use what's known as leverage. So if you have high conviction that a stock is going to go up, you might start a margin account and use $3,000 of leverage, even though you only have $1,000 to invest, let's say you only have $1,000 to invest, but you borrow an extra $2,000. And so you're investing $3,000 total into a stock. And then the stock's total value goes from $3,000 to $6,000. At that point, you could sell for $6,000, then you would pay the $2,000 that you borrowed back to the company, but you would end up with $4,000 total. Now you would also have to pay interest on those loans as well. And that interest depends on how long you hold it and a bunch of other different factors. But in this particular example, instead of the stock going from 1000 to 2000, and you just make 100% return, you're actually making a 300% return because it's going from $1,000 all the way up to 4,000. But the flip side to that is that if you lose money, it's also more risky as well, because you have to pay that money back one way or another. So if you borrow $2,000, and then the stock goes down quite a bit, you still have to pay that full $2,000 even if you sell your original stock and you don't have enough to pay all of it back, you still have to pay it. So you're going to have to figure out a way, sell your PlayStation or something. Now you can also enter into what's known as short positions. And this is where you bet against a stock. And again, this is a very complicated process. And I just don't have time to explain exactly what it is. But essentially, you're betting against a stock. Now short positions are also incredibly risky. We saw a bunch of big companies that had short positions against GameStop stock. And when the stock went up, those companies ended up losing billions with a B billions of dollars. Now again, with short positions, you are essentially taking out a loan and you have to pay interest on that loan. So very risky, very advanced would not touch margin accounts until you have a lot of investing experience and maybe just don't touch them at all. A much less risky version of investing that also does require quite a bit of experience in my opinion is called options trading. And the technical definition for options trading is that it gives the buyer of a stock the option to buy or sell the stock at a previously agreed upon price during a certain period of time or specific date. So buying the option is called a call option. And selling the option is called a put option. Now this is very difficult to understand. So I'm going to explain it and I'm going to give you an example, but just know that you don't technically have any ownership in the company like you would if you bought a stock. You just have the ability to buy or sell that stock at a previously agreed upon price. So let me give you an example of a call option. Let's say that I have a $1 million house, you come up to me and you want to have the option to buy my house for one year. So you tell me I want the option to buy your house for $1 million at any time during the next one year, but nobody else can buy the house only you can. But you don't have to buy the house. You just have the option to buy it at any time during the next one year. Now I think that's great because I didn't really want to sell my house during this next year. But I tell you, you have to pay me interest. And so I say you have to pay me 5% of the value of the house during that time. Now you have high conviction that that house is going to gain in value over the next year. And the reason for that is because you heard that the Las Vegas Raiders are about to build another stadium right next to the house. Yep, that's right. They are actually switching towns again. And that would increase the value of the property. So you pay me essentially $50,000, which is 5% of the value of the house in order to have the option to buy it at the end of the year or any time during that period. So about one year later, the house is worth $1.3 million dollars. And so you come up to me and you're like, I want to exercise my option to buy this house from you. And I'm going to buy it at one million. And of course, I don't want to sell it to you at one million, but I have to because you had a call option on it. And so you spent $50,000, but then you end up selling the house for $1.3 million. And so you overall have a $250,000 profit. Now this is an example of a call option that goes well. It could also do the opposite and not go well. And then you would have the option to not buy the house. And you would have lost the $50,000, but at least you didn't lose a lot more than that. Now let me go over an example of a put option. Let's say you go into a business deal with somebody where you own 50% of the shares of a company and they own 50% of the shares as well. And let's just say the company's worth $2 million dollars. So you both own $1 million dollars in shares each. Now you're a little bit worried about your partner and you're not sure they're going to do a good job with the company. And so you decide to exercise a put option. And basically what that means is during the next year, you have the right to sell your shares of the company to them for $1 million dollars. So even if the company loses its value, you can still sell your shares to them for a million dollars. So one year later, your partner did a very bad job and the company is now only worth $1 million dollars. And so both of you own 50% in shares. And so you both own about $500,000 each. However, you exercise your put option and you tell your partner that you are going to sell your half of the company to them for $1 million dollars. Now of course, they don't want to do that because the company is no longer worth $2 million, it's only worth $1 million now and your shares are only worth $500,000. However, because of the fact that they agreed to your put option, you have that right to sell that option to them. And so you exercise your put option, you no longer own the company, they own all of the company and you're happy because you avoided a disaster. Now let's do another scenario. Your partner does a fantastic job at the end of one year and the company is now worth $4 million dollars. So each of you own about $2 million dollars. Now of course, your partner would love it if you exercise your put option because then they would get $2 million dollars worth of stock for $1 million. But of course you don't want to do that. And so you decide to not exercise that option. So in either of those cases, you have more options, you have the option to either sell it or not after that year is up. And because you have more options, there is lower risk. Now out of all the different types of short-term advanced trading, in my opinion, from my experience, and I've looked into just about all of them, options trading is the least risky. So I have seen lots of different types of traders, day traders, swing traders, penny stock traders, and most people are not successful. Short-term investing is incredibly difficult and takes a lot of skill. However, I will say the one that I have seen a good amount of people be successful with is options investing. So if you are looking for a type of short-term investing, you're really into that. I think options probably are the way to go. But again, this is not financial advice, always do your own research. The last type of investing we're going to talk about is what's known as retirement accounts or tax advantage accounts. Now these are accounts that were originally created to benefit middle and lower class workers. These accounts are managed generally by brokerages and there are many different types, but the two I'm going to focus on are the Roth IRA and the 401k. With the Roth IRA, you can only deposit around $6,500 a year. However, it is tax deferred and it compounds tax-free inside of the Roth IRA. And the income that you contribute, aka the money you put in, you can actually pull that out anytime without suffering a penalty. And you can withdraw all of the gains, aka the money that compounds within the Roth IRA itself when you turn 59 and a half years old, aka around retirement age. Now at the 401k on the other hand, the reason it's so fantastic is many companies will actually match your contributions. So let's say just to keep it very simple, you make $50,000 a year and your company will match up to 5% of your contributions. So just to keep things very simple, let's say you make $50,000 a year and your company will match up to 10% of your contributions. That means if you put $5,000 into your 401k, your company will put an additional $5,000 and that means right away, as long as you do up to your company match, you are getting a 100% return on your money. So that's something you probably want to do. It's basically free money. And on top of that, this is pre-tax dollars, so it will lower your tax bill. So instead of having to pay taxes on $50,000 of income, you only have to pay taxes on $45,000. Now there is a $19,500 limit, you can't do too much. You're also taxed when you withdraw the money. And you can withdraw the money without penalty at around 59 and a half years old. Now we're going to talk about some of the most popular stockbrokers. I'm going to go over the pros and cons and what, in my opinion, are the best ones for you to use depending on what circumstance you're in. But before we get into that, let's quickly talk about the first free gift that I have for you for this video. And this is probably the least cool one, I guess. But basically what I did is I made a list of a bunch of different financial institutions and brokers and, you know, cryptocurrency apps, et cetera, that offer you free cash. And sometimes this is just straight up free cash. Sometimes it's free cash in the way of free stocks. But some of them will offer you like five free stocks that are up to $8,000. And all you have to do is just sign up. And sometimes you have to fund an account with $100. So this is essentially free money. And if you do this with a bunch of these different ones, you'll have quite a bit of free money. And if you want to, you can just go ahead and sell the stocks right away. So I made a list of some of the best ones. Some of them have my affiliate links, some don't, some just have normal promotional links. But just know that with some of these, if you click on it, I will get a small commission for them. But if you don't want to do that, you can always just go to Google, type in the company, and then look for promotional links that are not mine. But yeah, you can find that down in the description below. All right, so first we're going to start off with some of the advanced stock brokers Vanguard. This is the company that basically started index fund investing. There is a legendary investor named John Bogle who owned Vanguard. And at a time where there was a lot of sketchy stuff going on in the financial markets, even more than now, if you can believe that John Bogle created index funds and made them available to the public. And these outperformed, like I said before, somewhere between 80 to 95% of mutual funds. And on top of that, the company makes less money from fees and transactions of index funds than they do with mutual funds. So in my opinion, this was just an awesome move from John Bogle. And for that reason, Vanguard is one of the most established and most trusted companies. Now, there are a few things, a few downsides to Vanguard. It doesn't really have a trading platform. It's all about long term investing. There are no physical branches. So you can't really go in and like talk to a physical broker. They don't offer any extra cool perks, other financial services like credit cards or checking accounts. They're pretty much just a brokerage. But because of that, they are relatively easy and simple to use. But with that being said, the website is pretty outdated. So it's not like beautiful and ergonomic, like some of the other options on this list. But I will reiterate Vanguard is probably the most trustworthy company out of all of them. Charles Schwab, another great option. It is a more of an advanced option. There are more features in Vanguard. It's also more ergonomic and user friendly than Vanguard. They do offer all these extra perks and benefits like credit cards, checking accounts, and a trading platform. They do tend to have high margin interest rates. So if you want to borrow money from them, the interest rates are relatively high. There are some physical branches. So if you're that type of person who wants to talk to someone face to face, you may have that option. And one thing I'll say about Charles Schwab, and this is just from my own personal experience, is they have a fantastic international bank account. And the reason for that is because if you are traveling internationally, and you'll know what I'm talking about if you've done this, some of the ATM fees are horrendous. And so you might withdraw $100 and you've got like $3 to $5 in ATM fees. Now what Charles Schwab will do is they will actually cover those fees for you. So over the long run, this can save you hundreds or even thousands of dollars when you are traveling. And so a lot of people who do traveling will use Charles Schwab because they simply have the best international bank account. Fidelity basically has a lot of the same features that Charles Schwab has. They do have physical branches as well. And Fidelity is probably the most ergonomic and user friendly. They have an incredible website and a super easy to use app. They also offer loans so you can, you know, invest on margin with Fidelity, but the interest rates are lower. And right now Fidelity is really focusing on integrating all different types of finance-related services seamlessly. So right now people probably have like a bank account with one company and a savings account with another company. And then they invest with like two or three different companies, but their 401k is with one company and their Roth IRAs with another one. And then their normal investing account might be with like Robinhood or Webull. And then maybe you have a money market account with a different company. I mean, there's just so many different services that are offered and it's just a big mess. Fidelity is basically trying to take all these different financial services that are offered and combine them into one platform. And in my opinion, at this time, they're probably the best at doing that. Now, another thing that they offer is international trading. And they do offer fractional shares as well. So all three of these companies are fantastic in my opinion. And they are my top picks. Another really good company that's well known is going to be TD Ameritrade. They are known as TD Ameritrade for investing and think or swim for trading. They're offered in the USA as well as Canada. You can actually day trade cryptocurrency with the thinkorswim platform. So that's kind of cool. So they have Bitcoin futures trading, but they don't really offer fractional shares. Alright, so Merrill Lynch is another one. This one almost made it onto the beginner friendly list because I think out of all of them, Merrill Lynch might actually be the easiest one to use. But with that being said, they do tend to have a little bit higher fees and they don't offer as much as a company like Fidelity. And they also don't offer fractional shares. Now we're going to move on to some of the beginner friendly brokers. Webull. Alright, Webull, super, super easy to use. It's good for beginners as well as intermediates. And if you use the desktop version, it's even good for advanced investors and traders. Webull is my personal favorite option for a beginner if you're just starting out investing. And they do offer a really cool sign up bonus. Right now I'm not sure exactly what it is. It'll be down in the description below, but they offer something like, you know, five free stocks for like $8,000 if you sign up and fund an account with $100. I mean, the sign up bonus is just absolutely ridiculous. It's basically free money. So definitely check that out if you haven't done it already. They offer both active trading as well as long term investing and they have a great phone application. I absolutely love their phone app. It's so easy to use and it has all the features that I want on a phone application. You can do a significant amount of cryptocurrency trades as well. So if you're somebody who doesn't want to go through that whole process of signing up to Coinbase and then transferring your Bitcoin over to something else in order to buy cryptocurrency, a really easy way to do it is to just buy it through Webull. They also have pretty good customer service for an app. And like I said, amazing sign up bonus incentives. Just incredible Robin Hood. On the other hand, this was basically the first application to make investing easy for common people. They also have some pretty good sign up bonus incentives. It's something like up to $500 in free stocks or up to $800. The incentives always change depending on the time of the year. So you can check it out on the word doc that I've made available my first present to you down in the description below. Robin Hood is ridiculously easy to use. I would say this is a beginner only investing app. It's not even great for intermediary or advanced investors. It's only good for beginners in my opinion, but it is incredibly easy. It's even easier to use than Webull. It's designed to be used on the phone, but it does have a very basic web app, but it really just does not have a lot of the options that you have with something like Webull. So Webull is almost as easy to use as Robin Hood, but it just offers so much more in my opinion. Moomoo is the new kid on the block and this one offers what I believe is even better sign up bonuses than Webull. And that's hard to believe because the Webull sign up bonuses are incredible. So right now, as I'm making this video at this particular time, I believe their sign up bonuses are better than Webull. So I don't know if this is going to change, but again, you're going to just have to check down in that Google doc that I posted to see and Moomoo does sort of have a focus on more Eastern related companies. So Hong Kong, China, etc. They also offer free level to market data. Usually in order to get level to market data, you have to pay with Moomoo. They offer it for free. And this can help you as a trader, especially, but also as an investor. It's very easy to use. And in my opinion, it's good for beginners and intermediates. And even if you get to the advanced level, Moomoo still offers a lot. It definitely has way more tools than Robin Hood. So this would be a good one, especially if you're somebody who wants to get in on that incredible sign up bonus. Sofi, great for beginners and intermediates. They offer one free stock worth up to $1,000. More than just an investment, they also are kind of trying to integrate a bunch of different finance related services. And in my opinion, they are a very value driven company. I have done a ton of research on different finance related things. And they always post really good articles, for instance, and you can tell that the people who are writing the articles really go into detail. One thing they offer that a lot of these other companies don't offer is they will refinance and consolidate your student loans. So yeah, Sofi can be a really good one as well. Not a bad idea to check out the one free stock worth up to $1,000. Next, we're going to be talking about some robo advisors. Now robo advisors are basically where your stocks get managed automatically with a robot. So people are doing very little of the work. And it's mostly a robot that is managing your stocks. So it's extremely automated and hands off with M1 finance. There's $100 account minimum. So you do have to have at least $100 to start it right now. I actually do have my Roth IRA with M1 finance, and I've been very happy with them. And it basically did not take me very long to set up. And it's been completely hands off since then they also offer some type of sign up bonus. I'm not sure exactly what it is. But again, you can just check the word doc. I try to keep that as updated as possible. Wealthfront also a robo advisor. With Wealthfront, there is a $500 account minimum last time I checked there are more personalized financial needs. And that's why they have that $500 account minimum, because you can actually ask them to not only just help you with investing, but kind of more of a holistic personal finance plan. So for instance, there are tools that integrate that might help you with buying a house, paying your student loans, starting a savings account, etc. And they also have a really good savings account. Last year, for instance, they offered 2.57% on their savings account, which was the best that I've ever seen. They did drop it after the pandemic, but at a certain point, it was actually the best that I've ever seen 2.57% is incredible. Better Mint, another robo advisor, very similar to Wealthfront, in my opinion, except they don't offer as much advice and it tends to be even more automated and hands off. Stash is yet another robo advisor. This one has more of an emphasis on kind of like belief investing or social investing. So for instance, maybe you are very interested in sustainable energy. When you sign up with Stash, you could basically choose that as one of the things that you want to focus your investments on. So you're basically focusing your money and your investments on companies that you believe in. It also tends to gamify the investing experience, which means it tries to make investing as fun as possible. There is a $0 account minimum, so you don't have to have like a ton of money to start an account. However, there is relatively high fees, especially if you have a small account. And then the next one, it didn't really fall under any brokerage category. It's kind of in a category of its own. And that is acorns. So acorns basically automatically invests your spare change. So let's say you go to the gas station and you buy some stuff and your total amount ends up being $5.75. It will automatically round that up to $6 and it will invest that extra 25 cents. So it's basically automatically saving and investing for you. So it's essentially a savings app mixed with a robo advisor. And this is probably the easiest and most hands off app that you could possibly use. However, I will say that there are very high fees, especially for a small account. Now, in terms of my favorite apps to use for the advanced ones, you really can't go wrong with Charles Schwab, Fidelity or Vanguard. And it really just comes down to personal preference. I personally like Fidelity at this point. And for the beginner slash intermediate investors, I would say Webull is my favorite. And honestly, Webull is even good for advanced investors because their desktop application is fantastic. But that's just my opinion. Always do your own research. This is not financial advice. Now, when it comes to investing strategies, there are several different strategies that people use for investing and we're going to go over them. My favorite type of strategy is known as long term investing. And this is where you would buy an index fund, an ETF, a stock or whatever, and you plan to hold it for the long term. And usually this would be done gradually. So for instance, let's say you get paid once a month, you would put a certain amount of your paycheck into your investment account every single month. And this can actually all be automated, which is awesome. Most of the brokerages that I talked about have an option for you to just automatically take out a certain amount from your bank account every month. So you never even have to see it. Now long term investing isn't nearly as risky as short term. It's also relatively hands off. And you don't really have to worry about the price of stocks going up and down all the time. Whereas a lot of people who do all different types of short term investing will report that many times they have trouble sleeping at night because they're thinking about the volatility of their investments. Long term investors don't have to worry about that. And then on average, long term investing absolutely without a doubt has better returns than short term investing or trading. Now for sure, there are short term investors and traders here and there that do really well, but for the most part, for most people, long term investing is the way to go. There's also less fees when it comes to long term investing as well, because you're not constantly entering and exiting positions. And if all of that wasn't enough, there's also tax benefits to long term investing as well. So you pay what's known as long term capital gains tax, as opposed to short term capital gains tax. And long term capital gains is much cheaper than short term over a lifetime, you might end up saving hundreds of thousands of dollars. And we're going to go over long term versus short term capital gains here in a bit. So another one is going to be day trading. And this is where you buy and sell a stock all within the same day. Now with a day trading account, you might start off the day with $10,000 and you may buy and sell many different stocks throughout the day. But the end of the day, you close all of your positions. So you do not own any stocks in that day trading account at the end of the day, you must close all of your positions. But because of this, you don't have any overnight risk. So you don't really have to worry too much about what the stock does overnight. Now the trades could last anywhere from a few moments to hours. And the thing about day trading, especially if you're doing some of the cheaper stocks is news is going to make the price of a stock fluctuate a lot in the short term. So good or bad news could make or break your trade. Day trading is very, very risky. Most people lose money. And let me just repeat that. Most people lose money. It's not that most people break even so they don't make any money. And it's not that most people get a return that's maybe a little bit lower than what you would get with an index fund. So it doesn't quite perform as well as the market on average. Most people lose money when it comes to day trading. This is just a fact. And so day trading is incredibly difficult. And you have to be very careful and probably do a lot of practice on demo accounts before you even try it. Swing trading is where you buy and sell stocks within maybe a few days or up to a month. Trades sometimes may last a day, or they can be as long as a few weeks. When it comes to swing trading overnight risk is a problem. You are holding stocks overnight. And so sometimes in certain cases, those stocks could lose a significant amount of their value by the time the stock market opens up the next day. It's not as influenced by the news, but you know, it's still very influenced by the news for sure. Now it does require larger price movements in order to be profitable. Whereas with day trading, you might take profits right away because you can do like a hundred day trades within a day if you want. Now I would say swing trading is less risky than day trading, but it's still pretty risky. Next is going to be tax advantaged investing. This is something where in my opinion, if you can take advantage of tax advantage or retirement investing, you should do it. There's a lot of different options. You got the Roth IRA, the 401k health savings account. There's a ton of different options out there. There's a ton of different options out there, not just the Roth IRA 401 or HSA. And there are honestly just ridiculous tax advantages and incentives with these options. However, the thing that's kind of not as good as there are penalties for early withdrawal. So this type of investing is less liquid than if you just simply put your money into the stock market. But in my opinion, the advantages heavily outweigh the disadvantages. The pros are much better than the cons. So I would highly recommend that, you know, for instance, if your company matches you up to 5% for you to agree to that and put 5% of your paycheck into your 401k. Now we're going to go over the 10 most common types of trades. So when you put your money into an app, when you fund your account, and then you go and you try to buy a stock, it is going to present you with a page where you choose what type of trade you want to do. Now the two most common ones are market orders and limit orders. And we're definitely going to go over those, but we're also going to go over eight others that are relatively common as well. So a market order is an instruction to buy or sell a stock at the best available price. So this is the most common type of trade. And oftentimes you will see it set as the default trading option. And as long as it's a common stock, meaning it has liquidity, the trade should execute pretty much immediately. So a way to remember this one is you're essentially buying or selling a stock at the current market price. A limit order on the other hand is an instruction to buy or sell a stock at a specified price. Now if the price that you specify is reasonable, it should execute relatively quickly. Now this one can actually be better for buying small cap or volatile stocks. And the reason for that is because market orders require liquidity and small cap stocks a lot of the time don't have very much volume, therefore not very much liquidity. And so sometimes market orders will take a while to execute, whereas a limit order oftentimes will be much faster if it is a small cap stock. Now you don't have to use a limit order like that with just small cap stocks, you can basically do this if you think a stock is over or undervalued. So as an example, let's say the current price of the stock is $50 and you believe that the stock is going to drop to $45 very soon. You can place a limit order to buy the stock at $45. And if your prediction comes true, it does drop to 45, then your order will execute. If it doesn't, then your order will not execute. And sometimes if you are buying multiple shares of the same company, it might partially execute. Next one is going to be a stop order. So a stop order is kind of like the combination of a limit order and a market order. So just like a limit order, when a certain price is reached, it's going to execute the trade. However, unlike a limit order, it's going to execute that as a market order. That means when that price is reached, it's going to execute it as a market order and try to get the best price on the market. So as an example here, you have a share of a stock that's $50 and you place a stop order on the stock at $60. Once it reaches the $60, a market order is placed and it will likely sell for around 60. Next is going to be a stop limit order. And this is very similar to a limit order, except there's just one little difference. Once the stop price is reached, it automatically converts into a limit order. However, if you aren't able to find a buyer at that exact price, it is going to stop the order from executing. So as an example, let's say you have a stock worth $50, you set a stop limit order for 60. When it gets to 60, you sell it for exactly $60. Now, if you aren't able to find a buyer for exactly $60 and the stock price dips back under 60, the order is not going to execute at all. Next, we have what's known as a trailing stop order. And this one is really interesting. And this one is a great way for you to protect your gains, but also limit your losses. So this one's a little more difficult to understand, but just bear with me. So let's say you bought a stock at $50 per share and it's currently $60 per share. However, you believe that this is a good growth stock and it's going to continue going up and it is going to hit $70 a share. So you don't want to sell the stock because you think it has a lot of upside, but at the same time, you don't want to take the risk of the stock plummeting back down. And you either don't make as much money or you even lose money. So what you decide to do in this case is you use a trailing stop order. So you put in a trailing stop order of $5 in order to lock in at least a $5 gain. So what this means is if the stock drops to $55, you're going to automatically sell. And so at the end of the day, you invested 50 and you got 55 out of it. However, if the stock rises up to $65 per share and then drops back down to $60, it's also going to be sold. So basically when a negative swing of $5 happens, whether it's way up at $100 and then it drops down to $95, or whether it drops right away from the $60 that it was at down to $55, whenever that negative swing of $5 happens, the stock is automatically going to be sold. So basically in layman's terms, when the stock starts to fall significantly, you sell. However, if it keeps going up, you don't sell. So this can be a great way to lock in a certain amount of gains, but still have that upside. The next one is a short sell order. And this is basically when you are betting against a stock. And by that, I mean you think that the price of a stock is going to fall in the near future. Now this is commonly referred to as shorting. Now this might actually be one of the most complicated types of orders to explain. I actually did a whole video where I thoroughly explained how shorting works when I talked about what happened in the GameStop stock situation. But essentially there is a $50 stock that you don't own. You believe that that stock is going to go down to $40. So what you can do is you can put a short sell order against the stock. And by doing this, you are essentially taking a loan out in order to bet against that stock. So this is trading on margin. Now, like I said, this is what happened in the GameStop stock situation where a bunch of different hedge funds were shorting GameStop. And it turned out to be a horrible idea because the GameStop stock went all the way from like $5 to $7 somewhere around there to over $300. And of course, when you borrow money, you have to pay interest on it. And that's what is called a margin call. And suffice it to say these hedge funds ended up losing billions of dollars. Not only is short selling incredibly risky, but on top of that, it's relatively frowned upon because if you think about it, you're not really providing any value. You're making money from the downfall of a company, which doesn't necessarily provide any value to the world. Whereas investing in a company, you are helping them out and you are technically providing value. So it's extremely frowned upon, also very risky. And I would stay away from it unless you really know what you're doing. Another type of order is the buy to cover order. And this is essentially how you would complete your short sale. So basically how this works is let's talk about that stock again. It was $50 and it goes down to $40. You then repurchase the share that you borrowed, you bought the share for $40, you sold it at $50. And then what you do is you pocket the difference. But don't forget, you also have to pay interest on the loan that you took out. And again, you must be able to trade with margin for this one. So just keep that in mind. Very risky. Another one is a fill or kill order. And basically what this one is is it's exactly what it sounds like. The order must be filled immediately and completely or it is killed. An order can never be partially executed. And so basically what this is is you order 10 shares of a $10 stock with a fill or kill order and then you want to sell it. Now there are enough buyers out there that they do want to buy nine of your shares at $10. But unfortunately, there's not a 10th buyer. And because of the fact that there's not a 10th, none of the orders are executed because all 10 stocks cannot be sold. Now an immediate or cancel order is very similar to a fill or kill order, except that partial amounts of the order can be completed. So again, let's go back to that example, 10 shares of a $10 stock and you sell all 10 shares with an immediate or cancel order. Buyers want to purchase nine out of the 10 stocks at $10. And so you sell nine out of the 10 for a total of $90. And the market adjusts and now there's no other buyers that want to buy it at $10, but one of them wants to buy it at nine. So what you do is you cancel the last part of that order, you sell nine of them for a total of $90 and you keep one of the stocks hoping that maybe the next day will rise back up to 10. A day order is another type of order, very simple one. It's a trade that is good until the trading day ends. If the stock isn't bought or sold by the end of the trading day, then the order is canceled. And regular trading days here in the United States end at 4pm Eastern Standard Time. So in this particular case, you place an order for a rare stock 10 shares at $1 each. Now, unfortunately, nobody wants to sell the stock by the end of the day. The clock hits 4pm Eastern Standard Time. And so the order is canceled. Now usually, market orders are automatically set to day orders unless you change it. So that's just one thing to keep in mind. All right, now we're going to go over some stock trading terminology that you are going to hear over and over and over again. So these are things that you have to know. All right. So the first term you're going to hear this all the time is bear market. What the heck does that mean? You know, I've got the bull in the bear right here. And why is this related to finance, right? What the heck does this have to do with finance? Well, a bear market is almost like a bear going into hibernation. It's when the market experience is prolonged price declines for stocks. So basically the market as a whole is going down for a while. It's not just one sector of the market. It's the market as a whole. Now these are much less common than bull markets. And a bull market is the opposite of a bear market. It's when the market faces prolonged price increases for stocks. So basically the market goes up for a period of time. Now these are much more common than bear markets. And you can see this at the bottom here. This is by first trust. The blue is the time that the market is in a bull market. And the red is the time that the markets are in a bear market. And you can see that most of the time it is in a bull market. And basically the way it works is the market's either a bear market or a bull market. It can't be neither of them. It has to be one or the other. So you can almost think of a bull market. I don't know if you've ever watched like bull riding. But the moment the bull is let out of the cage, it basically just starts bucking. And the rider has to try to stay on as it goes up. It's almost like a roller coaster. And that's a way to think of a bull market is, you know, that bull might jump like 10 feet in the air and you just have to hold on while it's going up. Another term you want to know is blue chip stock. Now this is from an established company that has a really good track record for returns. So usually these are very stable companies, which means they're worth in the multiple billions of dollars in evaluation. A lot of the time these companies do pay dividends and blue chip stocks are supposed to have decent returns even during a bear market, but not always. Another one you want to know is earnings per share. You're going to hear this one all the time. And this is basically an indicator of a company's profitability. And essentially what it means is how much does a company make per stock? So EPS equals net income minus dividend payments divided by the weighted average shares outstanding. Now you have to be really careful with ratios like this because a lot of the time it is not an apples to apples comparison. So for instance, Google's EPS is over 50, which is really good. But what you want to do is look at the EPS of a company per year. So compare the EPS this year versus the earning per shares last year. That's the most useful way to use this ratio because if you try to compare the earnings per share of Google to a company that has absolutely nothing to do with Google, it's an apples to oranges comparison and it's just not going to help you that much. PE ratio is another one that's really important and that is comparing a company's share price to its earnings per share. So generally speaking, a high PE ratio either means one of two things. Either it means the company is very profitable or it means the company's stock price is overvalued because if you think about it, the stock price is on top, the earnings per share is on bottom. So a high PE ratio could either mean that the stock price is too high or it could mean that the earnings per share is too low because if you increase the stock price and the PE gets bigger and if you decrease the earnings per share, if you understand how division works, then PE also gets bigger. Now a low PE ratio indicates that a company either isn't very profitable or it could also indicate that the company is undervalued. So it's kind of the inverse. This is another one of these things where you either compare it to another company that's very similar or you compare it to the previous year's PE and those two things can be very valuable, but if you don't do that, it's probably not going to be an apples to apples comparison. So it's pretty much worthless. Volume is another thing you're going to hear about a lot. And this is basically the amount of stock that is traded over a specified period of time. Now usually when somebody talks about volume, it's measured daily. Now if a stock doesn't have very much volume, there's one really big risk and that is that you could go to sell the stock and you might not be able to. So lower volume, generally speaking, means more risk. And this can be a really big problem with small cap stocks, because many of them do have very low volume. And very generally speaking, it's best to stick with a stock that has at least $20 million in volume per day. And when it comes to trading stocks, volume can be an indicator that the stock is either about to drop a lot or go up. Now when it comes to the bid, this is the highest price that a buyer is willing to buy a stock at. Now to illustrate this, let's say you want to buy 10 shares of a stock that's worth around $10 each, you will bid a maximum of $100 for all 10 shares. And the bid will almost always be lower than the offer or asking price. On the flip side, the ask is the opposite of a bid. This is the lowest price that a seller will sell a stock or a number of shares for at a given time. So let's say you have 10 shares of a stock that is selling at around $20 each. You will ask for a minimum of $200 for those 10 shares. That is your asking price. And then the spread is the gap between the bid and the ask price. So the buyer wants to buy the stock at $15. That's the bid. The seller wants to sell the stock at $20. That is the ask. And the spread between those two things is $5. Now when people talk about close, they're usually referring to win a market closes at the end of the day, which here in the United States, a market is open from 9 30 a.m. to 4 p.m. Eastern Standard Time. So 4 p.m. Eastern Standard Time is when the market closes and then also closes during the weekend. It's also closed during many different federal holidays as well. An execution is the completion of a sell or a buy order for a stock. So if an order executes, that means that it completed margin is basically the money or collateral that you need to invest. And this is usually in the form of a loan that you take out from a broker. So this is commonly referred to as trading on margin. So let's say you want to purchase $20,000 worth of a stock, but you only have $5,000. You could borrow another $15,000 from your broker. That's a 25% margin requirement. Now, if you don't pay back that money on time, you can get what's known as margin called. And that's where you have to pay interest on the loan that you took out. There's a really good movie. If you kind of want to understand this better, it's called margin call. Now leverage is very similar. It's the use of borrowed money in order to increase the potential gain of a stock, but it also increases the potential loss. So again, very risky to trade with leverage. So an example here, there's a stock that is $100 and you believe it's going to go to $200 fast. You have very strong conviction. So you only have $100, but you can trade on margin and borrow $200 so that your total investment is 300. Now the stock goes up to $200 per share. And so you sell those three shares that you had for $600. You then pay back the $200 plus whatever interest that you owe on it. And your profit is approximately $300. So instead of profiting about $100, if you only invested in one share because you only had $100, you profit approximately $300 a little bit less because you'd have to pay interest on that loan. Index is a measurement of the change of a large number of companies. So here is a picture of what an index looks like. And usually an index is going to be a market or a segment of a market. And the index of a bond market, for instance, would be the percent change in the value of all bonds inside of that index. Now the most common use of this term, of course, is an index fund. And so in an index fund, for instance, you might invest a certain amount into every single company that you see on this index that I'm showing on the screen. A portfolio would be a collection of your financial investments. So sometimes people have their portfolio in only stocks. But if you want to diversify even more, you can do all kinds of other types of investments. So you could invest in stocks, bonds, REITs, ETFs, cryptocurrency, real estate index funds, etc. And then the top right is kind of a breakdown of all the different types of investments you could make if you wanted to have like a super well balanced portfolio. A rally is when a stock increases in price for a sustained period of time. But usually when we're talking about rallies, we're not talking about a bull market, we're talking about just maybe a few days or a few weeks. So an example in this picture is the stock is in a bear market. So it keeps going down, down, down, down, down. And then all of a sudden it has a nice little rally, but it only lasts for a few days. And so unfortunately, it continues the downtrend after that a stock symbol or a ticker symbol is an arrangement of characters that represent a stock. So for instance, with Tesla Motors, it is TSLA that is its ticker symbol. Sometimes people just refer to it as ticker volatility is the fluctuation of a stock and specifically the fluctuation of a stock during a short period of time. So if a stock is $100 one day, and then it drops to $75 the next day, and then it goes all the way up to $125 the day after that, then that is a very volatile stock yield is the earning of an investment over a specific period of time usually yield is referred to when it comes to yield per year. And the most common use of the word yield is when you're talking about dividends. So for instance, some of the best dividend stocks give over 5% yield per year. All right, so this is the second free gift and surprise. And these are some of the resources that are completely free that I wish I knew about when I first started investing in stocks. So I'm not going to go over these. But these are in my opinion the best free resources that you can use. So simply wall dot street wall street Zen finance dot yahoo.com super useful. Google.com slash finance very useful as well. Google did a great job with that morning star.com is great for evaluating companies. And then doco.com can be a really good resource as well. So definitely look into these check these out when you are doing research on companies. All right, so how to set up a stock trading account. Now here's the part that kind of sucks a little bit. I'm going to give you the bad news first. In many places in here in the US, they have what are known as know your customer laws, which means KYC. And what this basically means is you have to gather certain information from all of your customers before they can start an account, fund the account and start investing money. And so these stock brokerages and trading apps are going to ask you certain personal information for you to be able to own an account. So for instance, they're going to ask you how much you make approximately per year, they're going to ask you for your social security number. And this whole process does not take long. You can sign up to a stock trading app sometimes in like 15 minutes or so. But after that, you do have to get approved. And that kind of depends on the company how long that takes. Oftentimes, it doesn't take very long at all though. But that is something that you have to do in order to start a stock trading account. Now we are going to go into buying stocks on fidelity. So this is something that I had to do a few days ago because there is a little bit of a delay and it didn't take very long for it to go through. But I'm going to go ahead and cut back to Shane from a few days ago. So I'll see you here in a moment. All right, hey guys. So I created a fidelity account here. This is actually an account that I used a while back for my Roth IRA before I actually transferred it off of fidelity. But anyways, I'm going to be showing you exactly how to transfer money on a fidelity and then buy a stock. So what you want to do here is go up to the top left and you are going to click on the transfer button, then you are going to click here and you're going to go link a bank to fidelity account and you click continue. Now when you set up your account, you probably set up two step verification. So it's going to send you a text code or however you set that up. All right. So on this part, you have a few different options. You've got the electronic funds transfer option. That's kind of just your standard option. Unfortunately, it does take a little bit of time, but it's free. And then you've got bank wire, which is much faster, but you can only withdraw money from fidelity. Okay, so they tell you kind of the downsides to that. So in this particular case, I'm just going to do an electronic funds transfer. And then I'm going to select my individual account. And then I am going to link my bank account. At this point, you basically just have to enter in your routing number, account number, and then it's going to make you re enter your account number. So there's many different ways you can find this information. When you started the bank account, you were probably given this info. You can also log into your bank account online and it should be there, but you can also look at the bottom of checks. That's another place where you can find those numbers after you have entered that information and you just go ahead and click agree and continue. All right. So as it says at the top of the banner success, your bank account has been linked. Now you click on the bottom left here, transfer money now, click on this list, and then you click on your bank account. You want to then click on your individual account. The frequency here is just going to be just once and the amount I'm going to do is $1,000 this time. So go continue, just want to review the transfer details one last time and submit. So at this point, you just have to wait a little bit for your funds to get into your account and then after that, you will be able to purchase stocks and actually fidelity makes it to where there is a certain amount of money that's available right away. So it looks like in this case, the cash available to trade is about $1,000 right now. So there's sort of just trusting that that money is actually going to get into your account more or less. If you ever have any issues with your bank, they may not have that as an available option. All right. So that did not take very much time at all to fund the fidelity account. The funds were pretty much available right away. Unfortunately, it was after market hours. So it is the next day. But this is the main page of fidelity. You might find yourself on this one, you would just want to go to accounts and trade, go up to trade here, select which account you want to do your individual account go. And then here you can look up different stocks, ETFs, etc. The one I'm going to do today is the Fidelity Zero Total Market Index Fund. So we're going to click on that one, going to click buy. All right, we're going to end up buying about 62 shares or so. So it's going to be around $1,000. Preview the order. You go down here and you go place order. And there you go. Order is executed. So really easy one. That Fidelity Index Fund is great because it basically just tracks the entire market. So however, the entire market does, which, you know, historically speaking, it's done extremely well, you are going to increase your earnings on par with that. Definitely one of these safest investments you can possibly make. Hey, guys, so I'm going to be funding my Webull account with $9,000 in order to buy some stocks. This is Webull. You know, it's not that hard to create the account. It's got some options here. You can go markets, look up some cool information, you know, cryptos, global, explore, etc. Go to community, there's some cool stuff there. This is just my dummy account that I use to make videos and stuff messages. And basically, the one we're going to be going to is this middle one here. And on here, what you want to do is click detail, and then go down a little bit, click buying power or on buying power to the right, you'll click deposit. And then it's going to have on the very top here, it's going to have you sign up to your bank account. So you want to link your bank account. Most common is an ACH transfer. It does take a few days. However, you will usually depending on the brokerage you're using get access to your funds pretty much right away. So basically, you just need your routing number, your account number, some basic bank information, pretty easy to do. Go here to the amount, I'm going to click 9,000, and transfer to Webull. And it's that easy. Hey, guys, future Shane back again. So we're going to go ahead and make that purchase on Webull. So the easiest way to do it is to just go ahead and click the markets tab at the bottom. And then it should automatically set to the United States, if you're watching this from the US, but you have options to do crypto, global, explore, there's a lot of good stuff you can see there. And we're going to go to the top right. And the one that I'm interested in buying is going to be VGT. Now, VGT is basically an index fund that has a little bit more exposure to technology related stocks. And one thing about technology related stocks is they did incredibly well during the pandemic. Everybody knows that. But even before the pandemic, they still did extremely well. They outperformed other types of stocks. And another thing about technology related stocks is they tend to be very scalable. So with some types of companies, they run into issues at some point because they simply cannot scale the company and make more money. Whereas with technology related companies, that's not nearly as much of an issue. You know, you don't have to have a lot of inventory to sell more software or digital products. So for that reason, and many more, I did a lot more research than that. I am going to invest some money into VGT because I think it is an index fund where you're going to have really diversified stocks, but at the same time, you have more exposure to technology related investments. So I'm going to type in VGT here. And you want to always make sure that it's the right one. But this is going to be an ETF. And you can look at all this, you've seen that, you know, over the last five years or so, it has gone up quite a bit. I had that dip when the pandemic started, just like everything else. And then it went up a ridiculous amount since then. So very nice, steady growth. That's what you would expect to see from an ETF. So on the bottom left, I'm going to tap trade. I'm going to set the quantity to looks like I can do 21 without running out of money. I'm going to make it a market order. And then I'm going to click buy and confirm. And my order was filled almost immediately. So we're good to go. All right, so now we're going to talk about how to sell your stock on Webull. And this is the part where my accountant is going to hate me because I'm basically buying and selling stocks within a few minutes. So there's several different ways you can get to your stocks, you can look at the main page, the middle one on the bottom, look at what stocks you own, or you can just, you know, go to markets and then search the stocks as well. That's another way to get to it. But I'm going to go ahead and click trade on the bottom left. And I'm only going to sell one of them because I just think it would be so wasteful just to buy and sell all of them. But I'm going to go ahead and just set a market order here. I'm going to sell and just sell one of them and confirm. And it sold it pretty much immediately as well. So as you all saw, incredibly easy, super straightforward. For people who have used other investing apps, you see how super easy this is some of the other ones actually make it incredibly complicated. It's almost like as if you had to learn a new software at work or something and it takes a long time just to be able to do the basics. But with Webull, incredibly easy. Plus you have a bunch of extra options as well. So it's really good for beginners and intermediates. And then the desktop app is great for advanced. Now I do have a third gift for everyone who has made it this far into the video. First of all, thank you. I appreciate you. And I really hope you enjoyed this video and learned a lot from it. And second of all, if you want to have access to the slides that I use in this video, as well as all the references, check the description down below because that is my third gift to you. I know a lot of people probably don't have time to watch the whole video again. You might want a little bit of a refresher. And so I decided to include these slides to this video as well, completely free. And I saw another video like this where they said they were going to give the slides for free. But then I went into the description and clicked on it. And you had to enter your email. So you don't have to do that. It's completely free. You can get them in the description below. Now let me know down in the comments what you thought about this video now that you've seen all of it and also share the video if you think somebody else could benefit from it. And of course, you know, like, comment, subscribe, all that sort of thing that helps as well. And here are some of these citations that I used throughout this video, different pictures as well as references that I used. So 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 and I will see you next time.