How Do I Start Investing? Assets, Freedom Fund, and Putting Your Money to Work | RFS 2026 Week 6

The stock market is a marketplace for buying ownership stakes (shares) in real businesses, where investors can earn money through dividends (profit sharing) and capital growth (increasing share value). There are three main ways to invest: picking individual stocks (high risk), using active fund managers (95.5% fail to outperform the market), or investing in index funds (passive, low-cost, diversified). Index funds are the recommended approach because they automatically provide diversification across thousands of companies worldwide, require minimal effort, and historically deliver average returns of 13% annually. The key distinction between risk (chance of losing money over time) and volatility (short-term price fluctuations) is crucial—long-term investing (10+ years) has a very low probability of losing money, making index funds a reliable strategy for building wealth over time.