Basics of Investing

Summary

In this video, the speaker addresses common misconceptions about wealth creation and investing, emphasizing that significant returns require substantial initial investments. They caution against 'get rich quick' schemes and advocate for a more equitable tax system. For those with savings, the speaker suggests investing in property or diversified assets like stocks and gold to protect against currency devaluation. They also stress the importance of considering the broader economic impact on future generations and the need for systemic change to address growing inequality.

Takeaways

• 💰 Wealthy families can earn substantial passive income from their investments, but for ordinary people with smaller savings, the returns are less impactful.
• 🚫 Beware of get-rich-quick schemes; they often promise high returns but carry significant risks and are not reliable for wealth creation.
• 🏦 For those with significant savings, investing in property is recommended as a long-term strategy to protect against inflation and devaluation of cash.
• 📈 Investing in stocks and shares or gold can be a way to grow your wealth, but it's important to diversify to mitigate risk.
• 🏠 The younger generation faces significant challenges in purchasing property, and those who can should consider it a priority.
• 👨‍👩‍👧‍👦 Parents should assist younger family members in acquiring property, as it has become increasingly difficult for younger people to do so independently.
• 💼 Those struggling financially should advocate for wealthier individuals to be taxed more highly to address economic inequality.
• 🌐 The current economic system may not provide a reliable path out of poverty for many, and systemic changes are needed.
• 🔒 Holding onto property is crucial, especially in a climate of increasing property prices and potential future devaluation of cash.
• 🌐 The economic divergence caused by rising house prices will likely lead to fewer people owning property in the future, exacerbating inequality.
• 💡 For those unable to buy property, consider investing in stocks and shares ISAs or general investment accounts to protect savings from devaluation.

Q & A

What is the average annual return wealthy families might expect from their savings?

Wealthy families might expect an average annual return of 3-5% from their savings, which could amount to £300,000-£500,000 a year from a family wealth of £10 million.

How does the speaker view the potential of ordinary people to significantly increase their wealth through investments?

The speaker is skeptical about the potential of ordinary people to significantly increase their wealth through investments, as they believe that life-changing sums are typically only achievable with substantial starting capital.

What is the speaker's opinion on 'get rich quick' schemes?

The speaker is very skeptical about 'get rich quick' schemes, advising people to be wary of such offers, especially if they require a large initial investment with the promise of a quick and substantial return.

Why does the speaker emphasize the importance of investing in property for those who can afford it?

The speaker emphasizes investing in property due to the expectation that asset prices, including property, will rise, which could devalue cash savings. Property is seen as a way to protect and potentially increase one's wealth.

What advice does the speaker give to those who are struggling financially and cannot afford to invest in property or other assets?

For those struggling financially, the speaker advises against investing in risky assets and instead encourages advocating for a more equitable tax system that could benefit the less fortunate.

What is the speaker's stance on the current economic system and its impact on wealth inequality?

The speaker is critical of the current economic system, arguing that it perpetuates wealth inequality and does not provide a reliable path out of poverty for most people. They advocate for a wealth tax as a solution.

How does the speaker suggest young people from less affluent backgrounds can get into the property market?

The speaker suggests that young people from less affluent backgrounds might need to rely on financial assistance from family members, such as parents, to help with the initial deposit for purchasing property.

What is the speaker's recommendation for those who have some savings but are unable to buy property?

For those unable to buy property, the speaker recommends investing in a diversified portfolio, including stocks, shares, and gold, to protect against cash devaluation and to potentially benefit from economic fluctuations.

What is the significance of the ISA mentioned by the speaker, and how does it benefit investors?

An ISA (Individual Savings Account) is a tax-advantaged investment account in the UK that allows individuals to invest up to £20,000 per year without incurring taxes on the returns. This can be an effective way to grow one's savings while minimizing tax liabilities.

What does the speaker suggest about the future of property ownership if the current economic trends continue?

The speaker predicts that if current economic trends continue, property ownership will become increasingly concentrated among the wealthy, leading to fewer people owning property in the future, which could exacerbate wealth inequality.

Outlines

00:00

💰 Wealth Creation and Investment Realities

The speaker begins by addressing the common inquiry about personal finance and investment advice. They explain that wealthy individuals can generate significant income from their assets, such as £300,000 a year from £10 million, due to their substantial starting capital. However, for those with modest savings of £10,000 to £20,000, the returns are minimal, highlighting the disparity in wealth generation. The speaker cautions against seeking 'get rich quick' schemes and emphasizes the importance of understanding that substantial returns are tied to substantial initial investments. They also discuss the risks associated with high-return investments and the potential for significant losses, advocating for skepticism towards such promises. The speaker concludes by suggesting that systemic change, such as a wealth tax, might be more beneficial for the average person than relying on investment strategies.

05:06

🏠 Prioritizing Property Investment Amid Economic Shifts

In the second paragraph, the speaker focuses on the importance of property as an investment, especially in an economic climate with devaluing currency and increasing asset prices. They argue that holding cash is risky due to potential inflation, which can erode the value of savings. The speaker suggests that those who can afford to invest should consider property to secure their financial future. They also touch on the social implications of property ownership, noting the divide between those who can access property and those who cannot, often due to family wealth. The speaker advises those who are struggling financially to advocate for wealth redistribution through taxation, while those with more savings should consider diversifying their investments into stocks, shares, and gold to protect against economic uncertainty. They also mention the concept of an ISA for UK residents as a tax-advantaged way to invest.

10:11

🌟 Navigating the Future of Property and Inequality

The final paragraph delves into the future implications of the current economic trends, particularly the impact on property ownership across generations. The speaker warns that the increasing property prices, fueled by economic policies, will lead to a future where fewer people own property, exacerbating social inequality. They urge property owners to consider the long-term effects of rising house prices on their children and grandchildren, as it may lead to a situation where property ownership becomes unattainable for many. The speaker reiterates the importance of addressing economic inequality through systemic changes, such as taxing the super-rich, to create a more equitable society. They also provide personal investment advice, suggesting a mix of stocks, gold, and other assets to safeguard against economic fluctuations, while acknowledging the inherent risks in such investments.

Keywords

💡Investing

Investing refers to the act of allocating resources, such as money, with the expectation of generating an income or profit. In the video, the speaker discusses the importance of investing for wealthier individuals who can earn significant returns on their investments, and contrasts this with the more modest returns that ordinary people might expect from their savings.

💡Personal Finance

Personal finance encompasses the management of an individual's financial matters, including budgeting, saving, investing, and planning for retirement. The video script touches on personal finance by advising viewers on how to manage their money, particularly in the context of wealth inequality and the challenges faced by those without significant savings.

💡Wealth Tax

A wealth tax is a levy on the total value of personal assets, such as property, vehicles, investments, and other valuables. The speaker in the video advocates for a wealth tax as a means to address economic inequality and to provide a more level playing field for those who are less fortunate.

💡Inequality

Inequality refers to the unequal distribution of resources, opportunities, or privileges among individuals or groups within a society. The video script highlights the growing economic inequality and how it affects the ability of ordinary people to invest and accumulate wealth compared to the super-rich.

💡Property

Property in this context refers to real estate or land that can be owned. The speaker emphasizes the importance of property ownership as a means to protect and grow wealth, especially in the face of inflation and economic uncertainty.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video discusses how inflation can erode the value of cash savings and why it's important to invest in assets like property or gold to hedge against this.

💡Stocks and Shares

Stocks and shares represent ownership in a company and are a common form of investment. The video suggests investing in stocks and shares as a way to potentially earn higher returns than keeping money in cash, especially through a stocks and shares ISA.

💡Gold

Gold is often viewed as a safe-haven asset and a hedge against inflation. The speaker recommends investing in gold as a way to protect one's wealth from the devaluation effects of inflation and economic uncertainty.

💡ISA (Individual Savings Account)

An ISA is a type of tax-advantaged investment account available in the UK. The video mentions ISAs as a beneficial way to invest up to a certain amount of money each year without incurring taxes on the returns.

💡Risk

Risk in the context of the video refers to the potential for loss or uncertainty of returns on investments. The speaker acknowledges that while investing in assets like stocks, shares, or gold can be a strategy to protect against inflation, there is always an inherent risk involved.

💡Economic System

The economic system refers to the way in which a country or region organizes its production, distribution, and consumption of goods and services. The video discusses the need for systemic changes to the economic system to address inequality and provide more opportunities for wealth accumulation among the broader population.

Highlights

Wealthy families can make 3-5% on their money, which is substantial when starting with large sums like £10 million.

For ordinary people with smaller savings, like £10,000 to £20,000, making 3% return is better than nothing but won't significantly change their financial situation.

There's a misconception that investing can be a quick way to get rich, but it's important to approach it with realistic expectations.

Investing large sums like £1 million to £2 million can yield substantial annual returns, but this isn't feasible for most people starting with much less.

The speaker advises skepticism towards get-rich-quick schemes, emphasizing the importance of understanding the risks involved.

Making 10% to 20% returns on investments is considered very good, but it's not life-changing for those starting with small amounts.

The speaker discusses the limitations of investing as a means to escape poverty or difficult financial situations.

The importance of advocating for a wealth tax to address economic inequality and provide a more reliable way to improve lives is highlighted.

For those with savings, the advice is to invest in property if possible, as it can provide significant financial security.

The speaker emphasizes the importance of not keeping large amounts of savings in cash due to the risk of devaluation.

Investing in assets like property, stocks, and gold can help protect savings from inflation and devaluation.

The advice for those who can't afford property is to invest in stocks and shares, and gold to safeguard against economic uncertainty.

Opening a stocks and shares ISA in the UK is recommended for those looking to invest up to £20,000 per year with tax advantages.

The speaker suggests a mix of gold and stocks for a balanced investment strategy, considering economic optimism or pessimism.

The importance of being aware of the risks involved in any investment, including the fluctuation in value, is emphasized.

The speaker calls for a collective effort to address economic inequality and the potential long-term consequences of rising house prices.

A message to property owners to consider the impact of increasing house prices on future generations' ability to own property.

Transcripts

so for this we're going to talk about investing  personal finance and because i get asked  

on all my social all the time can you give me some  advice what can i do with my money how can i make  

more money for my money um so the first thing i  want people to understand is basically i talk a  

lot in my videos about how wealthy people make  a lot of money from their money so if you have  

like £10million which a lot of wealthy families do then they might make £300,000 a year

just from their money it's important to  understand that they're able to make that money  

because they are so super rich so it's pretty  ordinary for wealthy people wealthy families  

to make sort of 3-5% from their money that's where i get these numbers from  

so then if you have a family wealth of £10million  you can make £300,000 - £500,000

um and that's easy enough to live a good life off but for ordinary people  

who might have £10,000 - £20,000 if you make 3% you know it's better than not  

making it but it's not gonna change your life  right if you have £20,000 savings  

and you make 3% that's going to make you £600 a year right which is great

you want to make it £600 a year but it's not going to change your life so  

i have a bit of a concern that sometimes people  come to me asking for advice and often what they  

really want is kind of get rich quick schemes  you know we've seen a lot of people make a lot  

of money very quickly on things like bitcoin and  things like this in recent times um or tesla these  

sort of things have gone up super quickly and  um i think often when people ask for this kind  

of advice that's what they're looking for you  know they're looking to like make you know huge  

amounts of money despite only starting with 10 20 £30,000 i think it's important for people  

to realize the reason that super rich people and  very rich people are able to make huge amounts of  

money from their money is because they start with  huge amounts of money so these guys who already  

have even £1million, £2million that can make you like £50,000 £100,000

a year to live off but for ordinary people  who might have savings of 20 30 £40,000

you're not going to make life changing sums and people who do offer you sort  

of get rich quick schemes invest 20 30 £40,000 you're gonna make a £100,000

please be very very skeptical of those guys they're probably not people you can trust um  

realistically what we're talking about is if you can make 10% 20% from your money then you're  

doing really really really well but even that if  you make 20% which is a really super good return  

and you start with £50,000 that's making you  £10,000 a year so it's obviously it's great  

money but that's a fantastic return and it's  um you know it's not going to change your life  

so that's the first thing um when we talk  about investing you need to understand that  

it's not going to make huge amounts of money  unless you start with huge amounts of money  

and that's an important point because i often  think people come to me from ordinary backgrounds  

even maybe poor backgrounds like where i'm  from and they see investing as a way out of  

out of poverty out of a difficult situation but  the truth is the way things are set up right now  

it's not a reliable way out and um everything  you do every way you try to make money by for  

example you know betting on bitcoin or um betting  on the stock market is risky you can lose money  

basically it's not a reliable way out and  the reason why i talk about what i talk about  

saying we need to bring in a wealth tax is  because these kinds of solutions encouraging  

ordinary people to gamble on the stock market  to gamble on cryptocurrencies i think they're  

super dangerous basically and they're not  reliable ways out and the only way that  

people as a whole are going to improve their  lives is basically by bringing changes to the  

tax system and making the wealthy people pay  higher taxes okay but that said there are a  

few things ordinary people can do and we're going  to talk about what you can do oh but before i get  

into that i just wanted to quickly add you know  if you are lucky enough to have say £50,000  

£100,000 that you can invest and that's  kind of the amount of money that you really  

need to be able to make like really significantly  sums of money that are going to affect your life  

um just be aware that there's people out there  that don't have that and a lot of people don't  

have that um one of the pieces of advice i'm  going to give is that if you don't have property  

you should probably try and get property just  please be aware that there's like a huge number  

of people especially young people out there  for whom that's just not a possibility so  

yeah have a bit of awareness that if you do  have money saved up even though things might be  

difficult for you there are other people out there  that don't have money saved up and things are more  

difficult for them when i talk about changing the  system to make it fair for everyone that's going  

to benefit you but it's also going to benefit  those people who have less and you know i'm super  

aware of the people out there might be watching  that don't have that kind of money as well um  

so what you can do really is super different  depending on where you are you know i'm not  

going to patronize people who are struggling to  get by every day by telling them that there's  

much they can do the truth is those people are  already doing everything they can right if you're  

struggling to pay the bills you just got to keep  struggling like you're not going to make money  

from investing and um if you've only got a few  thousand pounds that you desperately need please  

don't be dragged into get rich quick schemes  you might see on the internet like bitcoin like  

big bubbles in certain stocks like gamestop  or like tesla um you might have seen people  

make money for them of course it's possible  but the truth is if you don't have a lot  

of money to risk you shouldn't be getting  involved because those things can drop 80%  

90% we've seen happen in the past and you could  lose everything you put in um yeah so if if you're  

struggling to get by the main thing you need to do  is encourage people to support greater taxation of  

the rich because that is the only way that's going  to really help the poorest people in our society  

if you're lucky enough to have saved up a  bit more money 20 30 40 50 £100 000

i would say your first priority should always be  to get um property and this goes back to things  

i've been talking a lot about in my videos right  so i've mentioned in my other videos about covid  

that there's been a huge amount of money  printing that's going to devalue money  

devaluation of money is kind of  a complicated concept right because  

if you devalue money you know we normally think  of the price of whatever devalued things going  

down but what is the price of money right you know the price of money can't go down 

£1 is £1 but if money itself devalues what we  will see is the price of everything else going up  

and uh in particular because the people who are  benefiting from covid are largely richer people who  

tend to buy assets i expect to see the price of  assets like property like stocks and shares like  

gold go up very quickly whereas wages probably  won't go up obviously that's not good news for  

most ordinary people but it's also not good news  for people who have their savings in cash so how  

do you avoid that? the main thing i would say is  really avoid keeping large amounts of savings in  

cash um i know that we're conditioned to think  that keeping your money in cash is the safest  

thing to do but when you're in a climate like  we're in now where prices of assets are going up  

very quickly including property if you're sitting  on £50,000 in cash and the house price  

doubles which unfortunately could do especially  here in london or even other parts of the country  

that is really not a good situation for  you right so i would really encourage  

if at all possible as soon as possible get  yourself some property because that gives you  

the security that you can um that might involve  trying to get together as a family borrow money  

from your parents it's important for people from  poor backgrounds to realize the reason why young  

people get property is almost always because their  parents give them money and um this is the thing i  

want to let people know because i know that people  from my sort of background poorer backgrounds  

they see other people buying property and they  don't understand how it's possible because it's  

almost impossible if you're in london even if  you're on like a higher salary like 40 50 £60,000  

it's impossible to save up that deposit  it takes years and years and years and years  

but people from richer families are  getting that money from their parents so  

you know it's an unfair system but if you're from  a poor family the most important thing is to keep  

hold of property that you have and to try and  get property for younger people that's going to  

be the real challenge going forward especially  with property prices increasing as quickly as  

they are now i know that's not super positive  advice for a lot of people to hear because  

a lot of people they simply can't buy property  and you know this is why i do the work that i do  

because you know i predicted a year ago that  property prices were going to go up despite  

the worst economic crash in you know about 100  years that's insane but it's happened all right  

we've had the worst economic crashing injuries and  probably prices have gone up that's because of the  

way that governments have dealt with the crisis  which is to print money give it to rich people  

the people that get hurt from that are poor  families don't have property but also ordinary  

families i want to send the message out to  ordinary families that own property that might  

think they're winning when house prices go up um  so the older members of those families that own  

the houses they might think they're making money  when house prices go up but they need to realize  

the only way to make that money is to sell  their house and if you sell your house  

then your kids won't have houses and if house  prices double then your kids won't be able to  

get houses with their own money so the  end result of this massive increase in  

house prices is basically more and more ordinary  families going to lose their houses over the long  

run so i would like to have a message for older  people that own property that might be excited  

when house prices go up is think about how this  is going to affect your kids and your grandkids  

the end result is basically going to be that most  people in this country will not own property in  

20 30 40 years time and the amount of people  who own property going to go is going to become  

less and less and less and less and less um and  that's going to make life worse for most people  

um so look i see it in the families around me  right my friends who are from richer backgrounds  

their parents give them a hundred grand they  re-mortgage the house give them a hundred  

grand and the kids buy property but my friends  are often poor backgrounds i've got friends who  

are from single parent families their mums have to  sell the house to get by and the kids get nothing  

so what we are seeing now with this  massive increase in house prices  

don't get excited about it because what it is  what is causing is a divergence basically where  

if you've got 10 properties of course that's  great you've probably got a stock portfolio  

as well that's gone up 10 times but if you  have no property your family's in big trouble  

i don't i don't bring me no joy to  say that but if you have one property  

probably also your kids and your grandkids will  become unable to own property in the future so  

really if we want to stop that as a group we have  to do something about inequality and that's why i  

said we have to tax the super rich it's the only  way to do it but as an individual like i said  

i get asked what can do with your money the main  thing is protect your property and if you can buy  

property if you're young if you can buy property  and if you're older help your kids buy property um  

yeah you know that's not a positive message but  it's not a positive time if we don't fix the  

economic system um but yeah if you are unable  to buy property now which i understand like a  

lot of young people are um and you're worried  about the deposit you've saved up being devalued  

there are sensible things you can do um don't  keep it all in cash invest in stocks and shares  

invest in gold i've got a lot of money invested in  gold also have some invested in stocks and shares  

um stocks tend to do well if the economy is good  so if you're an economic optimist you might want  

to buy more stocks gold tend to do better when  the economy is bad so if you're an economic  

pessimist you might want to buy more gold i've  got more gold if you buy a mixture of both then

you will probably be a bit more  secure whichever way it goes um  

the best way to do that for an ordinary person to  open a stocks and shares ISA that's if you're here  

in the UK um you can put £20,000 into that a year you can just buy normal gold funds or global  

stock tracker funds i recommend buying tracker  funds that buy a basket of stocks rather than  

individual stocks because they're less risky um  you can only put £20,000 a year into an

ISA but if you have more you can just get what's  called a general investment account there's plenty  

of providers online um i use free trade i use  hargreaves & landsdown but there's plenty  

of providers that will give you ISAs that's  independent savings accounts uh they have  

some tax advantages and if you have more money  general investment accounts GIAs um but yeah if  

you have money saved up you're worried about being  devalued buy stocks buy gold don't leave it in cash

um obviously keep some cash um and i have to  add to that like whenever i give advice like this  

every single time you buy an asset gold stocks  anything there's risk involved um i think they're  

going to go up in general because cash is being  devalued but that's no guarantee um be prepared  

when you put the money in the value fluctuates day  to day could go up it could go down i think you're  

more secure holding stocks in gold over the long  term than cash but um yeah there's no guarantee  

when you buy things there's risk involved um  yeah what have you got any questions on that

housing could be so much more affordable wages  could be so much higher and we could have so  

many more options in how we live our lives some  of them put a lot of money into paying economists  

and think tanks to tell you that inequality  is important for the economy that is not true