Welcome to the deep dive.
You know we love to tailor these explorations just for you.
We know you're interested in
getting into the stock market, right?
Especially thinking about how to build that long-term wealth,
even if you're not starting with a ton of cash.
Right.
So we're diving into Sarah Finance's YouTube video,
Stock Market for Beginners.
Okay.
She's amazing at breaking down complex stuff
and making it super clear.
Yeah, she does a really good job with that.
So it's perfect for this deep dive.
It's great that you're thinking about investing,
especially now.
You know, like there's a lot of potential out there.
A lot of people are a little hesitant
with the market right now,
but that can sometimes create
some pretty interesting opportunities.
That's a good point.
Of course there's always risk too.
Yeah, for sure.
But it's smart to be thinking about this stuff, you know,
for that long-term financial well-being.
Definitely.
So let's start with the basics.
What is a stock?
How does Sarah explain that?
Yeah.
I love how she uses Apple and Tesla
as those like real-world examples.
She says, imagine like Apple has five million shares, right?
And the price you see, like right now, it's 277.97.
That's what one share costs at this very moment.
Right.
So when you buy a share,
you're basically buying a tiny little piece of Apple.
That's it.
You become a part owner,
even if it's a super small part.
And you know that share price.
The 277.97 in our Apple example,
that's always fluctuating.
Oh yeah.
It changes based on how well the company is doing,
trends in the market,
even like global stuff happening in the world.
I mean, think about the COVID-19 pandemic.
That really messed with the market.
Totally.
So, okay, we know what stocks are,
but how do we actually buy them?
Like what are the mechanics of it?
Sarah mentions all these platforms
like Wilsimple Trade, Robinhood, Questrade,
TD Ameritrade.
There are so many options now.
There really are a lot more than there used to be.
And some even let you start investing with just 10 bucks.
Yeah, that's amazing.
Investing is so much more accessible these days.
You don't have to be rich to get started.
That's so cool.
But I guess it's important to like,
compare these platforms before jumping in.
Oh, absolutely.
Don't just pick the first one you see.
They've got different fees, you know, different features,
and they don't all offer the same types of investments.
Some might charge you like a fee every time you buy or sell.
Others might have like a monthly fee.
Yeah.
And those little costs can add up
and really eat into your returns in the long run.
Yeah.
It's definitely worth taking the time to do your research
and find the one that's the best fit for what you're trying to do.
Yeah, it's like those sneaky charges you sometimes
see on bills like, wait a minute, what is this?
Right, exactly.
So let's say we've picked our platform and we're ready to go.
How do we actually make money from stocks?
OK, so the classic approach, the one everyone talks about,
is buy low, sell high, right?
Yeah.
Sounds pretty straightforward in theory.
But there's a bit more to it.
Right.
It's about being able to understand market trends,
researching companies, and being patient.
Oh, yeah, patients.
You're basically trying to figure out which companies are
going to increase in value over time.
Gotcha.
It's not about getting rich quick.
It's about making smart, informed choices for the long term.
OK, so she uses Tesla as an example for this buy low, sell high,
right?
Yeah, like let's say you bought a share of Tesla a while back.
Then the market dips, and the price drops.
If you sell right then, well, you're going to lose money.
Oh, right.
But if you hold on, and the price goes back up even higher
than before, you're in a good spot to make a profit.
So it's all about timing, I guess.
Sort of, but not exactly.
It's more about having a strategy and sticking to it.
Makes sense.
It's a bit like a roller coaster, though, right?
Going to be ready for those ups and downs.
Exactly.
That's why it's so important to differentiate between long term
investing and short term investing.
OK.
You mentioned wanting to build long term wealth, right?
Yeah.
And while buy low, sell high can work for short term trades,
those can be pretty risky.
You're basically trying to time the market perfectly,
and that's a tough game even for experienced investors.
Really?
Oh, yeah.
I thought they were always on top of that stuff.
Even the pros get it wrong sometimes.
Long term investing is more about choosing companies
you really believe in and holding onto those stocks
for years, maybe even decades, so your investments can grow
steadily over time.
So you're saying it's more about finding those solid companies
with growth potential.
Exactly.
And then having the patience to let those investments play out
over the long term.
OK, that makes sense.
And that kind of reminds me of something else
Sarah talked about.
The whole research aspect of investing
is like you wouldn't jump into a relationship without getting
to know the person, right?
Exactly.
Due diligence is so important.
Yeah, it's all about knowing what you're getting into,
I guess.
Absolutely.
And Sarah has some great tips on how to do that research.
She suggests checking out investor relations pages,
things like the 10K reports and 10Q reports
that companies have to publish.
Those can seem pretty intimidating, though.
They can, but they're a goldmine of information
once you know what to look for.
OK.
And she also talks about listening to conference calls.
That can give you a lot of insight
into the company's plans and performance.
Plus, there are fantastic resources out there
like Yahoo Finance and CNBC that give you
a ton of information.
There's like gathering clues, putting the pieces together.
Exactly.
But that can feel like a lot of work,
especially if you're new to this whole investing thing.
Yeah, it definitely takes some effort,
but it's an investment in itself.
The more you understand the company, the more confident
you'll be in your decision to invest.
Right.
So you're not just buying a stock,
you're buying a piece of a company's future.
Exactly.
You're becoming a part of their story.
I like that.
OK, but what about those of us who don't have the time
or expertise to analyze those complicated company reports?
Right.
Sarah mentioned something about blue chip stocks and index funds.
Which does.
Are those a simpler way to get into investing?
They can be.
They're definitely great options for what
we call passive investing.
It basically means you don't have to be as hands
on with your investments.
OK, that sounds more my style.
So blue chip stocks, those are the big, well-established
companies with really solid reputations,
like your Facebooks, Apples, Amazons, Microsofts.
OK, I've heard of those.
They've been around for a while, have a proven track record,
and they're generally considered less risky than those smaller
or newer companies.
So they're like the reliable ones, the ones that
have been around the block.
Exactly.
They've weathered the storms and come out stronger.
So what about index funds?
What are those all about?
Index funds are like, imagine a basket of stocks, OK?
OK.
And that basket is designed to track a specific market
index, like one of the most popular is the S&P 500.
I've heard of that one.
That one includes 500 of the largest US companies.
So when you invest in an index fund,
you're basically buying a small piece of all the companies
in that index.
So instead of picking individual stocks,
you're investing in a diversified portfolio.
Oh, so you're kind of spreading your risk
across a bunch of different companies.
Exactly.
That's kind of smart.
It is.
It's a great way to reduce risk without having
to do all that research on every single company.
And she also mentioned something about capital gains taxes.
What's that about?
Yeah.
So taxes are a super important part of investing.
And like many things in the financial world,
they can be a little complicated.
But the basic idea is that when you sell an investment
and you make a profit, you might have
to pay a capital gains tax on that profit.
So you're basically sharing some of your earnings
with the government.
Pretty much.
It's like a thank you for letting
you use their financial system.
But the amount of tax you pay depends on a bunch of stuff.
How long you hold the investment,
what your tax bracket is, all sorts of things.
Remember how Sarah mentioned that holding an investment
for over a year can sometimes get you a lower tax rate?
Yeah.
That's a good thing to keep in mind
when you're deciding how long to hold your investments.
So it's like a puzzle.
There are all these different pieces that you
have to fit together.
It is.
And it's a puzzle that's always changing.
But once you get the hang of it, it's
a pretty amazing puzzle to solve.
That's a good way to look at it.
And the rewards can be pretty amazing too.
Well, that's encouraging.
OK, so we've gone through a lot here.
Yeah, we've covered a lot of ground.
We've talked about what stocks are, how to buy them,
the different approaches you can take to investing,
and even touched on those pesky tax implications.
It feels like a lot to absorb.
It is.
But you're doing great.
Just remember, investing is a journey, not a sprint.
Right.
Take your time, do your research,
and don't be afraid to ask questions.
That's the best way to learn and grow.
I like that.
OK, so are we ready to dive into some of those investing
strategies Sarah talks about?
Let's do it.
All right, so Sarah talks about a few different investing
strategies, which is awesome because it helps figure out
which one might work best for you.
Yeah, it's like finding the right tool for the job,
different strategies for different goals.
Exactly.
So let's start with swing trading.
What's that all about?
So swing trading is all about trying to catch those short-term
price swings in the market.
The idea is to buy a stock, hold it for a few weeks or months,
and then sell when the price goes up, hopefully.
So it's kind of like riding those waves,
trying to time it just right.
Yeah, that's a great way to put it.
Imagine you're surfing.
You're waiting for that perfect wave to come along.
OK, yeah.
Yeah, catch it at the right time.
Write it for as long as you can, then hop off before it crashes.
Gotcha.
So Sarah uses Amazon as an example for swing trading, right?
Yeah, imagine buying Amazon at a certain price.
OK.
You wait a little bit, the price goes up,
and then you sell for a profit.
Boom.
Sounds easy enough.
It does, right.
But swing trading can be tricky.
You got to know what you're doing.
Right, of course.
It requires a good understanding of market trends,
being able to make quick decisions,
and it definitely comes with some risk.
So not for the faint of heart.
Yeah, it can be a bit of an emotional roller coaster, too.
Oh, I can imagine.
Watching those prices go up and down all the time.
Yeah, it can be stressful.
OK, so maybe not the best strategy for someone just
starting out?
Probably not.
But Sarah also talks about this other strategy
called buy and hold.
OK, tell me about that.
Buy and hold is more about the long game.
It's about picking companies you really believe in.
OK, yeah.
Companies that you think are going
to be successful over the long term.
Like household names.
The ones everyone knows.
Exactly.
The companies that have been around for a while
and have a track record of success.
Gotcha.
And you buy those shares and you hold onto them,
sometimes for years, maybe even decades,
and let the company do its thing.
So it's like planting a seed and watching it grow.
Exactly.
And hopefully, your investment grows along with it.
She uses built-to-airlines as an example.
Oh, yeah.
Imagine you invested $1,000 back in 2009.
OK.
10 years later, that investment would have been worth
almost $7,000.
Wow, that's impressive.
It is, right.
But you know, past performance doesn't always
guarantee those same results in the future.
True, true.
But it does show the power of long term growth.
Yeah, totally.
So swing trading is all about those short term gains.
And buy and hold is more about those long term, slow,
and steady wins.
Right.
What about day trading?
Is that another strategy she talks about?
She does.
That one is, well, intense.
Day trading involves buying and selling
stocks within a single day, sometimes in minutes, even
seconds.
Whoa.
Yeah, it's a fast paced game.
It sounds stressful.
It is.
It definitely takes a certain personality type.
I don't think I can handle that.
Day trading is really high risk, high reward.
You need to really know what you're doing,
have super quick reflexes, and be
able to handle a lot of stress.
Some people even compare it to gambling.
Yeah, I could see why.
It's not something I would recommend for beginners,
or really anyone who's not completely dedicated to it
as a full time thing.
So yeah, I'm going to stick to swing trading or buy and hold.
Those seem a bit more my speed.
Good choice.
So OK, let's say we've decided on our strategy.
Maybe we're thinking long term, that buy and hold approach.
How do we know which companies to invest in?
Where do we even begin?
That's a great question.
And that's where the research comes in.
Remember how we talked about due diligence earlier?
Yeah.
It's all about really understanding the company.
It's potential and its track record.
You're not just throwing darts at a board here.
It's about making informed decisions.
Exactly.
And Sarah gives some great ticks on how to do that research.
She suggests things like checking out a company's
investor relations page, looking into their 10K and 10Q
reports.
I feel like those are those long boring reports
that nobody really reads.
They can be a bit dry, yeah.
But I guess they're important.
They are.
They give you a real in depth look
at the company's financials, their performance,
all the nitty gritty details.
And there are tons of resources online
to help you break them down and figure out what's important.
It's like learning a new language.
At first, it's all gibberish.
But once you learn a few key phrases,
you can start to understand the conversation.
Right.
OK, that makes sense.
So besides those reports, what else does Sarah recommend?
She also suggests listening to conference calls.
Those can be really helpful.
You get to hear directly from the company's leadership
about their plans for the future, what's going well,
what challenges they're facing.
It's like getting a sneak peek behind the curtain.
That's cool.
It is.
And then, of course, you have your trusty resources
like Yahoo Finance and CNBC.
I've heard of them.
They're great for getting news and analysis on companies
and market trends.
They can be your investing buddies,
always there to give you the latest scoop.
I like that.
So it's all about gathering information from different places
and then putting it all together.
Exactly.
It's like building a puzzle.
You have all these different pieces.
Right.
And when you put them all together,
you get a complete picture of the company.
And that helps you make a more informed decision about whether
to invest.
So it's not just about picking a company
because you like their products or something.
No, it's much more than that.
It's about understanding their business, their financials,
their growth potential.
It's about seeing the big picture.
OK, that makes sense.
But what about those of us who don't have the time or the
expertise to go through all those reports
and analyze all that data?
Right.
Is there an easier way?
There is.
Remember those blue chip stocks and index funds
we talked about earlier?
Yeah, those sound familiar.
Those are a great way to invest without having
to do all that in-depth research on individual companies.
OK, tell me more.
Remind me why those are so appealing,
especially for beginners.
So blue chip stocks, remember, they're
the big well-established companies.
Right.
Think Apple, Microsoft, Coca-Cola.
OK.
They've been around forever.
They've got solid track records.
And they're generally considered less risky than investing
in smaller, newer companies.
Gotcha.
And then you have index funds.
Index funds are like baskets of stocks
that track a specific market index.
Right, like the S&P 500.
Exactly.
That's a popular one.
It includes 500 of the largest US companies.
So when you invest in an S&P 500 index fund,
you're basically investing in a little piece
of all of those companies.
Always.
So instead of trying to pick individual stocks,
you're getting that instant diversification.
That's pretty cool.
Right.
So you're spreading your bets instead of putting
all your eggs in one basket.
Exactly.
And that makes a lot of sense, especially
if you're just starting out.
It does.
It's a great way to get exposure to the market
without having to become a financial analyst overnight.
OK, but what about taxes?
Yes, taxes.
Always important to keep those in mind.
Yeah.
Remember how Sarah talked about capital gains taxes?
So when you sell an investment and you make a profit,
you might have to pay taxes on that profit.
It's called a capital gains tax.
Right.
And like most things in the tax world,
it can get a little complicated.
But the basic idea is that the amount of tax you pay
depends on a few things, like how long you
held the investment and your individual tax bracket.
So it's like a little bit of a trade-off.
You make money from your investments,
but you might have to share some of those earnings
with the government.
Exactly.
It's the price we pay for living in a civilized society.
I guess so.
But hey, it's still a pretty sweet deal overall.
You get to grow your wealth and contribute
to things like schools and roads and all that good stuff.
True.
So it sounds like investing is about more than just picking
stocks and hoping for the best.
It is.
There's a lot more to it, but that's
what makes it so interesting, right?
Yeah, for sure.
OK, so we've covered a lot of ground here.
From the basics of what stocks are
to different investing strategies,
we talked about the importance of due diligence,
and we even touched on those sometimes confusing tax
implications.
We did.
And hopefully we've demystified some of those concepts
and made investing feel a little less intimidating.
Yeah, definitely.
It's cool how Sarah encourages everyone
to keep learning about investing even after watching her video.
She even recommends some books to really dive deeper.
She does.
It's a constantly changing world, this whole investing thing.
So you got to stay curious.
Right.
Always be learning.
I mean, it's like anything else you're passionate about.
You're always looking for ways to level up your skills.
Totally.
And speaking of learning, I thought
it was great how Sarah emphasized starting small.
Yeah, she really makes that point.
You don't need to have a ton of money to get started.
Exactly.
Investing shouldn't be this exclusive club for the wealthy.
Right.
It's for everyone.
And starting small takes a lot of the pressure off.
Yeah, for sure.
You can dip your toes in, learn as you go,
and build your confidence over time.
And we can't forget about the power of compound interest.
Even small amounts invested regularly
can really grow over time.
That's the key.
Consistency is key.
Even if it's just a little bit each month, it all adds up.
It's like, that snowball effect.
Oh, I like that analogy.
Start small, but as it rolls, it picks up more and more snow,
gets bigger and bigger.
Yeah, that makes sense.
That's the beauty of compound growth.
Your money is working for you even while you sleep.
I love that.
So I think one thing that holds a lot of people back
is the fear of messing up.
What if I make a bad investment?
Oh, I totally get that.
It's scary putting your hard earned money at risk.
Right.
But Sarah says it's OK to make mistakes,
that it's all part of learning.
She's absolutely right.
Everyone makes mistakes, especially when they're
starting out.
The important thing is to learn from those mistakes
and keep going.
Don't let them discourage you.
So it's more about progress than perfection.
Exactly.
It's a journey, not a destination.
And you don't have to do it alone.
There are so many resources out there to help you.
Oh, yeah.
What kind of resources?
Books, websites, podcasts, even financial advisors.
There's a whole community of people
who can support you on your investing journey.
That's awesome.
It is.
So as we wrap up this deep dive into investing,
I want to leave you with something to think about.
Knowing what you know now, how can you
use this knowledge to make smart financial decisions
in your own life?
That's a great question.
It's like taking all this information and putting it
into action.
Exactly.
Empowering yourself to make choices
that create a brighter financial future.
Awesome.
Well, thanks for joining us for this deep dive.
We hope you found it helpful.
And who knows, maybe even a little bit inspiring.
Yeah.
We hope you feel more confident about taking those first steps
towards investing.
Absolutely.
And remember, keep learning, keep exploring,
and don't be afraid to reach out for help along the way.
Happy investing.