Something I often get asked by my friends, and through general comments on my videos are, how do I start investing? Which app do I used to invest? Which app do you buy stocks from? How do I get started with investing? Which stocks should I buy? All of the questions!
For those of you who are confused, just like me, Hi my name is Pete Matheson, and I make videos and write blog posts around tech, business and finance. So if you want to learn to be smarter with your money, then please head over to my YouTube channel and subscribe for more.
First off – what right do I have to talk about money and investments? Well, none, in all honesty. I’m not a certified investor or anything like that – But what I am is very interested when it comes to managing my own money.
I educated myself when I was younger with books like Rich Dad Poor Dad, Learn to Earn, Think and Grow Rich, Beating the Street – just a tonne of finance books, which are all well worth a read. In the last decade I’ve also started my own business, and ended up selling it in March of 2020, and so that left me with a fair sum of money which I needed to do something with.
We maxed out my ISA and my wife's ISA, which here in the UK is a tax free way of saving and investing, we’ve thrown some into cryptocurrency, and we’ve also invested in stocks and shares outside of the ISA accounts. And without boasting, but more to show that I’m putting my money where my mouth is – we’ve more than doubled our money…. So if anything and if you are not yet investing yourself, please pay attention.
Now there are LOTS of options when it comes to investing, and since we’re talking about something which you value deeply, then you’ll want to be super mega careful about what you do with it. But a wise man once told me that the only person who will care about your money the most, is you. And they were 100% right.
So in here there won’t be any talk of things like which broker to give your pension to so they can invest it for you, take their 1% cut and never speak to you again…We’re talking DIY investing, for beginners. I’m going to walk you through how to get started, which apps you should be using, and which stocks I have been picking, which I hope will help you pick the right ones for you.
Also, be sure to read until the end – as there is a bit of an extra thing worth knowing that can save you a huge amount when trading. Before we get started, let me know if you are already using any investment apps yourself, and perhaps which stocks you are interested in – and we can see what everyone is interested in!
So if you’ve got this far then you are probably already interested in taking your financial life into your own hands, or at least making a start in investing your money in a way which we all hope, will make you more money. Because one of the worst things you can do is just put your money in a bank account, and then wait until you retire. Why is this, you might ask? Well the bank will always pay you less interest than the inflation rate. Which means that any money saved in a bank will lose value every year. The £1 or $1 you save in your bank today, will buy you less tomorrow.
What does that mean? Well, let’s say you save 10p. In 2005, that could buy you a Freddo. But fast forward to 2017, and the price has tripled, to 30p. So that 10p you saved, can now only buy you a third of a Freddo…. Sad face :( Just think about that in much bigger proportions and in terms of saving for a house or retirement, and that price change will really sting you over time.
If you are sitting there reading this with your significant other, who thinks that investing is a waste of time and will lose you money – Tell that to my wife, who has actually made more than double her money in less than 6 months of doing exactly what I’m talking about in this video. She was super against doing this to begin with, but when she saw the money go up and up over time, she fully converted.
If you don’t learn to invest, then your money is literally getting less and less valuable the more the years go on. SO – The time is now for you to take your own financial wellbeing, into your own hands. BUT FIRST, the caveat. Let me remind you here that I am not an expert, I’m not certified in any way, and I’m not providing any form of financial advice – but I am just sharing what I have done over the years, and what has worked well for me.
My rule is always to only invest money that you can afford to lose, because you should always be aware that money can go down, just as much as it goes up. It’s very easy to make a bad decision and lose your money, but if you continue reading – I’ll explain how I avoid those bad decisions where possible. But I urge you, don’t read this and think it’s too risky and then flip over to the next post. Unless you’re reading this post – which is where I talk about some less risky ways that I’ve invested my money over time.
Overall, I’m what’s called a Long investor. That means you invest in something for the long run, and you’re not put off by the daily ups and downs that the stock market has. And yes, this does mean that some mornings you’ll wake up and see that the money you invested yesterday is now worth less, but you know that over time – this won’t matter. Because fast forward to a month or year from now, and the chances are highly likely that you will be in profit.
Still with me? So let us continue!
The first thing you need, to get started with investing your money, is to sign up to a place where you can invest. Here in the UK, that means somewhere like Trading212, or Freetrade, and in the US that’s likely to be RobinHood. Since I’m in the UK and Robinhood are yet to make their way over here, I have accounts with Trading212 and Freetrade.
Now, I don’t have anything to sell you here, there’s no investment course – but if you are going to sign up for Trading212 or Freetrade, then if you follow these links both you and me will receive a free share in return. No idea what it will be, but hey – a free share is free money!
Get a free stock worth up to £100 on Trading212 : https://geni.us/OhB9
Get a free stock worth up to £200 on Freetrade : https://geni.us/B4fTs
For me, I do most of my trading with Trading212, but I do have Freetrade for some other trades just to spread my investments out. Following that, first some basic admin.
Both Trading212 and Freetrade are as safe as most banks, in that any money you invest with them up to £85,000 is protected with a guarantee from the FSCS. Which basically means, if the bank, or company, were to go bankrupt, then you would be guaranteed to get your money back. But I will reiterate that the likelihood of that happening is very, very rare. As rare as one of your high street banks going bankrupt.
I have significant amounts of money invested in both of these accounts, and I have both transferred money in and out of these apps without any issues. Secondly, with Trading212, they have 3 different types of investment accounts. ISA, Invest and CFD. ISA is by far the best and the first one you’ll want to setup. Here in the UK, you can invest up to £20,000 every year, and when stored in an ISA then any profit you make from those investments are 100% free from any form of tax.
Next we have Invest, which is basically the same as the ISA, except this time you are taxed on any profits you make. Now when I say that you are taxed, nothing actually happens in your account, money isn’t taken away from you. But you do need to let HMRC know if you make any significant profits so that good old her majesty gets a cut of your money, once again.
Lastly, we have CFD. Now please listen carefully – never, and I mean NEVER, open a CFD account. Not unless you are super skilled and know exactly what you are doing. Because CFD is how Trading212 make their money, and it’s like a casino, where people are putting money on bets, but most of the time they lose. So please, don’t put your money into CFD.
With that out of the way – let us continue with the actual advice…
First, Sign up for a Trading212 account as well as a Freetrade account, if you want to benefit from getting 2 free shares by doing so. There’s no huge difference between them, but personally I prefer Trading212’s app layout. Fund your account with whatever you wish – if you’re not sure what to start off with, then I’d suggest with £100, or if that’s too rich then £50 or £10 is still a great place to start too.
To do this, you can throw in your card details, do a bank transfer or use something like Apple Pay. I found the instant bank transfer and debit card payments so easy to use, so just pick what works for you and move on. So now you have your trading app and trading account set up, the next question is what do you invest in? My advice here – is one of 2 things.
Number 1 is to invest in Blue Chip companies – What are Blue Chip Companies I hear you ask? They are the big corporate businesses who have stood the test of time. We’re talking Microsoft, Apple, IBM, those big companies who have been around for decades and decades, never skipping a beat, even amidst the most difficult financial time this world has seen so far, Covid 19, these stocks have rallied to all time highs, which is just insane.
Number 2, is to invest in companies where you absolutely LOVE what they do. These may not be as stable as the Blue Chip companies, but they can be the most rewarding IF you get it right. Prime example? Tesla. Since they’ve existed, they have fought constant doubt and ridicule from so many, but those of us who love what they do, have stayed loyal, have invested over time, and now there is a term known as ‘Teslionaire’, which is a millionaire that exists because they invested in Tesla stock.
Personally, I am very heavily into the tech sector – Tesla, Yes, but also Microsoft, Apple, Amazon, Intel, AMD – and I have some smaller holdings across other diversified sectors, like green energy, Delta airlines, Carnival, Nike – and well, generally the rule of thumb isn’t to put all of your eggs in one basket, as you want to invest in multiple areas so that if one industry gets hit (say for example, the events or travel industry!) then you’re overall investment isn’t impacted too much. But with that said, Tesla have been performing so well for me that over time I’ve been slowly moving lots of my portfolio over to Tesla so I am very heavily weighted into Tesla.
Once you have picked who you want to invest in, let’s say, Netflix, then over on Trading212, tap on search, find their name, and tap to open them up. This will show you their current price, as well as historic information on where that price has gone in the last day, week, month and so forth. You can also see if the market is Open or Closed, which is good to know when trading stocks overseas because of the time difference.
Something to know here is that the stock market is open between normal business hours, however a small number of traders on certain platforms CAN trade out of hours. For most of us traders, this means nothing to you, you can’t do anything about it unless you find a broker who will let you trade out of hours. But anyway. Now you might be looking at Netflix and thinking – I don’t have $541 to buy a share right now, but wait! You can afford to buy still, because you can buy fractional shares, which means you can buy 0.1, 0.5, or even 0.001 of a share if that is all you can afford or all you want to buy.
Simply tap Buy, and then you are given 4 options. Market, Limit, Stop and Stop limit – and for this post let’s just cover Market and Limit. Using Market will just go and buy however many shares you want, at whatever the current price is. You’ll want to use this if you’re buying fractional shares, but if you’re buying full shares then you’ll want to avoid this. Because next up is Limit. With Limit, you get to buy full shares AND set the price that you want to pay for them. This could mean that you want to buy them cheaper than they currently are, if you are prepared to wait to see if the market drops to that price. But in general I find that using this option, you will get a better price than using Market.
So let’s go buy one share of Netflix, I’m going to set a Limit order and buy 1 share at 541.23 and hit Review Order, check everything is OK then hit Send Buy Order. What will happen next is your order is sent to the market, and you wait for someone to sell their shares to you at the price that you’ve set. Depending on how quickly that negotiation happens, you could be waiting seconds, minutes, or it might reach the end of the day and never happen because the market has gone up in price so quickly.
If this happens then your order will be cancelled and money released ready to place another order – but you can also tap into the company, scroll down and then delete the order which again will immediately free the money up to spend elsewhere. Now you successfully own your first stock! Congratulations! You have taken your first steps into your financial independence. Give yourself a pat on the back and wait for the money to roll in….
Yes, but no, but yes, but no, but, now you’ve invested into a stock, you’ll want to see how it’s doing. So you just go into that same name and now you’ll see how your investment is performing. Green means Good, Red means Bad! But what I like about Trading212 is that it shows you the pricing difference between the stock price change, but also the exchange rate, which really helps when the stock price has gone up, but you’re wondering why you have less money than you did to begin with…
The one thing to know here, which does annoy me about how Trading212 and other platforms too, is that if you decided to sell your shares, and then buy back in again either at a higher or lower price, it will calculate your profit and loss based on each time you make that trade. So with Tesla, I’ve actually bought and sold a lot, and with Trading212 I’ve now totally lost track, because whilst it says I’ve only made a small profit – the vast majority of that money is pure profit from previous buys and sells.
Now I know I said I was a long investor, but I’m essentially Long on my main ISA Account, and Medium to Long on my normal trading account as I like to play around sometimes to see what happens. But for now, you should be focusing on long – buy the stock and leave it there until you retire, and you should be happy. Finally, and on that note, the last part you need to know, is how to sell those stocks. It’s super simple, as easy as buying one in fact!
It’s also the same as buying. You tap Sell, then either Market or limit. Market sells it at the going price. Limit sells it at the price you set. And that’s it! It’s as simple as that.
Now you can withdraw the money back to your bank account, or buy back in to stocks again to keep that wheel turning. Making your money work for you, rather than retiring your money to a bank account where it get old, tired, a bit wrinkly, and loses value.
Let’s just review quickly – Sign up for a Trading212 and a Freetrade account with the links I’ve shared gets you 2 free shares, fund your accounts with whatever you want to invest with, then go buy shares in either blue chip companies, which are generally a safe investment, or find stocks that you’re passionate about – for me, that’s Tesla and green energy, but find something that works for you.
Do let me know if this post was interesting to you, or if you’d like me to make a more in-depth video or post about investing in stocks and shares, or perhaps one about Bitcoin, then shout in the comments down below.