A Quick Guide to Stock Market Investing (For Complete Beginners)

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Hey guys, welcome back to the channel! We're continuing on with the new money advent calendar. Today, I'm going to keep this video quite short because, let's be real, you've been seeing a lot of my face over the past couple of weeks.

So, in this video, I'm going to do a quick guide on how to get started with investing. This is going to be a guide for someone who is looking to get started in the stock market but hasn't pulled the trigger yet. What do you need to look out for?

So, let's get stuck right into it. Step number one, you really need to decide what type of investor you want to be. Two types: are you going to be the investor that tries to pick stocks, or do you just want to participate in the stock market, stay diversified, be a passive investor, and just reap the rewards of the general market over time? That's step one.

I think that a lot of people, when they first start out, they don't have their strategy nailed yet. They don't understand what type of investor they want to be. A lot of people just think the only way to be a stock market investor is to pick stocks. Totally not the case!

A lot of people—the most popular investing strategy—is the passive investing strategy. Get wide diversification across the whole market and just keep investing for your whole life.

Okay, so step number one: take some time to figure out what investor do I want to be? Am I going to put in the effort and be the stock picker, or do I just want to grow, you know, get wealthy over time, grow my wealth when I retire, and be the passive investor? That's step number one.

Once you figure that out, then the second step is you need to open a brokerage account. Now, back in the day, you know, buying and selling stocks used to look like this. However, today, it looks a lot more like this. Everything these days is online.

So stock brokers still exist; they are the people there— the companies, the platforms—that actually execute the buy and the sell orders that you place. That's how you buy and sell your stocks. Of course, you don't actually have, there’s no paper involved anymore; you just log on to your brokerage site and go for it.

Now, with brokerage sites, the thing to remember is that the stock broker takes a fee for what they do, for providing that service. That is your brokerage fee. So, what a lot of new investors need to look out for is how much do you pay as a brokerage fee every time you buy or sell some shares?

If you're buying or selling a lot of times in, say, a month, then you want the lowest brokerage fee possible. If you're not making too many trades, then it doesn’t matter as much. But if you haven’t got that much to invest to begin with—say you’ve only got 500 bucks—then obviously, a 30 brokerage fee is going to... it means you have to make back a substantial return before you even break even.

Remember, you pay brokerage fees on the way in and on the way out; when you buy and when you sell. There are brokerage free platforms out there; the classic one is Robinhood. There are some other ones as well, but you're always trading something. You're always trading off something to get no brokerage, so think about that because remember the economics of their business still has to work out.

So a lot of times to get brokerage free trading, you’re giving up customer service; you're giving up actual physical branches that you can walk into and ask questions at. So it's always worth considering: what do I need out of my stock broker? What are the brokerage fees? And if I'm going with a commission-free trading platform, what am I sacrificing in the process?

Then the third step, in my opinion, getting started with investing—once you've figured out whether you're going to be an active investor or a passive investor, once you've got your brokerage site up and running, your brokerage account up and running—is to think about what is my goal? What am I trying to achieve with my investing?

This is quite important, and it's a step that not a lot of people do before they start. Okay, you need to ask yourself: am I trying to snowball my wealth to buy a house in five to ten years, maybe? Am I just trying to buy that stock that Jono told me about the other day because he says it's going to go up 50 next week?

Am I just getting into Bitcoin because everyone's talking about Bitcoin and it seems like the right thing to do? Am I trying to build my wealth over time to try and save up for a good retirement? This is a question you need to understand, really; like really take the time to understand what are you trying to get out of your investing.

Because if you don't have a clear goal of what your... well, put it this way: if you do have a clear goal, then the strategy almost presents itself. If you know, okay, I'm saving up for my retirement in 40 years and this is how much I want to make, then you can almost figure out from that goal what sort of strategy do I need to implement.

I can just implement the passive investing strategy, buy a market tracking investment, and keep buying for 40 years and get the average market return. If you want to save up for a house deposit, maybe you do mostly passive investing, but you also take your time to research some different companies that you think will be good investments over the next little while.

So really think about what you are trying to get out of your investing, and that will really ground your investing approach. In all honesty, it will keep your emotions at bay because you have a clear goal; you know what you're trying to do.

And that's the next thing I wanted to talk about as a quick pointer for people that are just getting started investing is that you have to try and keep your emotions in check. Okay, this is something that a lot of new investors don't appreciate. When you buy or sell, when you buy your first shares, you will feel the investing emotions. If the stocks go up, you will be very happy. If the stocks go down, you will feel very sad. Even if you've bought an investment that you want to hold for literally four decades, the day after you buy it, if it goes up, you'll feel great. If it goes down, you'll feel terrible.

You need to understand that you will feel those emotions, and it's also important to, you know, recognize that you shouldn't act on those short-term emotions that you do feel. The longer you become—like, the longer you invest for, the less and less you feel these short-term emotions.

And it's important to understand that while you will feel the emotions, you shouldn't act on short-term euphoria or short-term panic based on what happens in the next week or the next month. Okay? Remember, for all of the successful—the best investors in the world, the most successful investors in the world— they are the long-term focused investors and the investors that are able to stay ultra rational.

Yes, they feel the emotions; you can't stop yourself from feeling emotions, right? However, they step back, okay? And they look at, well, even though I feel fantastic that my stock went up, even though I feel bad because my stock went down, I'm not going to let these emotions influence any decisions that I make about these investments.

Because a lot of the times, while you feel terrible when a great stock that you hold goes down, it makes you feel rubbish, like "Oh damn it, I've taken a paper loss." A lot of times, that is the best time to buy into that company after the stock's gone down a bunch.

So make sure you know what type of investor you want to be: active or passive. Then open your brokerage account, then think about your goal—what are you trying to get out of the market? Then have a think about your emotions and don't let your emotions influence your investing decisions; you need to stay rational.

And then the fifth thing that I wanted to finish off with is, if you are going to be a stock picker and you're brand new to the game and you've never bought a single stock before, please don't feel the need to rush. Don't feel as though you need to get into the market immediately.

By all of the news and what people tell you, it will feel as though you have to get in as soon as possible. Okay? But if you are going to be someone that is going to take the time and, you know, invest in individual businesses, just don't rush. Don't rush into the market. Take your time and do it right.

Take the time to learn from some of the teachings of the world's best investors—people like Warren Buffett, Charlie Munger, you know, Phil Town, Monash Prabhakar, Peter Lynch—all of these people have reading material that will help guide you as to how to pick stocks. If you're someone that wants to fast track that as much as possible and you want to just have all of those kind of ideas in the same place, then check out Introduction to Stock Analysis over on Profitful. Links down in the description.

But definitely take the time to learn about your investing strategy and understand how to pick stocks properly. It's certainly not a case of just plucking them out of thin air and going, "Hmm, that one, and I'll have that one, and oh that one, you know, I've heard of that company before." You definitely need to take the time. You should definitely—these are absolute musts in the active investing stock picking approach.

You must understand the investment. You must understand the business you're getting into. The business must have some form of competitive advantage. Okay? The management team must be trustworthy and must run the company with skill and integrity.

Okay, and you have to make sure that their interests are aligned with the interests of the long-term shareholders. And last but not least, you can only buy the shares when they are at a discount to intrinsic value. So, you have to get comfortable with valuation methods like discounted cash flow, owner's earnings, margin of safety.

Again, if those words just sound like mumbo jumbo to you, check out Introduction to Stock Analysis down in the description below. But you have to get comfortable with being able to find the intrinsic value of a certain business, and you only buy the shares when there is a discount—when the share price is at a discount to intrinsic value.

And I think they are the main quick tips that I would definitely stress to anyone that's just starting out with investing. Okay? Definitely make sure you understand your strategy. Secondly, open your brokerage account. Third, think about what you're trying to get out of your investing. Fourth, you know, make sure you're keeping your emotions in check.

And then fifth, don't rush and make sure you understand what you're trying to do before you actually do it. The stock market's still going to be there in three months or six months' time; you've got time. You don't need to rush.

But anyway, that is my quick guide for people that are new to investing, how to get started in the markets. And, as I said, I'm not, you know, not trying to push this on you too hard, but if you do want a helping hand, that's why I've made the courses that are down in the description. So, if you're interested, check them out. No pressure though, totally up to you.

Anyway, guys, that is the video for today. Leave a like on it if you did enjoy. And, uh, here's the thing: we're still going with the new money advent calendar, so I'll see you guys back here tomorrow.

So thanks very much for watching, guys. Leave a like on the video if you enjoyed. I appreciate every single one of you that watches all these videos, so thank you, thank you, thank you so much, and I'll see you guys tomorrow.

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