From $0 To Millionaire | Investing For Beginners

What's up you guys, it's Graham here! So, as many of you know, I have this thing for talking about investments. For some reason, it's what I've been obsessed with doing over the last decade. Like, I wake up early in the morning, I make myself some 20-cent iced coffee, and then I spend a few hours reading through every single financial website in existence, going through my favorite YouTube channels, trying to learn as much as I can, and then sorting through the newest real estate listings to get an idea of what's coming on the market. This has been my routine every morning. It's helped me tremendously in terms of how much money I make, and it also happens to give me something to talk about here on YouTube three times a week.

Make sure to hit the notification bell! But with this video, I thought it might be helpful to get back to the investing 101 basics because I'm still getting comments from people who know that they should be investing but have no idea where to start or what to look into. So, I wanted to make a video talking about my own personal favorite investments, why I invest in them, and how you can get started doing something similar as well. Hopefully, that will serve as a template and a catalyst for you to begin investing from.

Then, if you stick with this for a long time and you save your money by not going and buying overpriced Starbucks coffee, then one day, you might have enough to invest in to buy this really cool 2019 Lamborghini Aventador SVJ coupe that goes 0 to 60 in under 3 seconds. And if you think that's impossible—like, "No, Graham, I can't afford a half-a-million-dollar car!"—well, it's really as simple as a $10-a-day investment compounded at a 7% return over 35 years. There you go!

And if you want anything more expensive than that, then keep watching, and I'll share with you exactly how to do it. First, I just want to start by saying this: when it comes to investing, there's nothing out there that is guaranteed or risk-free. Typically, the more profit that you aim for, the more work is involved, or the higher the chances will be that you'll end up losing money. Even something as guaranteed as a high-interest savings account has the risk of you losing money to inflation or having that interest rate go down over time, like pretty much every online bank has been doing to me over this last year.

So, with this, there's never going to be a magic pill or just like this one-size-fits-all approach when it comes to investing. Not to mention, investing is almost never going to be consistent, and how much money you make will definitely fluctuate over time. Even though we can look back and see historically that some of these investments have performed pretty well long-term, in the short term it's usually a pretty wild ride. There might even be several years in a row where you just continually break even on your investments and then pull out your hair and question your very existence as an investor.

Or, most likely, there are going to be times where you smash the like button for the YouTube algorithm—if you have not done that already! But no, seriously, I just really want to preface this video by making it very clear that investing is going to be a messy operation. It's really going to be a true test of your willpower not to get too excited when things go up and not to get too disappointed and sell and panic when things go down. All of this is going to be cyclical, and it's important that sticking with it becomes just as much of a consistent habit as going and brushing your teeth every night.

So, understanding these dynamics is going to make you that much better of an investor and get you one step closer to going from 0 to 60 in under three seconds. So, now without further ado, here are my all-time favorite investments.

The first, and something I advocate non-stop here on the channel, is—wait for it—index funds! The reason I'm such a huge proponent of this both for myself and almost everyone watching is that it offers the ultimate diversification, the ultimate selection of almost anything you want, and some of the best returns out there. Now, for anyone who is not aware, what an index fund is—it’s pretty much a portfolio of certain investments that you could buy into, and then you own a small amount of all of them.

For example, you could buy into the entire S&P 500, which covers the top 500 publicly traded stocks here in the United States, for the low price of $307.58. That way, you could own a small fractional percentage of everything without needing to go and buy each stock individually at its full price. Historically, an investment like this, over the last 100 years, has seen a return of about 7.5% annually, adjusted for inflation with dividends reinvested. What you gotta say is pretty decent for something you just buy once and then hold on to forever without needing to lift a finger.

This is the reason why Warren Buffett suggested that the majority of investors out there keep 10% of their money in cash and the other 90% in a low-cost S&P 500 index fund like this one. His reasoning for this was that long-term index fund investing should see a higher return than just about any other broad investment out there—all for a fraction of the price. This is also something that I agree with, which—let's be real—like, who am I to ever disagree with the almighty Warren Buffett? So obviously, I listen to his advice, and this is something I personally invested in throughout the last 10 years.

I keep it incredibly simple—just throw it into a mix of VTSAX, VFIAX, VIG, and VIX, which covers a wide variety, pretty much everything out there. Then after I do that, I do absolutely nothing! Of course though, just like with anything, there are pros and cons to this approach, and this is what they are.

Starting with the bad at first, because this is not an actively managed investment, you're at the whims of the overall market, for better or for worse. That means that other more specific investments could end up making you way more money depending on how much work you're willing to put in, so doing this could limit your profits to a certain extent. The second index fund investing is meant to be a long-term strategy, meaning that if you just want to get in and make money super fast, it's probably not recommended because the markets are way too volatile to ensure you're going to make a profit short-term.

So, if you wanted to do something like this, I recommend you hold your investment for at least ten years or longer. The third downside is that there is no third downside. On the other hand, index fund investing does have some pretty solid advantages for anyone who's willing to give it a shot.

First, it's really easy to do, and anyone can get this set up within minutes. Websites like Vanguard, Fidelity, or Charles Schwab all offer you extremely low-cost or even free index funds that cost you nothing to buy and almost nothing to maintain. That's pretty much as free of an investment as you're going to see! So in terms of simplicity, this is the best. Second, it takes very little work to figure out where your money is going. Unlike picking individual stocks, trying to time your buy-in, and then figuring out the right time to sell, index funds take pretty much no work at all.

All you got to do is buy at once, hold it for a really long time, and then comment down below when you get to this point in the video! Third, studies have shown that index funds actually generate a higher rate of return than hedge funds and the majority of individual investors. So, from a money-making standpoint, index funds just seem like the clear winner. This is why I like them so much and why I recommend them for anyone who wants to take a really easy, passive approach to investing, who still wants a really good return and wants to do as little work as possible for their investments.

This is really one of those investments that can make you money long-term while you just sit there relaxing, tanning on the beach, and watching my videos. And this is why I throw money into this as well, just so I can cash in on the markets moving up whenever they do.

Second, we have another all-time favorite investment of mine, and at this point, this is pretty much where all my money goes. That would be real estate! Now, this type of investment is insanely more intricate, time-consuming, and risky than just going and buying an index fund and then doing nothing, but the returns that I get from doing this are so much higher. And when you really know what you're doing, you have the potential to make a lot of money.

But it comes to myself, my entire investment strategy really just boils down to this:

1. Buy an undervalued property that I know I can get a good deal on.
2. Buy property in an area that I expect will be going up in value over the next 10 years.
3. Get a fixed-rate, low-interest 30-year loan on the property or renovate and fix up the property so it's going to be worth even more by the time I'm done with it.
4. Rent out the property, and the rent should cover all of my expenses plus some profit.
5. Repeat the process and do this over and over again.

No joke, I've made over a million dollars doing this as a side investment, and now my rents are exceeding $15,000 a month gross. Plus, each of these six steps makes money in a different way, so I'm not entirely dependent on just one way of making money.

First, buying an undervalued property where I could get a good deal. This is where you can make an instant profit just for buying a home less than what it's actually worth. For example, imagine buying a home for $450,000 that's worth $500,000. In a way, you just made $50,000 of equity just for buying it. That is entirely possible with real estate investing when you have the patience to wait for the right deal.

Second, I always try to invest in an area where there's upside potential and values are expected to rise. For example, I like to invest in areas that are seeing a surge of new buyers, new investments, and new businesses. I also like these areas to preferably be selling for less than other nearby areas because, from my perspective, the cheaper homes should see more demand from buyers. They should be more affordable and also have more room for upside.

Third, I always get a low-interest, fixed-rate mortgage on the property. In a way, this is one of the techniques that I use to essentially borrow free money. For example, I could go and get a loan from the bank for 30 years fixed at 3.5%, but when I go and rent out the property, that 3.5% interest rate is a tax deduction against the rental income. Plus, the net amount that's remaining after taxes is further whittled away by inflation at a rate of about 2% a year. Meaning that, after everything is all said and done, that 3.5% interest rate loan is essentially costing me nothing to maintain and hold over 30 years.

Now, fourth, by going and renovating the property, you could get what's called forced appreciation. This is where you go and remodel the home and make it more desirable, and in return, it's worth more money than what you paid for it. For example, this might be the equivalent to you going and buying a $500,000 home, then spending $50,000 fixing it up, and now it's worth $600,000—the $100,000 more than what you have into it.

Then, fifth, you go rent out the property. Hopefully, you're making cash flow every single month as profit. This is also going to be known as what's called your cash-on-cash return, or how much money you're making from your money after all of your expenses. So, if you invest $100,000 in a property that makes you $5,000 a year, that works out to be a 5% cash-on-cash return.

It's six when you go and make your mortgage payment every month, a portion of that payment goes towards home equity and paying down the loan. It's kind of like saying every month that you make your mortgage payments, you now own half a percent more of the home until eventually you own the entire thing. With this, you're building up your net worth each and every month, and the best part about this is that your tenant is the one who's helping you pay it off.

Lastly, by investing in real estate, you should see some appreciation of your home's value long-term over time on top of everything else. So, much like picking a stock that goes up in value over time, real estate should too. Now, the amount your home goes up in value is entirely dependent on the area that you buy in. Some areas might see your home actually go down in value, but long-term, in high-quality areas, you should expect to see a 2-4% increase in your home's value year after year, and that also increases your net worth.

I could easily talk about this for another hour or two because this is really just the tip of the iceberg in terms of what's possible. Overall, I've incorporated everything that I've mentioned here into my entire real estate career, and that's allowed me to make way more money than I would have otherwise in just about any other investment.

However, there are some downsides to doing this because, like I said, any returns like this don't come without an equivalent amount of risk. First, I'll be the first to admit it's a lot of work. Even as someone who's been doing this professionally now for almost 12 years, it could still take me three to six months or longer to find the right deal. I'm constantly searching the markets to see what's coming up, I'm seeing open houses every weekend, and I spend a lot of my time managing renovations. In the beginning, it's definitely like you're buying yourself another part-time job.

Second, there's also a high barrier to entry because you will need a down payment, a good credit score, and sufficient income to get a loan from the bank. Without that, you're either not gonna get the loan in the first place or you're gonna end up paying a much higher interest rate, which has cost you more money.

Third, this type of investment is fairly illiquid, meaning that if you need cash, it's probably gonna take you a few weeks to maybe even a few months to sell the property or pull out your equity in cash. So, why do I really recommend this? If you're the type of person who likes to be really hands-on with what they do, this is not like an index fund where you could just click sell, and within minutes, you have all the money you need to go and buy that 2019 Lamborghini Aventador SVJ.

Fourth, dealing with tenants is not for everybody. Even though you can hire a property manager to take on a lot of the work, it still requires some effort on your end to manage the manager, so to speak, and otherwise just make sure everything is running smoothly. But still, for me, despite all of the negatives, real estate investing holds a special place in my heart. I enjoy it because I like having complete control over my investment and getting cash flow every single month, not to mention some pretty good tax advantages. If you keep reinvesting the profits, the amount of money that you can make from this can be a lot.

However, if you're the type of investor who wants something completely easy and passive, without ever needing to lift a finger or pick up the phone to deal with another person, then chances are real estate investing is not for you. Instead, you might want to look into this third option, and that would be individual stocks.

Now, admittedly, this is not something that I do very often because I believe that overall index funds are generally the best for the majority of people out there. However, every now and then I do dabble and buy individual stocks, like with Tesla, as I mentioned here on the channel. I'm not gonna go so far as to say that buying individual stocks is riskier than going and buying real estate; it's certainly not as time-consuming, and the upside can be way better. But the likelihood that you'll lose money long-term is really just as equally present.

This is because you're placing your money within a few specific companies that you do not directly control, and your entire investment is dependent on those businesses doing well. Now, I personally recommend if you're gonna go and do this to do it within a Roth IRA or a 401(k) to make sure you're not paying any more tax than you absolutely need to. But again, this is not required— you could also just as easily open an account with the multitude of free stock trading platforms out there, deposit some money, and then go and trade away.

And if you pick well, combined with maybe just a little itsy-bitsy bit of luck, you could end up making a lot of money! For example, AMD is up over 120% in the last year, Tesla is up 140%, and Apple is up about 88%. So, as you can see, if you pick well, you could do substantially better than investing in an index fund and even better than investing in real estate!

For anyone watching, feel free to use the link down below in the description, and the free stock trading platform Webull is going to be giving you two free stocks if you deposit $100 in the platform, with one stock being valued up to $1400. This is one of the stock trading apps that I use myself personally, and even though it's a little bit complicated to use at first, it's got some really great features, and I would highly recommend it!

So again, for anyone who wants those two free stocks, the link is down below in the description. However, just keep in mind that this is significantly riskier, and you also have the potential to lose a lot of money, so you're really gonna need to do your research to make sure your investment performs well over time. But individual stocks can be a great way to invest if you have the interest in going for it and you don't lose as much sleep as I do just constantly checking prices!

Of course, I just want to say a quick disclaimer for this: the typical investor is really, really bad at doing this and will not outperform the overall market long-term. Even when it comes to myself, I only buy individual stocks with money that I could afford to lose, and even though it might work out sometimes in my favor, I do not count on it, and I do my best to invest as safely as possible.

So, if you want to go ahead, by all means, do it! Just know your odds and understand that you're really gonna have to put in your work if you want this to be successful.

The fourth investment I want to throw in here is, even though it's not an investment by any means, it’s certainly something that I use every day that helps me with that—and that would be a high-interest savings account. Here’s the thing: it's always a good idea to keep cash sitting on the sidelines while you wait for a good investment to come up or to pay the bills or even for your emergency fund.

There’s never a situation that I’ll be in where I don’t keep at least $50,000 in cash sitting in one of these high-interest savings accounts at all times to cover anything that might come up. I recommend if you want to make the most of that sitting money that you put it in a high-interest savings account making at least 1.6% on your money at the bare minimum. I use banks like Ally Bank, Wealthfront, PNC Bank, and HSBC that all pay between 1.6 and 2% interest.

Even though it doesn't make a ton of money and it basically just keeps pace with inflation, it’s still making money that would have otherwise just been sitting there. That way, by the time I actually go and use that money for an investment, at least it's made a little bit of money or at least not lost any to inflation. There is literally no point in you not doing this for any money that you have sitting right now in a bank account! So, if you haven't done this already, I'll link to a few of my other videos down below in the description that go over the best high-interest savings accounts that you can get right now.

Lastly, know this one might be kind of lame, but it’s true—the fifth favorite investment for myself has always been in myself! This might be in the form of buying a book or going and traveling somewhere to meet someone I could really enjoy learning from. It could be an investment of time to go and get a new experience, broaden my perspectives, or see a new point of view. Not all investments have to be money-related.

In terms of what will generate the best return, whatever you invest in yourself will usually get the best outcome. Like, for myself right now, my time investments tend to be the best, and that does not cost any money! Use your time to go and learn a new skill. Use your time to go and volunteer for somebody you want to learn from. Or you could go and use your time to smash the like button for the YouTube algorithm if you have not done that already!

For real though, just using your time and going out networking with other people will often make you way more money than your investments ever will. I also consider it a smart idea to reinvest back into yourself in ways that just make you genuinely happy. For me, this could be a gym membership or going and pursuing a hobby or spending time with people I care about.

That type of activity is gonna make you feel so much better, and in return, you're gonna do better work and therefore end up making more money as a byproduct of that. Those types of investments are really gonna help you. If you're just about money, money, money, money, eventually you're gonna lose sight of everything else, and everything else is going to suffer.

So, keep this one in check, continue broadening your horizons, and you're gonna end up making more money at the very same time. And that, you guys, are my five favorite investments and how you could follow a similar path as well! You know, doing this is not gonna be without a little work upfront and a bit of a risk that maybe in the short term, you might end up losing some money. But long term, rest assured you're gonna be so happy you got this set up and running now and that you started as soon as possible!

So, the one day you can mop around in that paid off 2019 Lamborghini Aventador SVJ coupe with all that index fund and real estate money that you made profits from. So, with that said, you guys, thank you so much for watching! I really appreciate it! As always, if you guys enjoy videos like this, make sure to subscribe and hit the notification bell.

Also, feel free to add me on Instagram; my posts are pretty much daily. So, if you want to be a part of it there, feel free to add me there as on my second channel, The Graham Stephan Show, I post there every single day. If I'm not posting here, so if you want to see a brand new video from me every single day, make sure to add yourself to that!

And then lastly, like I said, if you guys want those two free stocks, the only because down below in the description, Webull is going to be giving you those two free stocks if you deposit $100 on the platform, with one of the stocks being valued up to $1,400! So again, the link to that is down below. Let me know what two free stocks you get! Thank you so much for watching, and until next time!