Basics of Investing
Summary
TLDRIn 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
💰 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.
🏠 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.
🌟 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.
Mindmap
Keywords
💡Investing
💡Personal Finance
💡Wealth Tax
💡Inequality
💡Property
💡Inflation
💡Stocks and Shares
💡Gold
💡ISA (Individual Savings Account)
💡Risk
💡Economic System
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
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