The Only Investing Video You’ll Ever Need in 2026 (Start With 0)

Most people have no idea where to start when it comes to investing. Should you buy property? Should you buy stocks? Should you buy crypto? The decision is so overwhelming. And the truth is, if you don't know how the main asset classes work, you might already be taking on way more risk than you realize. I'm Nisha, a former investment banker turned financial educator. And in this video, I'm going to be breaking down the main asset classes in plain English. For each one, we'll cover how it works, the real risk involved, what returns you can reasonably expect, how quickly you can get your money back out, and the time horizon you need to focus for for each one. By the way, if you're watching this before the 11th of January, you might be interested in a completely free investing workshop that I'm hosting on Sunday. We cover how to invest and what to invest in, how to accelerate the returns on your investments over time, the single biggest mistake new investors make, and how to avoid it. How to calculate what your freedom number is and what you need to eventually live off your investments and so much more. You can sign up at nisha.me forward slash invest or click the link in the description below and reserve your spot before doors close. Let's get into the video. So let's start with what is an asset class? You've probably heard people talk about the importance of diversifying your investments across asset classes. But what does that actually mean? When I first started investing, I used to hear terms like equities, real assets, fixed income, and honestly, it all sounded a bit intimidating. Like there was this secret language only finance professionals understood. But in reality, an asset class is just a category of investment, a bit like food groups. So if you could think of cash as your fruit and vegetables, think of your property, that could be bread. Think of stocks, it could be milk and dairy. Each asset category has its own level of risk and potential return and purpose inside of your portfolio. Some will help your wealth grow, others protect what you've built, and a few are there to balance things out when markets get messy. It might even help to think of your investment portfolio like a meal made from a wide range of ingredients from a variety of food groups. It's not a one size fits all kind of thing, though. It can take a while to figure out what's right for you, your situation, and your risk tolerance. And the best asset class for you might actually be very different than the best asset class for a friend. So now you know what asset classes are, let's look at the first investment option and arguably the most simple, and that is cash. Cash is the safest asset as it gives you security. You know exactly how much you have, you know you can access it whenever you need, and that is why it is so important for short-term goals like booking a holiday, like paying for a home repair, like saving for a house deposit in the next year or two, like covering an unexpected bill. There is a downside, though, because although people tend to think of cash as risk-free, that is not completely true. There's no risk of losing money like you would when buying stocks or crypto, sure, but there is a risk that the value of your money will be quietly eroded by inflation. And that's because even if you earn interest on your savings, inflation will usually rise faster in the long run, meaning whatever you put in cash today won't go as far or pay for as much in 10 years' time. For example, if inflation is 5% and your savings account pays 3% interest, your money is actually losing 2% of its real value every year. So although the cash plays a crucial role in your portfolio, as it gives you the stability to explore the other asset classes without losing at all, and you could watch this video about what I'll do if I start investing from scratch, which goes into what I'm saying there in a bit more detail. So although cash plays a really crucial role in your portfolio, it is not a great long-term wealth builder. So knowing this, how much cash should you actually hold? For most people, aim for around three to six months of living expenses in an emergency fund, enough to give you peace of mind, but not so much that it slows down your growth. Once that's covered, the rest of your money can start working harder in other places, which brings us into the next investment option. So first, let's add this to our table. So the risk of holding cash is very low, and the returns are usually around 2% to 5% a year if you're putting into a high-interest or high-yield savings account. The liquidity, i.e., how quickly can you take it out, usually instant. Most of the time, you could withdraw or spend your money straight away, unless it's in a fixed-rate account or something similar where you have to give notice. Last but not least, it's best suited for short-term goals like emergencies or saving for something, ideally in the next five years. Now let's move on to individual stocks. If you invested 1,000 in Apple stock 20 years ago, it would be worth 130,000 today. When we hear success stories like this, it's so easy to see why equities, that's the asset class that stocks fall under, are so popular. When you buy individual stocks, you're buying tiny pieces of real companies like Nvidia, like Tesla, like Unilever. You become a part owner, which means if the company grows and earns more money, your shares also increase in value. Some companies, they also pay out a portion of their profits to shareholders through dividends, giving you a small income on top of potential growth. The average stock market returns about 7% to 10% per year over the long-term, but that figure reflects hundreds of companies. The success of individual stocks, on the other hand, that can vary massively. One might jump up 50% a year while another falls to zero. Even popular companies can go out of business, potentially leaving you with nothing. So if you invested 1,000 in Blockbuster in the 90s and didn't sell before the company got into trouble, you'd probably wish you'd chosen a different stock, even though it is very hard to know which will be the winners and losers without a crystal ball. That is why most people only buy individual stocks after they've already built a very solid base of diversified investments like index funds, which I'll explain in just a moment using one of my favorite analogies. But first, individual stocks can grow your wealth faster if you pick well, but they can also wipe out your gains if you don't. They're best treated as a small, higher risk portion of your portfolio. So think of them as something for long-term growth, but not for your financial foundation. So let's have a look at the table again. With individual stocks, the risk is higher because you're relying on the success of individual companies. The returns can be anywhere from zero to 50% or more, depending on how well you pick, but there's also a risk of negative returns, meaning you lose money. They're highly liquid since you can buy and sell easily, but they're best for a long-term horizon, at least 10 years, I would say. Moving on to the next asset class, and technically this falls into stocks, but we're separating them out for the purpose of this video, index funds. So imagine walking into a shop to buy some chocolate. You could buy a big bar of dairy milk, which would be like buying an individual stock, or you could buy a box with a mix of dairy milk, of toile, of Toblerone, and more inside. That's basically what an index fund is. It's setting up all your eggs in one basket and betting on a single company, you're buying a ready-made mix of hundreds of them in one go. There are lots of index funds to choose from, each one tracking a specific market, like the S&P 500 in the US or the FTSE 100 in the UK. So when the market rises, your investments rise too, but when it dips, your fund dips too. And because it's spread across so many companies, one bad performer doesn't ruin the whole box. To give you an idea of just how powerful that can be, the S&P 500 has returned an average of over 10% per year since 1957, even after every crash, every recession, and market panic along the way. Index funds aren't completely risk-free because markets as a whole can fall, but they're usually fairly simple, low cost, and they don't rely on you constantly checking stock prices or predicting the next big company because that is very, very hard to do. So by choosing index funds, you're not trying to beat the market, you're just owning it. And because you're paying lower fees and staying invested through the ups and downs of the stock market, most people usually end up doing better than those who try to outsmart the market by picking individual stocks. Index funds work best when you invest regularly, so you can start small with 20 or 50 a month and increase the amount you invest over time. It might not seem like a whole lot to begin with, but the longer you stay invested, the more time your investments have to grow. If we pop index funds into our table, the risk is medium. You're still exposed to market ups and downs, but it's spread across hundreds of companies. The average returns are about 7 to 10% a year over the long term. They're liquid since you can sell them easily, and they work best when you hold them for five to 10 years or more. If you'd like to invest, but you're not sure where to start, one of my favorite apps that I've been using for a while now, and I've raved about them in previous videos, is Plum. What I love about it is that it does the saving for you automatically and lets you invest tax-free all in one place. So you don't need to have loads of different apps open trying to manage everything. I set up these automatic saving rules based on my spending habits, and then it just moves that money aside for me. So I'm building my savings without having to remember to do it myself every single month. And this is key. And that money can be saved in a very competitive cash ISA account. Or if you want to start investing, you can do that from as little as two pounds in a Stocks and Shares ISA. It's a really, really good way to get into investing and anything you earn inside the ISA is tax-free on up to 20,000 pounds a year. Or you can do both. You can choose how much goes into savings versus investments, and it's all in the same app. So you don't need to mess around with multiple platforms. If you want to try it out, you can download Plum. And if you use my link below, the first 25 people who deposit into an ISA account will get a 25 pound bonus. The app is completely free to download and the link is in the description and it can give you a very good start into 2026. Thank you so much Plum for sponsoring this bit of the video. Let's move on to the next asset class and that is Real Estate Investment Trust, i.e. REITs. If you'd like to invest in property, but you're struggling to save a deposit or you don't want to deal with tenants or repairs or surprise boiler breakdowns, then this one could be for you. REITs let you invest in property without becoming a landlord or needing a large amount of cash upfront. So when you buy shares in a REIT, you're buying a small slice of a company that owns and manages income producing properties. So things like apartment blocks, like shopping centers, like hospitals, even data centers. So instead of saving up hundreds of thousands for a deposit, you can invest in property with as little as 50 or a hundred dollars, pounds, euros, whatever the currency that you're investing in. REITs earn money through rent and property appreciation. And by law, most of them are required to pay out at least 90% of their portfolio to you as shareholders as dividends. And that's why they're often seen as a very great source of passive income. So to give you an idea of performance, the FTSE All Equity REIT Index, this one here, and a REIT which tracks U.S. listed REITs has outperformed the S&P 500 over the past 20, 25, 30, 40, and 52 year period. But as the table below shows, stocks have been performing better over the last 10 years. REITs do come with risks though. Their prices can fall when interest rates rise because borrowing costs go up and investors look for better returns elsewhere. They're also affected by the property market itself. So if demand for real estate drops, your investment might too. So overall, REITs can be a great way to add assets to your portfolio that behave slightly differently from traditional stocks. They're especially useful if you want property exposure, but prefer to keep things hands off. So no mortgages, no tenants, no phone calls about leaking roofs or anything like that, just steady income and potentially long-term growth too. So to summarize, let's put this into our table. REITs, the risk is medium since property values and interest rates can affect prices. The returns are usually around 8% to 12% a year, combining both income and growth. They have moderate liquidity and they tend to work best with a five to 10 year horizon. Moving on to gold, gold has increased by 60% this year. It is one of the oldest and most trusted forms of investments in the world because it has a reputation for being a safe haven, which pretty much means it holds its value when other investments like stocks aren't doing so well. So unlike shares or unlike property, gold doesn't produce any income. It doesn't produce dividends and its purpose isn't to grow wealth. It's more to protect your wealth. To give you an idea of how it's performed, it has delivered, according to the World Gold Council, an annual average return of around 8% since 1971. But that average actually hides big fluctuations because gold can go sideways for years and then suddenly go really high when global confidence drops. So I would say it's around three to 7% is more accurate representation of what you can reasonably expect. The easiest ways to invest are through gold ETFs, digital gold platforms, also by buying physical gold through gold bars or gold coins. And when you buy it physically, it just gives you that psychological reassurance of I can hold this in my hand, but it does come with storage and with insurance costs. So let's put this into our table. Gold is considered a low to medium risk asset, often used as a hedge against inflation, as a hedge against market turbulence. It's not there to help you get rich, but it is there to potentially help you stay rich. That's why a lot of investors keep around 5% of their portfolio in gold. It's the financial equivalent of comfort food. It's steady, it's familiar, it's there when things get tough. So again, to recap, it's around three to 7% average annual return you could expect over the long-term. It's fairly liquid, especially if you invest through the digital platforms or ETFs, and it's ideal for a five-year horizon or longer than that. Then it's mainly there for stability and protection. Okay, moving on to the next asset class, and that is crypto. Crypto is probably the most talked about asset out of all of these, and it's probably the most misunderstood asset out of all of these over the last decade. It is exciting, it is unpredictable, and for some people, it has been life-changing, but it's also one of the riskiest places you can put your money. So to explain what it is, at its core, cryptocurrency is just digital money, and it's secured by something called blockchain technology. So think of blockchain as a public record book that lives online, and it tracks every transaction made with a cryptocurrency. Because it's stored across thousands of computers, it's also almost impossible to alter or to fake. Part of crypto's appeal is that it represents a bet on the future of technology and on decentralized finance, which means that instead of needing a traditional bank to send money, to earn interest, to get a loan, you can do it all directly through digital platforms powered by code. Now, unlike pounds or dollars, it isn't controlled by any government or any central bank, and you can buy coins like Bitcoin, like Ethereum, you can store them in a digital wallet, and you can sell them whenever you want. But the thing with crypto is that the swings are huge, and you'll need a real stomach for volatility if you wanna make it work for you. If adoption continues and regulation improves, it can very much play a much bigger role in the global economy, but at this moment in time, it is still speculative and it is high risk. So if you're curious, invest with caution, do your research, and don't put money into it that you can't afford to lose. So adding crypto to our table, let's see how it compares to the rest of our investment options. As you know, the risk is very high. Prices can move up to 20% in a single day. The returns, they can range anywhere, and I'm putting a number on this, but it could be even more drastic than this, minus 90% to over 500%, depending on the timing, when you get in, when you get out, how long you're there for. It's highly liquid, but it is a speculative investment, something to hold only if you can handle extreme volatility. And the final one, I just wanted to add this in because a lot of people ask me what exactly is it, private equity. So private equity, it's about investing directly in private companies. So not in public companies that are listed on the stock market, in private companies that are not listed on the stock market. It's before they go public. And it's how venture capitalists and institutional investors can back businesses before everyone else can. And by venture capitalists, I mean people who, or firms who fund very early age startups in exchange for ownership, and institutional investors, it's like large organizations like pension funds or endowments that invest on behalf of others. So the upside with this, it can be huge. If the company grows or eventually lists on the stock market, if you're in there early, you can make a fortune, but the risk is just as high. Your money is usually tied up for years and there's no easy way to sell if things don't go as planned. And so because of that, private equity tends to suit experienced or high net worth investors who can afford to take long-term bets and wait for results. It is exciting. It can deliver incredible returns, but for most people, it's something to learn about later in your investing journey, not as a very first step. So I just wanted to cover that off rather than actually compare it side-by-side with the rest of the investment options. So those are the main investment options, simplified, side-by-side. You don't need to pile every single type of investment onto your play at all. There's no point holding extremely high-risk assets if you hate volatility. There's no point holding really safe assets if you want growth. Instead, you just need a mix that suits you, that suits your goals, that suits your timeline. And if you want to learn exactly how to do this, I'm hosting a completely free live workshop on January the 11th at 5 p.m. GMT. We go from everything from how to invest to what to invest in. This is the second time I'm hosting this workshop. We held it in October and everyone loved it, so I'm doing it again. You can sign up completely for free. The link is in the description, and I hope to see you there.