How to invest money

Introduction

Today I will discuss stocks and real estate for investing purposes. Due to rampant inflation we mostly know money in a savings account is probably not the smartest option even with 5% interest rate. A smarter solution is to invest that savings into growth assets.

Why invest in the stock market?

Some people avoid risk altogether and choose to stay away from stocks, but these days its become popular opinion that the stock market goes up in the long term and it grows much faster than the banks interest rate offering. In stocks you can either be safe and steady or fast and rough, I lean safe and steady to avoid indulging in greed. The stock market can be an alternative money account to your bank account even if it offers higher interest rates. Reminder that with greater power comes greater responsibility. The stock market is a powerful tool in your phone.

What's a stock?

Stocks are a unit of ownership of a company. Stock markets exchanges where stocks are traded include NYSE and NASDAQ. Stock indexes like S&P500 track the top 500 companies in market cap.

How do I buy stock for the first time?

Open an investment account with a brokerage. Charles Schwab, Robinhood, Fidelity.

Risk

Losing money, don't be greedy.

Advantage

Compound interest!

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

• Einstein

Pro tip:

The strongest movements in the market have over a short window. Allocate wisely.

Why invest in real estate?

Land and labour are valuable.

What is real estate?

Land. Some might think homes but it's really land. The home makes the small chunk of land more valuable.

Risk

Not paying the mortgage and accumulating debt.

Advantage

Tax advantages and business opportunity.

Conclusion

Stocks are less risky because of the flexible up-front cost. It just so happens that the stock market returns more over an average yearly basis than land. Although this is not to diminish the opportunity that land or home ownership presents.

Thanks for reading!