How To Invest Your First $1000 in 2022 (Step by Step) - YouTube

Who is the fastest self-made billionaire ever?

While it took warren buffet 55 years to join the billionaires club, Jay Walker literally

did it in less than a year.

He launched priceline.com during the dot com bubble, and his net worth instantly jumped

from zero to billions.

But that wasn't sustainable because when the bubble burst, his net worth crashed as well,

while Buffet is still on the top of the list, and he doesn't seem to go anywhere anytime

soon.

And that's the kind of wealth you want to build.

The game of money isn't easy.

It's taught, competitive and ruthless, and if you don't know the rules, you are doomed

to fail.

The problem with most people is that they might work hard their entire lives but end

up poor at the end of the journey because they don't know how to let their money make

even more money.

In other words, they don't know how to invest.

Let's assume that you have been saving money and have an extra thousand dollars in your

bank account.

That is an achievement because nearly 70 percent of Americans don't even have an extra thousand

dollars in their bank account.

So instead of spending it on another useless gadget or a pair of shoes that you will wear

once and then keep in your wardrobe for many years before you finally throw it away, let's

assume you are going to invest that money!

But the question is, how do you invest your first 1K dollars?

Do you invest it in real estate or the stock market?

What kind of stocks do you buy?

Is 1000 dollars is enough to start investing?

We are going to answer all of these questions and many more!

So give the video a thumbs up, and lets get started.

To understand what investing is and how does it works, consider this example.

Let's say you worked so hard and saved 300K dollars, you can pay a visit to a Ferrari

store and get yourself a luxuries car and let everyone know how successful are you or

you can buy real estate (house) and rent it out.

Every month you will receive at least 2000 dollars.

If you decide you no longer what to keep receiving that 2K paycheck every month, you can sell

it and get back your initial investment.

In fact, the value of your investment might even appreciate, so you will sell it for a

higher price.

And that's how money makes money.

But you can't buy real estate for a thousand dollars.

That's not even enough for a downpayment; however that doesn't mean you can't invest

that thousand dollars elsewhere and let it grow.

The easiest way is to just deposit it into a savings account and generate interest, but

why would the bank pay you for keeping your money in the bank?

Shouldn't they charge you instead?

No.

You see, the bank is going to take your money and loan it to someone else at a higher rate

and would share with your a portion of that profit.

That's how banks work in short.

The only problem with this strategy is that interest on the deposits account is so low

that it isn't worth it.

The highest rate you probably can get is 0.8 percent.

Which means that if you invest that 1k dollar into a savings account, 12 months from now,

you will receive an extra 8 dollars.

Which is extremely low because the Fed targets an inflation rate of 2 to 3 percent which

means, if you are not getting at least 2 or 3 percent, overtime the real value if your

thousand dollars will depreciate, which means you can buy with it less goods every year.

But why are interest rates so low on deposit accounts?

Because interest rates, in general, are low this year since the pandemic forced the fed

to lower them (interest rates) to encourage everyone to borrow money and spend.

A year or two from now, once we get out of this recession, the fed will increase interest

rates to 1, 2, or even 3 percent, which means interest rates on the savings account will

rise as well.

Your second option is to buy government bonds.

A government bond is a security that is issued by the government to raise money to support

government spending.

Say the government wants to build a school, but it doesn't have the money to do that,

so it issues an IOU, a piece of paper that says that whoever owns this security is owed

this much amount of money plus interest by the US government.

Of course, this is an oversimplified example, but that is the point in short.

Government bonds are heavily influenced by interest rates, so since interest rates are

extremely low this year, government bond rates are less than 1%, but two years ago when interest

rates were high, government bond rates were as high as 3 percent, which is not bad, since

government bonds are the safest investments you can ever make.

Any investment carries with it a certain level of risk, if you are loaning money to the US

government, what are the chances that the US government will default on its loan?

For the US government to go bankrupt, the entire US economy might have to fail.

That's why US bonds are considered the safest investments in the world.

But if you want to make a higher return, let's say 10, 20, or 30 percent, then you have to

consider investing in the stock market.

For example, amazon's stock price increased by over 80 percent just this year.

Google's stock price rose by almost 30 percent.

Tesla's stock increased by 721 percent.

Yes, you heard that, right!

721 percent!

Then the question is, why would anyone invest elsewhere when you can double or even triple

your money in the stock market?

The answer is RISK.

When it comes to government bonds, for example, there isn't much risk.

In fact, it is risk-free to certain extend.

But when it comes to individual companies, there is a risk that the company might fail,

it might report negative earnings, pretty much any negative news can drive the stock

price down.

The company might release a product, and if the public doesn't like it, that can make

some negative headlines, which can drive the price down, so with higher returns comes more

risk.

Apple is a well-established company and its chances to fail are way lower than Tesla,

but it also has less room to grow than Tesla; that's why Tesla grew by 721 percent this

year but apple by just 70 percent.

What you have to determine for yourself is how much risk you can take without going nuts.

If that 1000 dollars is all that you have left, maybe risking it all isn't the wisest

option because if things turn south, you can end up losing most of it.

So one-way investors minimize their risk in the stock market is by investing in an index.

The most famous one is the SP500, which tracks top 500 US companies, so an index fund would

basically invest in these top 500 companies.

Some of these companies will definitely fail, but others will grow.

Judging by historical data, the average return rate for the sp500 since the 1920s was around

10%.

This means, buying a share of these index funds means you are buying a tiny share in

the top 500 us companies.

My 3 top favorite index funds are VOO or Vanguard 500 Index Fund, QQQ and index fund by Invesco

and Fidelity ZERO Total Market Index Fund.

All of them are great and invest in pretty much the exact same companies.

But how do you buy shares in these index funds?

I mean, where do you start?

First, you need to find a broker; someone is qualified to sell you stocks.

In the past, it was always someone; you had to pick your phone and call him and ask him

to sell you some shares.

Remember the wolf of wall street?

He would spend his entire day calling people and try to sell them worthless stocks.

But thank god we are in 2020, and things are much better and easier.

Brokerage firms created apps so that you can buy shares from the comfort of your smartphone,

such as Robinhood, Webull and so on.

All you have to do is download one of these apps and sign up, and you can start investing

right away.

In fact, if you use the link below to open a webull account, you will get 2 free stocks,

just a disclaimer its an afilliat link, but there is nothing wrong with that, you are

going to get 2 free stocks, isn’t that amazing?

That is a good start I would say.

Check the link in the description.

I tried my best to make this video as simple as possible so that whoever wants to start

investing can start right away.

Often what happens is that you want to start investing, but you have a million questions

and you start googling this and that and get exhausted after sometime and then you just

give up and try again a few months later so I tried to answer all of your questions in

this short video.

So if you have found the video helpful, make sure to give it a thumbs up and if you are

new around here, hit that subscribe button and the bell besides it.

Thanks for watching and until next time.