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Investing in stocks (2019 & beyond) - choose the 馃憤 best ways suited to your time & skill levels - YouTube
Channel: CF Lieu Channel
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how to invest money in stocks one
misconception many people had is that
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unit trust aka mutual funds and stocks
are two different asset class I'm gonna
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tell you why this is entirely bullshit
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funds
whether they are mutual funds aka unit
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trust or even exchange-traded funds or
ETFs in fact the vehicles are the ways
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to invest into stocks think of it this
way
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when this question pops up in your mind
how do I invest in stocks just imagine
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this analogy you want to travel from KL
to Penang how do you want to do that a
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few modes of transportation namely you
can drive your car you can use a bus you
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can ride a train or you if you are the
plain lazy you you know you your plane
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AZ you are overweight and all that and
you maybe want to sit your butt on a
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plane so this all be first when it comes
to the cost involved aka the price that
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you need to pay it differs in the time
involved aka the time to get to point A
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to point B and of course the level of
work that is needed for example if you
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drive a car you have to drive if you sit
your butt on the plane you don't need to
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drive you know don't need to drive
anything you just be at the airport at
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the right time just get off the plane
and then the plane we just go on ferry
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your your your your ass or whatnot and
come just just land on on on wherever
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you want to go let's take a plane as an
example if you take a plane is the
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fastest because this is also the most
expensive but if let's say if the plane
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crashes then this very little chance of
you surviving you hundred bucks and die
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okay so taking a plane it's like using a
derivatives to invest into the stock
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market derivatives you don't know then
put a link below what is a derivatives
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but one example of using a derivatives
is like stock options value of these
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options of warren's is actually derive
from the value of the price of the spot
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and the price of these stock options of
warrants it just cost a fraction of the
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underlying stock price maybe the stock
price cause the price one ringgit per
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share but an option or warrants maybe
just cost like 10 cents per option so
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the thing is you don't really own the
asset and make another option and warrants
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is a relatively higher risk of an
instrument to invest into stock but you
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know that options are warrants a proxy
to the underlying asset which is the
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spot now the value can actually despite
up the value can also spike down and you
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spike the word because it can really
grow very fast and you can also really
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go down pretty fast pretty fast okay
relatedly fast so you could profit a lot
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or you can make money fast there's also
lots of chances if you are stupid if you
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have foolishness
a lot of chances you could lose money in
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a blink and I if you invest in the stock
market using purely warrants or
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derivatives now how about driving a car
you drive in your car you have a full
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control yes it takes more effort maybe
if you are sleepy you have to take
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coffee you have to take breaks you have
to go over toilet breaks and all that
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and you know you go from KL to penang
penang hell even cost you if you cost
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you like techs are five six hours drive
at provider you don't break exceed the
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speed limit now if you are those who are
who are really tend to front the traffic
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laws and you just drive a 200 kilometer
per hour it's very possible you can
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reach in three hours or even two and a
half hours but there's no way the
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journey itself there's no way you can
actually beat the time it means for a
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plane okay to go from penang don't care
which is like leave in one hour there's
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no way you can do that now this is
exactly the analogy i want you to
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understand okay it's not about comparing
stocks and funds and all that i'll get
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right into that in
in a second but this is exactly how you
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invest money in the in the stock market
if you drive a car that the same analogy
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is you are investing your money directly
in the stock market now taking a bus or
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train means you also can - off the
effort of you being on the wheel and
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driving your car on your own but again
you can choose where to to actually
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drive your car okay it's not lie in a
plane where the itinerary is fixed the
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time is fixed driving a car you can
rather be slower you can detour to other
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places like maybe Ipoh or some take a
break you know stay in hotel which is
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some other times along the way
Treiber can't give you that kind of
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autonomy but if you take a bus and train
meaning that yes you don't need to try
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but you also lose the the autonomy to
actually say that hey I want to go here
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right now so you can't make the kind of
spur-of-the-moment decision and because
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someone is driving the bus okay someone
down the path it's like a five minute is
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managing a fund which you invest in the
family actually decides what are the
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stocks to pay and all that you naturally
have to pay a fee for the other work
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that is being done on behalf of you just
like when you use a train or you use a
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path to travel point A to point B you
have to pay a fee okay if you were
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compared if you were to drive a car
yourself of course you know your car you
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have still have to pay tol you have to
still have to know pay for the Petrol
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but that's another point that's just
discounted away taking a train it's like
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you are investing in the stock market
using exchange-traded funds or ETF way
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of doing things
like say train because of training can
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really go anywhere in fact the the route
is very very fixed because the cost you
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have to train have to move according to
the tracks in the same analogy and ETFS
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or exchange-traded fund initial tracks
to market in a like a train have to go
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by the track and probably at a certain
constant speech speed so it's not
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you can reach like oh if I Drive faster
then I can reach early that drive slow
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where I can reach slower so it's not
likely to happen for a train unless
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something break down along the path
right and a train is also one of
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probably one of the cheapest way
available
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compared to bus or you know or taking a
plane and this actually it's same with
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investing in the stock market how to
invest in a stock market true and ETF so
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it's the same it is one of the cheapest
that is why I'm using this analogy to
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actually educate you the way to invest
this way using ETF to invest into the
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stocks or stock market means you want
outperform or underperform the market
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too much now because the ETFS of the
exchanged traded fund has to mimic the
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certain stock market in that let's say
it tracks the malaysian stocks
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market in a southern sector than it has
to track as close as possible maybe not
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100% but as close as possible imagine if
a stock market index in a certain sector
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region is represented by a basket of
let's say 50 stocks out of 500 stocks
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these 50 stocks at each of them before 2
percentage on for each stocks that makes
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up the 50 stocks make up 2 percent weightage, makes up 100 percent which makes up the
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index index so that is exactly how the
exchange-traded fund or ETF has to buy
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the exact same stocks in the stock
market in the exact proportion exact
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percentage exact composition to invest
in okay and the form the entire ETF ever
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exchange-traded funds so you can really
doesn't make sense actually
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how other stocks other than these 50
stocks which is representing the index
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itself how about a bus a bus the same
analogy is like a unit trusts or mutual
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fund funds when talk about unit russell
mutual fund there are a lot of unit
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trusts or mutual funds out there it's
same like when you take a bus there are
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a lot more bus
bus operator or bus company's then a
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train operator maybe they're just one
train operator but for bus you know that
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there is a lot of bus company some are
more comfy some more expensive with some
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premium features and all that some might
overcharge you for crappy service some
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might be ok and some are simply awesome
so the bus is you have to also
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understand this always you are not the
only passenger in the bus there's a lot
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passengers in this in the bus going to
the same place review sharing what are
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the costs that the bus company needs and
not to pay the bus driver in order to
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take you from point A to point B that is
like a vehicle it's like a fund that
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holds many stocks inside the funds ok
with certain mandate which means that in
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certain ways it can take a break along
the path it's not as strict half as a
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train but yet the destination it
wouldn't be fir too much if it says that
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it's going from penang to KL then if you
actually started caring wouldn't go
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further and it wouldn't stop before it
which care unit trust or mutual fund
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is how people is how most people started
investing in the stock market or has
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exposure indirect exposure to the
stock market by investing in a unit trust
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probably they don't understand what is
are they investing maybe their friend
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just come and recommend it to them but
the point is this is how most people
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started let me ask you imagine if you
are sitting in the bus can you a one
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person out of the hundred passenger
asked the the the bus driver actually to
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drive faster just for you because you
are in hurry for time we're late for
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your appointment in another city no just
like you can ask the bus driver to speed
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just because if you endanger everyone
the same analogy is the fund manager as
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the bus driver
they can't be like buying or investing
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into one single stocks hundred percent
or even 50 percent or even 20 percent in
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one heavy in just one single stock just
because the things that this has a
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potential to go up just because
personally very much so you can really
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do that and is the thing that you had to
understand because it is not how it
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works now even if you are the fund manager or you're the bus driver like I say like I
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believe in so much but you can't
normally you can really hold more than
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probably 5% 6% even 10% of the entire
fund value into one single stock and the
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re pros and the cons to this versus
investing directly into the stock of
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versus driving the car yourself the cons
is imagine you have probably lion-o -
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indeed the basket of stocks but this one
stocks inside the unit trust of the
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mutual fund that maybe go up by 20% in
within a period of one week but because
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the fun only hosts maybe 3 4 % of these
stocks of this exact stuff so even
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though the stocks or cannabis and so it
would not go up you do not go up by 20%
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the fun maybe will go up even only by 1%
deal - a 20 percent rise in a single
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star in the fund which only makes up
maybe 3 4 or 5 percent of the total and
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- value now this might seem layered this
disadvantage but the advantage is what
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if this single stock goes the other way
like it drops just 20 percent overnight
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the thing is if you invested already
into the stock you will suffer that kind
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of losses paper losses 20 percent
overnight but because if you are
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investing in the fund this company
percent maybe the downside of the entire
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fund value which is investing in is only
1% because this single stock is only
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maybe a 4 percent of the entire fund
value this is really nice it limits your
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losses something of a risk management
and it is not about comparing which
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asset class are actually gives you
higher that is not the best you is
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really stupid to compare between unit
trusts and stock because essentially you
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unit trust of course you have bond unit
fixed income and all that but
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talk about equity unit trusts mutual
fund equity funds versus stocks that
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essentially the same one is a vehicle to
invest in stock where the other one is
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the underlying asset which is the stocks
itself so it's really stupid to compare
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between these two as a car because
underlying they are the same thing now
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if you also incur a table or link to the
table comparing these few vehicles which
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means ETFs mutual funds or unit trusts
or even derivatives or invest in the
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into stocks so these are the
vehicle to invest directly into equities
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or public equities market and what the
pro and cons and how you want to compare
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in terms of the fees feature risk and
return and all that so links below check
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out that this table will be very useful
to you now so that concludes how to
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invest into stop now if you like this
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