stock market investing explained in 8 mins by a 20 year old

本站添加: 2026-05-10

[00:00:00]Stock market investing is just one of those things. To the average person, it seems super complicated. Many people just have this image in their mind that they need to be able to pick the perfect stocks. They don't know what's the right thing to buy, when do you sell it? They think that they need to time the market right. They don't want to get caught in a big crash. But, I'm here to tell you, in reality, stock market investing is much more simple than many of you think it is. I'm 20 years old. I've been investing for just over 3 years now, and I've built my own multi-six-figure portfolio. I'm going to break down stock market investing in the most simple terms possible to make sure by the end of this video, you have a strong understanding of it, and maybe even feel like you could get started on your own.

[00:00:35]Let's just start out with the basics.

[00:00:37]What even is a stock? When you buy a stock, you're literally just buying a small piece of a company. Let's talk about some popular companies. Let's just say that you buy a share of something like Apple, Microsoft, Google, anything like that. When you buy one share of that stock, you're literally just buying one tiny piece of the company. So, yes, technically, when you buy a share of a stock, you are a partial owner of that company. As these companies grow over time and make money, the value of your share is going to go up. If you buy 1% of something that's worth $100, your piece is worth $1. Let's say in the future, the thing you bought 1% of that's worth $100 goes up to $200 in value, your $1 is now worth $2 if you were to sell it. Same idea with the stock market. So, what drives stock prices to actually move? Stocks move based on something that we all have learned called supply and demand. More people want to buy a stock, the price is going to go up. More people are looking to sell a stock, the price is going to go down. Let's cover the real question here. Why do people want to buy or sell a stock? I think this is going to come down to a few things, like how the company is performing, are they making money in their earnings, any news that's come out about the company, whether it's positive or negative, and in general, the overall economy affects the market.

[00:01:44]And then, in rare cases, when we have major world events, such as 9/11, no matter how good some companies are in things like that, people tend to panic and just sell a bunch of stocks. These things we just talked about, though, tend to just affect the prices the And the main thing that really just tends to drive stocks over a long period of time is the growth of the company.

[00:02:01]Now, the majority of Americans who are investing their money tend to just invest their money in the entire market.

[00:02:06]People typically aren't out here just taking their life savings and throwing it into one company like Apple or anything like that. A lot of people invest their money across the entire market into something like the S&P 500.

[00:02:17]Pretty much the S&P 500 in simple terms is just the largest 500 companies in the United States. Companies like Apple, Microsoft, any of the big names you can think of are most likely included in this. So, the benefit of investing in this is you don't have to worry about picking the one winner stock. You don't have to worry about what's the next thing that's going to take off, what's the right decision to make. You can pretty much just buy all the top companies in one thing called an index fund. Example of one up here, the ticker is VOO. This is the fund that I personally use. This literally tracks the S&P 500. So, let's say that you want to buy one share of this for whatever it is. I know it's like $600 something dollars right now. You guys will see it on the screen. You're not just buying one stock through this. You're getting exposure to 500 different companies. So, 5% of whatever the current share price you're seeing is right now, if you buy a full share, it's going to go to a company like Apple, 7% may go to Microsoft, and so on. This is one of the most common long-term investing strategies that minimizes your risk.

[00:03:11]Now, there's a few different ways that you can invest in the stock market.

[00:03:14]Individual stocks, of course, like buying Apple, a single company. If you just want to buy one share of Apple, that's a single stock. There's ETFs, for example, like what we just talked about, VOO. You're getting a basket of multiple stocks across a certain sector or just a broad index. And then there's traders.

[00:03:30]I'm sure if you guys pay any attention to the internet now, you see people doing like day trading, options, all that stuff. My personal approach is just simple long-term investing in things just like you saw, VOO, the S&P 500 fund. I'll go a little bit more into this later into the video as to why I do this versus trading. I'm trying to keep this as short and simple as possible.

[00:03:49]Just in short, trading and timing the market is much harder than a lot of people think. Now, how much money do you need to get started? A big misconception I hear all the time is people thinking they need a lot of money to get started with investing. You do not. You can start with $10, you can start with $50, $100, $1, whatever it is. Pretty much any brokerage now, for the most part, will let you start with, I think $1 is the minimum.

[00:04:13]This is pretty much just because you're allowed to buy fractional shares on most brokerages. My personal brokerage is Robinhood. You can download it on your phone, computer, whatever you choose to do. You can buy fractional shares. So, for example, VOO, that fund we just talked about, it's like $600 something dollars a share, you can buy $1 worth of it. You're just going to get a fraction of share. Obviously, you're not going to own a full $600 something dollar piece.

[00:04:36]The important part really here is not how much you start with, it's how consistent you're able to be. Now, to cover what most beginners are always so scared of, what if the market goes down or even crashes? Let me just tell you, before you start investing, there is definitely going to be a time, especially if you're investing for a long-term period of time, the market's going to go down. Sometimes it's going to be a little, and sometimes it will be a lot. The key here is that's all normal. The market always has moved in cycles. The biggest, most common mistake I see with people just starting up investing, especially young people, they start investing, they see the market go down, and then they instantly freak out and either panic sell or just quit investing. This is exactly how people lose and actually lose money. Many of the horror stories you hear about people losing tons of money in the market happen for a variety of reasons. These things involve using leverage or going way past a person's risk tolerance. For example, if I knew I was going to retire in 2 years, I would not be throwing all my money into individual tech stocks. A lot of people get themselves in really bad situations where they're either forced to sell due to leverage or they have to sell at a big loss just because they suddenly needed the money they invested and weren't prepared for a big drop like that. Long-term investing in the strong indexes like the S&P 500 has always worked over a long period of time as long as you stay consistent. Another thing to mention, for someone like myself, when the stock market drops, I actually see it as a positive. There are times when the opportunity to make real money is actually there. You're able to buy your favorite stocks and companies at much cheaper valuation, and when the market comes back, your portfolio is going to look a lot nicer. Just to give a quick example here, we didn't see a recent crash, but due to the Iran situation that's going on in the world right now, earlier this year the market did drop. I'm going to try and show you a screenshot of the movement I saw in my portfolio. Just a matter of about 3 weeks, my portfolio moved over $30,000.

[00:06:18]This is largely because on that way down, I took advantage of the cheaper prices, loaded some more cash into it, and then saw the results, as you guys can see, paid off pretty well. Just to be clear, many people have different risk tolerances, different time frames they're investing for, so not everybody's going to be the same. But that was just for my personal situation, which happened to be a smart move on my end. So, if I just simplify everything into a simple game plan to get started, first thing I would do is focus on building your income. The more money you make, the easier it's going to be for you to build your portfolio to a number you might have in mind. Then, start investing consistently. Not one time, consistently over time. Use a strategy called dollar cost averaging. I pretty much just have a set amount that automatically invests every single market day, Monday through Friday for me, and I just will let it go. It's like a bill I have to pay. I don't want to make this video super long and over complicated, but the number one thing that you should look into if you really want to get hooked on investing is learn about compound interest. Just want to show you a quick example here. If you're 20 years old right now, and you're able to invest $1,000 a month into the S&P 500 on history, just to show this by the way, the S&P 500 has averaged an annual rate of return between 10 and 11% since inception. $1,000 a month at 20 years old at a 10% average annual rate of return, at 65 years old will be worth over $10 million.

[00:07:32]Almost $4 million if you want an inflation based return, pretty much just showing what the buying power of that would be in today's money. Keep it simple, don't over complicate it, and most importantly, do not quit when the market's boring or going down. Take advantage of those opportunities.

[00:07:46]Investing is not about getting rich overnight, it's about building something over time. Hope this video helped. Let me know if you guys have any questions in the comments. Do you hit the subscribe button so you can get much more free content for me and watch me on my journey to a million dollars.