Demystifying Investing — Why It’s Important

You will never become wealthy by renting out your time or labor. The only way is through ownership of valuable and appreciating assets.

Buying Stock is buying a piece of the business. Buy a business you want to own forever. You can only make money investing in business’ that you understand the long term competitive advantage of. “I am buying this stock because” and have an answer. Understand the business and how it will be the key player in its market moving forward. A business’ moat (competitive advantage) can be a few things; look for excellent management, product quality and ‘stickiness’, market share, market trajectory, brand, the pace of innovation etc.

True valuation and market price are different things. In the short term, a stock market is a voting machine, in the long run, it’s a weighing machine. This means that fluctuations in the market shouldn’t phase you. When your stock dips don't divest, it's not a reflection of the actual value of the business, just what the market votes at the moment which is informed by irrational psychology. If the stock goes down and you believe it's a great business, it’s an opportunity to buy more because you know that its valuation is higher than the current market rate. Read about Mr. Market and Weathering Market Fluctuations.

The long-term growth of the market and gains made for investors overrides any sorry of short-term problems happening.

https://www.youtube.com/watch?v=dphm5WzJRTU

Time in the market is more important than timing the market.

Diversification; “Very few people have gotten rich on their seventh best idea.” Watch this video from Warren Buffet;

Capital Gains

Long Term (over one year) Capital gains taxes are low. Don’t trade, own stocks forever ideally, and let it be the backbone to your net worth. You have made your money when you pull the trigger on investment, you just have to wait for the market to realize the value.

Robinhood — How To

• Least Amount of Friction to trade.
• No Trading Fee
• You can buy Fractional Shares for as low as $1.
• Recurring Investments; schedule, daily, weekly or monthly buys of stock giving you dollar-cost averaging.

To Do

• Get an account
• Pick a stock
• Set up recording fractional shares of whatever you can afford. $1 a day, $5 a day $20 a day, etc. and have it automatically purchase shares. Then watch your money grow and start learning about companies you want to invest in.

Additional Resources;

https://www.youtube.com/watch?v=2a9Lx9J8uSs

Compound Interest

The earlier you start equates to massive gains down the line. Interest on interest, the exponential increase of value, “Most powerful force in the universe.”