If I Started Investing In 2025, This Is What I Would Do

So you have some extra money and you want to invest, but if you're new, it can seem really confusing and overwhelming. So this video is the ultimate beginner-friendly guide on how to invest for beginners in 2025. I'm going to split this video into five parts, so feel free to skip around if you want. Part one is why you should actually be investing. Part two is what you should invest in, especially for beginners. Part three is all about when and how much you should invest. And part four, I'm going to be showing you a live walkthrough of me buying an actual stock. Part five is all about investing strategy, and I'm going to go over some common questions around things like taxes. So starting with the basics, why you should be investing. Well, the main reason is because you ultimately want to make your money work for you so you can make more money. Like, let's say you have an extra $1,000, right? What are you going to do with it? You could spend it, you could keep it under your mattress, or you can just stuff it in the bank. But you see, the problem is this thing called inflation is going to make your money lose value over time, meaning you can't buy as much with your money in the future. For example, if a cheeseburger cost $7 last year, but this year it now costs $10 for the same cheeseburger, then that $3 increase is inflation making your money worth less. So to prevent that from happening, the better option is to invest that extra $1,000 because investing your money not only grows your money and your wealth, but also protects it from inflation. So there are two ways that your money grows when you invest it. The first way is when you invest in something like, let's say, Apple stock, you start to own a tiny bit of Apple, the company. So if Apple does well, like they open more Apple stores, they sell more iPhones, more products, and they earn more money each year, then Apple, the company, will be worth more. Meaning your money grows because the company you partly own, in this case, Apple, has become way more valuable over time. Now, the second way your money grows when you invest is what they call the eighth wonder of the world, compound interest. Now, compound interest is simply the interest you earn on top of your interest, meaning not only are you earning money on the original amount you invested, but you also earn money on the interest that you've made with that original money. It's a bit tough to explain this without using actual numbers, so let's just use something simple. So let's say your goal is to save $1,000 every month, and you invest that money, and you expect an average annual return of 8%. What that means is after seven years, you're going to reach a net worth of $100,000, right? That's your first milestone. Now, the time it took you was seven years. That's a good amount of time to get to your first $100,000 milestone, but where you get to really see the power of compound interest is when you try to get to the second milestone, the next $100,000, because the time period it takes shortens drastically at that point. And the reason for this is because this time, you're going to earn 8% return on a much bigger pile of money, right? Now you're going to earn that 8% return on the first $100,000 that you already saved, and you're also going to earn it on the interest that the first $100,000 has accumulated. So as a result, this time, it only takes you about four years to reach your second $100,000 milestone. Almost half the time it took you to reach your first $100,000 milestone. And now to reach the next $100,000 milestone after that, it's just going to take you a little over three years. And you'll notice that the time it takes to earn each additional $100K after that gets shorter and shorter because of compound interest, right? And then once you start reaching $1 million, making the next $100,000 will take you just over a year. And that's why compound interest is called the eighth wonder of the world. So now you're a believer, right? You understand that investing is one of the best ways to build wealth now. But now the question is, what should you invest in? You see, for many people who are just getting started investing, a lot of times their first thought would just be to look at stocks that performed the best in the past few years and just invest in that. But that would be a big mistake because the past doesn't always represent what will happen in the future. And I'm going to prove it to you, right? So Nokia was the leading phone brand in the phone space back in 2010. They owned about 37% of the phone market share. But by 2020, in 10 years, their market share dropped to less than 1%. And their stock price fell by almost 70%. And if we go back in time by about 40 years, back to the 1980s, you can see like the biggest companies in the world back then looked very, very different from now. Back then it was mostly big companies like General Motors, DuPont, Golf, mainly oil and gas companies. Even if we go back just 20 years, back to the early 2000s, the biggest companies again looked very different from today. There was Exxon, Walmart, Cisco, etc. But nowadays, some of the biggest companies are NVIDIA, Tesla, and Google. In fact, the only company who's still on that list today compared to the early 2000s is Microsoft. The point is investing based on what stocks performed well in the past isn't really the smartest strategy because just because the company did well in the past doesn't mean it's going to do well into the future. And as a beginner, you're really better off not investing in individual companies or individual stocks on day one because it's a bit too risky. It's sort of like the saying, you don't want to put all your eggs in one basket. Well, because in this case, investing all your money into a single company or a stock like Mr. Magic Lamp Company is like putting everything in one basket. The problem is if you accidentally trip and you drop your basket, all your eggs are going to crack. Similarly, if Magic Lamp Company stock does poorly, then you're going to lose all your money. So what should you invest in instead, right? The quickest and lowest effort way for a beginner to start investing is to look into these things called index funds. They're a great option, especially if you want to achieve financial freedom and build wealth without requiring you to get incredibly lucky or putting a ton of effort into investing and checking the market news every day. Well, investing in an index fund allows you to pretty much just set it and forget it. Even Warren Buffett, who is arguably the greatest investor of all time, said that most investors, both institutionals like hedge funds, as well as individuals will find that the best way to own stocks is through an index fund. But what exactly is an index fund? Well, you see, the easiest way to understand it is to really split the word index fund into two separate words. So an index is just a list of companies like the S&P 500 is just a list of the top 500 largest companies in the US. Now, a fund is essentially a pot of money that's pulled together from a bunch of investors like you and me, and that pooled money is then used to buy something. So putting it all together, when I say invest in an index fund, that essentially means we're going to be using all that pooled money from you and me, and we're going to use that to buy companies on the list or on the index. And one of the best things about investing in an index fund is that it instantly reduces your risk of losing money, because now your money is spread out across many stocks and many different companies. So in the case with the eggs in a basket, now you have a bunch of eggs spread across a bunch of baskets. If you accidentally trip and you drop one basket, you still have all the other eggs in the other baskets. And now I want to show you an example of what an index fund actually looks like so you can get a better understanding. So here we have this index fund or this ETF called QQQM, which stands for Invesco Nasdaq 100 ETF. And you can see the price it costs if you want to buy a share of QQQM, etc. Now, what's interesting, what I want to show you is if we actually dive into what this actually consists of, we can see the description over here that this index includes securities, which is just another fancy word of investments. You can call it stocks of 100 of the largest domestic and international non-financial companies listed on the Nasdaq. So essentially what that means is if you buy a share of this index fund, then you are automatically buying 100 of the largest domestic and international non-financial companies on the Nasdaq. And more specifically, you're going to be buying tech companies. So how do you actually know what tech companies are included in this 100 list of companies, right? So you can do that by going into portfolio, which is what you can see what is being held in that particular fund. So you can see the top holdings over here. I believe this would be the top 10. You're probably going to be familiar with some of these. You can see AAPL, which stands for Apple. And Apple is about 10% of the fund itself of QQQM. NVIDIA, you can see it's about 8.5%. There's Microsoft, about 8%. There's Amazon, 5.95%. Then you go down this list. These are just the top 10 holdings that are part of QQQM, which again means that when you buy a share of QQQM, you would automatically be investing in all of these companies, plus 90 other companies that's part of this particular index fund. But one thing to keep in mind when it comes to investing in funds is that they all come with fees, which in the investing world are called expense ratios. You see these fees cover things like administrative costs or maintenance costs, whatever the fund needs to spend to manage itself. For example, if a fund has an expense ratio of 1% and you have $1,000 invested into that fund, that means that you'll pay $1,000 per year in fees. Now, you don't actually get a bill at the end of the year. It's just kind of automatically taken out of your investment. Now, generally a 1% expense ratio or fee is considered pretty high, but the good news is there are index funds out there, and I'll show you later on in the video, that actually have a very low expense ratio, like around 0.1% to 0.5%. So you don't really need to worry about all the extra fees too much as long as you select the right index funds. Okay, so now you know generally what you should be investing in, but the question now is when should you start investing? And every time someone asks me this question, I always respond with a two-question checklist that I recommend everyone checks off before they start investing. So the first question is, do you have any high-interest debt with more than 7% interest rate? If yes, then you should prioritize paying off those high-interest debts first before you invest your money, because doing so is kind of like a guaranteed return on your money. Now, usually if someone tells you that you can make a guaranteed return or a guaranteed profit, then I'd say just block them because they're trying to scam you. But in this certain case, it's kind of true. For example, let's say you invest in the stock market, which has an average return of 10%, right? That's great. But what if you could have a guaranteed 25% return by paying off your high-interest debt that's eating up your cash flow every month? For instance, let's say you owe $10,000 on your credit card, and your credit card has a 25% interest rate. That means you're going to be paying $2,500 in interest. That's money straight to the credit card company from your wallet, which prevents you from saving and investing as much as you could. It's kind of like trying to put gas in your car while knowing you have a hole in your gas tank that's leaking a lot of gas. Your first priority is to fix that leak. So if instead of investing $10,000 and you use that money to pay off your credit card debt today, then you just saved yourself from paying that $2,500 in interest, which is like getting a guaranteed $2,500 bonus or earning a 25% return in the stock market on $10,000. Now, the second question is, do you have a three to six months of emergency fund? The point of emergency fund is to help you out when you run into a financial emergency, like when your car breaks down or when you get really sick. Knock on wood. The point is, is to use your emergency fund to help you out financially in those situations. If you don't have one, then you might be forced to use your credit card or even worse be forced to sell some of your investments at a loss to cover your emergency. So before you invest, you want to make sure you can check off these boxes, right? You have your high interest debt covered and you have your emergency fund taken care of. Now let's talk about how much money you should invest with as a beginner. And first off, you can start investing with just a dollar, right? There's no such thing as a minimum amount you need, but how much you make in the stock market is going to be limited by how much money you put in. For example, if you invest $10 and your stock goes up by 10%, you would only make $1 because 10% of $10 is $1. But if you invested $50,000 and that same stock goes up by 10%, that means you're going to make $5,000. The rule of thumb that I tell everyone is that you should only invest an amount of money that you don't need for several years. So for example, if you're trying to save a bunch of money for a down payment for a house, right? In the next year or two, then you probably don't want to invest with that money right now because you're going to need it soon for that down payment. And it's impossible to know if the stock market is going to go up or down in such a short amount of time. And anyone who tells you that they know for certain, like they know that the stock market is going to go up or they know for certain it's going to go down, they're lying. The reality is no one can predict the future. So now let's talk about how you can invest in your first stock. And then I'll also show you a live walkthrough of me buying some actual stocks. So there are two main ways that you can invest. The first way is with your retirement accounts, like your 401k or your Roth IRA. You see, the benefits of using and investing with a retirement account are the tax advantages that they offer. But the downside is that you typically can't withdraw money from these accounts before the age of 59 and a half without having to face some penalties. If you don't have retirement accounts or you don't want to invest with a retirement account, the other option is to use this thing called a brokerage account, like with Fidelity or Schwab or Moomoo, et cetera, right? The benefits of a brokerage account is that you can deposit, you can withdraw, you can invest that money whenever you want. The downside is that it doesn't have some of the main tax advantages that the retirement accounts do. So for the purposes of this video, let's assume that you want to invest with a brokerage account. Well, the first step is to just sign up for a brokerage account that works for you. Nowadays, all brokerage accounts like with Fidelity, Schwab or Moomoo, they offer basically the same functionality. There's not too much difference between them for its core functionality. So it's really up to you what you choose. I personally like to use Moomoo and that's what I'm gonna be using for this live walkthrough. And the reason I like using Moomoo is because I like to occasionally peek at what Wall Street like hedge funds and institutional investors are buying and selling. And Moomoo is the only brokerage account that gives you this data for free. The other brokerages do charge you for this information, but again, it's really up to you what brokerage you wanna choose. But if you are interested in Moomoo, if you sign up with my link below or you scan the QR code, there's a promotion running right now where you can get up to 15 free stocks when you make a qualified deposit. Plus you can get 8.1% APY on your uninvested cash for the first three months. All right, so step two, after you sign up with your brokerage account, you need to actually put money into it. So what you wanna do is connect your bank account into your brokerage account and just move whatever money you're comfortable with. All right, so you move some money into your brokerage account and this is really where the fun begins, right? So you can see over here in this example account, I have about $500 deposited in here. And now let's just say I want to buy Apple stock. So what I would do is just go to the search bar and I'm gonna type in Apple. And you can see the first one that populated is Apple, which has a ticker symbol of AAPL. I'd simply click on that stock. And now you're brought to the stock profile page for Apple. Now, obviously there's a lot of stuff going on over here. And as a beginner investor, and for this walkthrough example, you don't need to learn about all this extra stuff. All you really need to know is how much it costs for you to buy one share of Apple. In this case, you can see over here to buy one share of Apple, it's about $250. So now what you wanna do is you click on trade and then you get two options, buy or sell. And in this case, since you don't have any Apple stock yet, you're gonna click on buy. And then again, you're brought to this kind of summary page of what the action is going to be done when that trade executes. So again, you can see Apple, you can see it's around $250 per share, and you can see an option of buying or selling. It's currently on the buy side. Sessions, regular trading hours, let's keep that as default. Order type, this is where it gets interesting. There are two main order types that you wanna know about. If you wanna just buy a stock and you don't wanna care about anything else, which is actually a great example of just taking action and doing the action and executing a trade, just click market order. Okay, so market order essentially means that you're going to be buying a share or however many shares of Apple stock at its current market price. So if you execute this trade, and let's just say you want one share of Apple and you click on buy, it's going to buy Apple stock, one share of Apple at the market price. Now, the other main type order type that you wanna be familiar with is a limit order. Now, the difference between a limit order is you can actually specify a specific price that you want to buy Apple stock at. And when or if the price of Apple stock goes to that specific price or better, that is when the trade executes. So you can see the two differences at the market price. If you do a market order, the trade will execute pretty much immediately at whatever price you see. If you do a limit order, the price that a trade only executes when the price of Apple stock gets to that certain amount or better. So in the case here, you can see Apple stock is at $251 right now. If I set a limit order for $240, that means that I won't actually execute the trade until Apple stock goes down to $240 or even less. So in this case, let's just do a regular market order. We're gonna buy one share of Apple stock at the market price, which right now it's around $250. I'm gonna click on buy. And again, this is now just the order detail or the order summary. It's just going to resurface that information again. We can see that the order type is MKT, which is that market order. We're gonna be buying Apple stock or AAPL. It's gonna happen at the market price. The quantity is one. The total price for reference is around $250. And you can click on confirm. And now the order has been submitted. And now I can go back to my account over here on my account page over here. And I can see that I have one share of Apple stock that I own. So congratulations. You just bought your first share of Apple stock. And if you want to sell Apple stock, your Apple stock that you own, it's pretty much the same thing. You would just click on trade again. And this time you would just put the sell option and you would pretty much go through the same thing. You would put in the quantity of shares you want to sell. If you want to do it at a limit order or a market order of selling. And then you would click on sell and voila. Okay, great. So if you followed me through the walkthrough, congratulations, you just purchased your first stock. Otherwise, you can just go back in the video and follow along. Now, the question is, how long should you hold and invest in this stock for before you actually sell it? My suggestion, especially for beginners, is to hold your investment for the long term, which technically is more than three years. In fact, I go so far as to say, don't even look at your stocks after you buy them. Because a big mistake that I see a lot of people make is that they let their emotions drive their investing decisions. For example, if you see your stocks going down, you might get worried and decide to sell, which is absolutely a normal reaction, right? It's called panic selling. But the problem is panic selling is really how most investors lose money in the stock market. And now I want to show you something pretty fascinating, or at least I find it pretty fascinating. And this is to show you why panic selling and letting your emotions drive your investing decisions is probably not the best thing in the long term, especially if you're trying to build wealth. So we can see over here, I'm currently looking at this opportunity called SPY, which stands for Spider S&P 500 ETF, which is essentially an index fund that is tracking the S&P 500 or the 500 largest companies in the US stock market. And I have the stock chart profile over here, you can call it. And let's say right now, we are going to go back to the early 2000s to show you this example. Let's just say this is when you wanted to invest in the stock market, right? This is when it's happening right now, it's 2007. And you decide to buy a share of SPY for $154. This is the date you purchased your investment, October 2007, right? Fantastic. And now your expectation is, okay, I'm going to hold it for the long term. It's going to go up in the long term, right? But then unfortunately, if you remember in 2008, the financial crisis happened. And so now the stock market starts to tank. If you let your emotions drive your investment decisions, then chances are you are going to panic sell at this point. Which makes sense, right? No one's going to blame you. You see the stock market going down. But if you use logic to drive your investing decisions, then you know in the long term that the stock market is going to do well, right? And you won't technically, you technically haven't lost any money yet until you sell the actual investment. Meaning even though the price per share of SPY went from $154 all the way down to, this is $73, 70-ish dollars. You technically haven't lost anything because you still hold one share of SPY. You only technically lose your money if you sell that one share of SPY, right? Because in the long term, the expectation is that the stock market will go back up. And we can actually see that happening, right? From this all-time low over here, 2009-ish, it goes back to $150 per share in 2013. Okay, so you get back over here, you break EBIT. Now, in this case, you keep on holding. You keep on holding for the long term. And now in 2015, the price per share for SPY is $209. So you made some money here. Now, again, you keep on holding for the long term. You ignore short-term volatility. You ignore it, ignore it. In 2018, it's now $291, almost $300 per share of SPY, which means you doubled your money over here, right? And then you keep on holding. You're ignoring short-term volatility. You know that these blips happen. You know it goes down, but you don't really care. You don't let your emotions drive your messing decisions. And you let logic take control because you know that the stock market does well over the long term. So if we keep on zooming out, and we keep on zooming out, nowadays, you can see SPY has hit a high of $600 per share. And $600 divided by $150, that's a 4x on your money that you made for holding your investment for the long term. The point I'm trying to make is it doesn't really matter what happens in the short term for your stock because the rule of thumb is if you are investing for the long term, the stock market is going to go up. And I know in the heat of the moment, it's really hard for you to let your logic take over your emotions. But if you just zoom out, like look at old past stock charts or index funds or whatever, if you just zoom out, you can see that the performance of the stock market goes up over time. And you can acknowledge that these little blips that happens, that naturally happen in the stock market, doesn't really matter in the grand scheme of things. In fact, a study by this investment research firm backtested 10 years of stock market data and found that if you just missed 10 of the best market days, meaning you kept trying to sell when the market was down and you tried to buy when you saw the market was starting to go up, you would stand to lose on average 66% of the gains you otherwise would have made if you just stayed invested for the long term. Meaning if you invested $100,000 and you held it for the long term, let's just say it can go on to $200,000, right? But if you let your emotions drive your decisions, you might've only ended with $144,000, which is 66% less than what you could have made. And that's because when the stock market moves up, it moves up very quickly, which is why it's crucial to stay invested because it's impossible to perfectly time the market, which is why time in the market is much more important. In fact, data shows that 90% of people who take on day trading or super short-term investing lose money. And some studies even say only 1% of day traders are profitable. You see, some of the best investors in the world, they just buy and invest and they forget about what they invested in because over the long term, there's a really good chance that your stocks will be much higher than what it is right now. All right, so specifically, what are some index funds that you should look into? Well, here are three index funds with low expense ratios that you might want to do more research into. The first index fund is called SPLG, which stands for the Spider Portfolio S&P 500 ETF. It tracks the S&P 500, which like I mentioned earlier, contains the 500 largest publicly traded companies in the US, which will give you exposure to well-established businesses that represent about 80% of the entire stock market. It has an expense ratio of 0.02%, so it's pretty affordable. And investing in this S&P 500 index fund is pretty ideal for investors who want a balance of stability and growth. The next one is called VUG, which stands for Vanguard Growth ETF. VUG focuses on high growth companies, meaning these companies are expected to grow faster than average because they have like, let's just say some revolutionary technology. But while they have the potential for more growth and faster growth, they are more risky because as much as they're likely to go up really fast, they're also likely to go down really fast as well. Now, this ETF has an expense ratio of 0.05%, so again, it's pretty affordable. And growth funds are ideally more for younger investors with higher risk tolerance and longer time horizons who are a bit more aggressive because these type of investors have more time to outlast market volatility while taking advantage of the higher returns. The next one to look into is called SCHD, which stands for Schwab US Dividend Equity ETF. Now, SCHD really focuses on some large dividend paying companies, meaning these companies will pay you cash every so often. It has an expense ratio of 0.06%, so again, it's pretty affordable. And this is really more ideal for older investors with maybe less risk tolerance or people who really value cashflow and passive income. Now, I'll quickly go over what you need to know regarding taxes and investing. But since your investments are a form of earning money, US government is gonna want a piece of that pie. And the size of that piece is determined by how much money you profited or lost after you sell your stock. For example, if you buy a stock a year ago for $1,000 and things went really, really well and it went up to $1,500 and you sold it today for $1,500, that means you made a profit of $500 and that $500 will be taxed. If the reverse happens and things don't go well and the stock fell to $700 and you sold it at $700, that means that you had a loss of $300 and now you can deduct $300 from your taxable income. When it comes to taxes, the other important thing to keep in mind is that you can actually get taxed more or less depending on how long you hold the investment for before you actually sell it. For example, if you only hold a stock for the short term, which in the IRS's eyes means you hold a stock for less than one year and then you sell it, you generally will get taxed at a higher tax rate than if you held the stock for longer than one year, which is what the IRS considers long-term. Which means if you want to pay as little as taxes as possible, this is another incentive to hold your investments for the long-term. And without a doubt, investing in 2025 is one of the best ways to make your money work for you and build your wealth. But honestly, this only comes second after you know the right payday routine after you get paid. So if you want to make smarter money moves in 2025, click here to find out what you need to do every single time you get paid.