10 Core Investing Principles For Stock Market Beginners

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What’s going on you guys so i’m excited to bring you a collaboration on my channel again this time from marco he has a great channel known as white board finance and i am just super impressed with what he has going on here he just started this channel about one month ago and he now has over a thousand subscribers absolutely incredible but well-deserved marco is

A finance major he’s an entrepreneurship minor he’s owned three different rental properties he’s been investing for over 12 years he’s seen bull markets and bear markets and today he’s going to be talking to us about what you should know before you invest any money in 2018 and his top ten tips for that so if you guys enjoyed this video make sure you jump over to

His channel and subscribe be one of the first subscribers before this guy hits 10,000 subscribers it’s gonna happen quick based on the quality of the content that he’s been posting but let’s go ahead and learn more from marco and i hope you guys enjoy this collaboration hey everybody its marco from white board finance ryan i wanted to thank you for featuring me on

Your channel and i can’t wait to help people understand what they need to do before they invest in 2018 this is a very valuable topic so let’s get to it number one people need to draw a financial roadmap and set goals they need to take an honest look at their entire financial situation especially if they’ve if they’ve never made a financial plan before the first

Step to successful investing is figuring out your goals ahead of time do you want to pay off all your debt before you start investing you want to save up for a house before you start investing or maybe do you want to do all these things simultaneously this all comes down to what you’re comfortable with and again it’s called personal finance because it’s down to

Your personal situation so number one dry financial roadmap and set goals number two what is your risk tolerance all investments involve some degree of risk which i’m sure everyone watching this channel already knows if you intend to purchase stocks bonds mutual funds or real estate it’s important to understand that your investment could go down to zero and you

Can lose it all higher risk equals higher return investing solely and low risk investments may not keep up with inflation and you can actually be losing money in the law term as opposed to high-risk investments which could shoot up 6070 a thousand percent but you can also lose that much as well so it’s good to have a good balance and a good mix that way you can

Hedge against one another so number two what is your risk tolerance number three invest only what you can afford to lose this is kind of piggybacking off of number two on understanding your risk profile but this one is pretty self-explanatory you guys do not invest in what you cannot afford to lose it’s as simple as that if you have a family if you have people


That are dependent on you financially you can only allocate what you’re willing to lose and investments you should not allocate things that are responsible for taking care of those loved ones so again invest only what you can afford to lose number four have an appropriate mix of investments so you need to figure out what investment profile is right for you whether

It’s stocks bonds real estate cash or even cryptocurrency you need to find the right mix to use them as a hedge against one another so again if cryptocurrency is skyrocketing and your real estate investment is tanking those two will be balancing each other out hopefully in the positive you can also consider investing in something called a lifecycle fund which is

Naturally more risky as you’re younger and it gets more conservative as you get older so an example of a lifecycle fund is say for example a target retirement fund so you pick a certain year in which you think that you’re going to retire let’s call it twenty fifty five or twenty sixty in the future when you’re younger this invests in more risky growth stocks and

As you get older it becomes more conservative in nature allocating more of your funds towards bonds and more conservative investments so you’re not making it as high of a return but your money is considered to be safer in a less risky investment so check out a life cycle fund if you haven’t done that already number five if you do decide to go the stock market route

And invest in equities and stocks you need to know how much of your portfolio should be in stocks so a typical rule of thumb is that you take your age and subtract it from one hundred 10 to find the percentage of your portfolio which should be allocated towards individual stocks or equities in general this can be adjusted up and down for your appetite of risk but

This is a pretty good rule of thumb when you’re figuring out how much of your portfolio should be in stocks alone number 6 how many different stocks should you buy so if you decide to go the individual stock investing route i recommend that you have no less than 15 different stocks across different industries again this is diversifying your portfolio and hedging

Against one another in case some different industries accelerating growth or actually lose money this may not be practical to actually have this many individual stocks so i highly advise that you guys look into an etf or an index fund if you haven’t heard of that already number seven the all-important question how much return can you expect in 2018 so let’s talk

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About this nine year bull market that we’ve been in for you know a little over nine years now people have been getting crazy returns 50% hundred percent some people are investing in crypto and they’re getting thousands of percent you have to realize that these results are not typical i’ve been investing since i was 18 years old and that’s been for 12 years now

So i remember 2007 and 2008 where people were losing 40 50 60 % of their portfolio normally the market returns 9 to 12% historically so you need to adjust your expectations going into 2018 because a lot of people keep talking about a correction so keep that in mind but if you’re killing it in crypto if you’re killing it in certain stocks by all means please keep

Making your money and don’t let me deter you number 8 only by what you know so if i can’t clearly explain what a company does in one or two sentences i won’t invest in it i don’t want to be in over my head investing in some crazy biotech pharmacy company whose you know success is hinging on a certain application or patent or thing like that you know it’s important

To only invest in businesses that are easy for you to understand especially while you’re just starting out you must understand that company as if you are the ceo and if you can’t give a quick elevator about what the company does i personally wouldn’t invest in it and that’s just my philosophy number nine watch out for red flags so these red flags are companies

That don’t earn any profits a lot of tech companies fall into this category so those you need to dig deeper and do more due diligence also be cognizant of stocks who share prices are always going down you need to look at the three and five-year charts for long-term growth or actually long term losses in terms of share price number three companies that are under

Investigation so a lot of companies get sued here and there i’m not talking about litigious lawsuits or things like that i’m talking about under investigation for insider trading or things that there are major deterrence to the health of a company number four companies with lots of debt so i know a lot of companies want to grow so they either take on debt or

They start you know reinvesting all their profits back into the company which is fine but you need to be cognizant of the level of debt that each company has that you may be interested in investing in number five stocks with recent dividend cuts or an unstable dividend history this shows that the company is doing an okay maybe even a poor job at managing their

Money which means they’re a dividend is always changing going up and down rather than consistently increasing year over year so keep that in mind you guys number ten rookie mistakes to avoid so keep in mind this is for all the beginners and the rookies out there these are three things that i necessarily wouldn’t recommend you do when you’re just starting out and

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Investing avoid buying penny stocks so this is any stock that’s under five dollars a share that’s either traded on over-the-counter which is otc market and it doesn’t trade on a regular exchange like nasdaq or the new york stock exchange of course there’s exceptions to every rule but as a beginner i wouldn’t recommend going this route number two is buying stocks

On rumors so you know when you’re at the rec center and you’re in the locker room you just got done taking a shower and you overhear the old guys in the corner talking about the next big stock or oh my buddy works at xyz company and they got big things planned for 2018 don’t listen to rumors you need to do your own due diligence this is one of the easiest ways to

Fall into the fear of missing out and feel like you’re missing out on the next big thing but really you just need to be able to do your own due diligence and come up with your own thoughts you need to be mature when it comes to investing number three finally is using margin so there’s some valid reasons to use borrowed money which is margin but in this case if

You’re just beginning i wouldn’t dig yourself in a bigger hole than it really needs to be you need to learn from your profits and from your losses and i actually think the best teacher is sometimes getting burned in the market however if you’re using margin that means you’re leveraged which means you’re going to lose way more than you would lose just by using your

Own principle you can also make more and make a lot but it all depends on your appetite for risk if you’re a beginner i wouldn’t recommend trading on margin to start with and that’s all i got for everyone thank you so much for watching those are my 10 tips for people who are either new or who are considering investing in 2018 those are 10 things that you should

Know and just keep aware of again those are just my opinions if you’ve already been successful in the market by all means keep doing what you’re doing so for all the beginners out there go over this list very quickly make sure you’re checking all those boxes and best of luck to you investing is one of the best things you can do for you and your family’s financial

Future and it’s also a good way to provide a solid base into your older years thank you so much for watching and i appreciate you having me on your channel ryan thank you

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10 Core Investing Principles For Stock Market Beginners By Ryan Scribner

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