8,7 Years Investing Knowledge In 15 Minutes

To set the scene, over the past eight years and seven months, I've managed to grow my investment portfolio to over £137,000. About a year and a half ago, I left my nine-to-five to work solely on this financial education business, which you see right here, which over the past 12 months has actually brought in more money than 10 times the average UK salary. I'm not saying this to brag, I'm showing you guys what is possible. And I even won an award at the British Banking Awards for Money Content Creator of the Year, which was pretty cool too. Before this, my only award was a red rosette, finishing fifth place in the egg and spoon race in year four. But in all seriousness, my investment portfolio and my savings pots means I can now live the life that I want to live, and I'm only 35. And I'm absolutely no different to anyone watching this video right now. All I did was seize an opportunity that is right in front of all of you. Seize your moment. So in today's video, I'm going to identify the nine steps you can take to grow your own no matter what your salary is or how much you can currently contribute to your own investments. Now, if you follow this to the letter, there is no doubt in my mind that you'll be better off than you currently are. Now, the first step, I think this is the most important, and that's everyone starts from somewhere. Now, I grew up with two parents who are mostly very good parents, but weren't ever taught the value of money themselves. This got installed into me. So when I set up for Southampton Solent University at the tender age of 19, I turned up on day one, and there was a Barclays Bank stand in the main hall of the university. Me and my mate Lewis, we popped over as they had the actual biggest audience around their stand. And right there and then we were signed up to a student overdraft with 2000 pounds on it. And you can guess what happened from there, right? Freshers week, party time. And in just over three weeks, it was actually all gone. And so started my six year relationship with debt. Luckily at 25, I had an aha moment and I managed to change my relationship with money for good. I built up over 24,000 pounds in consumer debt by that point, and it was getting pretty bad. But I became obsessed with learning about money and managed to clear it in 18 months through a combination of income and side hustles. Now, what does this have to do with investing? Well, we all start from somewhere. Some of you watching this now will have some debt. Some of you might not. And there's no wrong or right place to start, albeit it would be nice to not have debt, of course. But wherever you sit right now, if you use today as an opportunity to put your flag in the ground and take a stand for wealth growth, we stand for wealth growth, then trust me, you'll be better off for it. Now, what I mean by this is if you start valuing your money differently and look for growth rather than material goods or a lifestyle that, quite frankly, nobody cares about other than you, then growing a six or seven figure investment portfolio becomes an actual reality. And the follow on from this, the approach that I and many others take is a simple path to wealth. Now, let's bust the myth. Investing isn't about being glued to stock charts or knowing the latest market gossip or whatever that might well be. It's very much about sticking to a simple, proven strategy that works over time. And one of the most powerful strategies is outlined in a book called A Simple Path to Wealth by J.L. Collins. If you haven't read it yet, I highly recommend it. Collins advocates for investing in low cost index funds. He actually talks about the Vanguard Total Stock Market Index, the VTI, he calls it all the time in the book, which essentially lets you invest into the entire U.S. stock market. Now, let's say I have a hundred thousand pounds invested in the Vanguard Total Stock Market Index. Obviously, Apple is inside it. But if it had a bad year and its stock price dropped by 20 percent, my overall portfolio might only dip one or two percent because Apple is just one piece of an entire puzzle. Comparing that to only owning Apple shares, your entire portfolio would be down by that 20 percent. Now, why is this so effective? Well, because over the long term, markets tend to go up. That is why the stock market was built. And in fact, history shows us that another index and probably the most famous one that you no doubt have heard on the news at least once or twice. The S&P 500 has actually returned an average of between nine and 10 percent annually over the past century. Now, in a 20 year period, the S&P 500 has never, I mean, never lost money if you invested for that 20 years. So playing the long game here is what we need to do. Think in decades rather than tomorrow or even next year. So let's have a look at a quick example. So let's say you invest 200 pounds a month into the S&P 500 starting at age 25, assuming an eight percent annual return rate. So below the rate that is actually returning by the time you're 65, you'd have seven hundred thousand pounds. That's the power of compounding and sticking to a simple, consistent investing strategy. But the key is to have that growth mindset. And a quote from J.L. Collins, which I actually love, is stop thinking about what your money can buy. Start thinking about what your money can earn and then think about what the money it earns can earn itself. Powerful stuff. Now, next up, I want to talk about gaining experience and avoiding bad advice. Now, experience is a crucial teacher in investing. There's no denying that. But here's the thing. It doesn't have to actually be your own experience. You can learn from other people's mistakes and I've made plenty of them and shortcut your own path to success. Now, one of the biggest traps new investors fall into is taking advice from the wrong people. Let me give you an example. We all know that, mate. Let's call him Dave, for example, who insists that they have cracked the code. Dave's convinced that his new crypto token or meme stock is your golden ticket to riches. And to be fair, Dave might have had one or two lucky wins in the past. But here's the truth. Luck isn't a strategy. When you act on hype, you're not investing. You are gambling and it might feel like you're in control, but you're essentially spinning the roulette wheel and hoping that it lands on your number. Take the 2021 meme stock frenzy as a prime example. GameStop, AMC, Dogecoin, you name it. Yes, people made some money. There is no denying that. But for every winner, there were countless losers. Many jumped in late, fueled by FOMO, that fear of missing out, only to see their investments plummet when the actual hype faded. And according to CNBC, one analysis found that the average amateur investor who bought GameStop at its peak lost around 60% of their money. Not good, right? But why is this such a common trap? Two reasons. Well, our brains love shortcuts. It's easier to follow Dave's advice than to do the research yourself. We're drawn into excitement is the second reason. Steady growth isn't sexy. Doubling your money overnight is. So here's my advice. Just don't follow Dave. Instead, follow a disciplined approach that prioritizes consistency over the quick wins. Investing isn't about excitement. It's about results. So next up, I want to talk about avoiding the noise. Another pitfall, getting caught up in the endless stream of market news and opinions is another factor here. Turning on the TV or scrolling through social media and you hear the pundits shouting, the next recession is coming and the market is going to crash tomorrow. You'll hear it hundreds and hundreds of times a month. And while some of this information might actually be useful, most of it I'm talking, most of it is designed as noise just to grab your attention. And here's the thing. Reacting to short term news often leads to bad decisions. And a study by Vanguard, one of the biggest investment providers on the planet, found that active investors. So these are the people that are constantly buying and selling, trying to outperform the market, by an average of four percent annually. Now, that's a huge chunk of potential returns that are lost because of emotional decision making. Now, ignore the daily ups and downs. And just remember that the market is designed to go up over time. That long term focus is really, really key. Now, next up, let's talk about my growth strategy. I want to take you behind the scenes of my own personal investment strategy. Over the years, I've refined what works for me and I've landed on the 80-20 strategy. You'll see lots of connotations of the 80-20 everywhere you look. 80 percent of the growth comes from 20 percent of the effort. When it comes to investing, it's an entirely different strategy altogether. Now, the first reason I split up my strategy into 80-20, and don't worry, I'm going to tell you what it means in a moment, is because I'm in my 30s. So I want to see significant growth from my portfolio. Whilst getting 8 to 10 percent from just investing into index funds is a great strategy. There's no denying that. I personally want to go for a little bit more than this. And it has actually paid off for me. I'm averaging around about 14.5 percent a year at the moment because of this strategy. The second reason is, again, because I'm in my 30s, I have 30 years ahead of me. Meaning I'm fine with taking a little bit more risk with my money than perhaps someone would be in their 40s, 50s or 60s. So what does this 80-20 actually mean? Well, first up is the 80 percent. And this is in three main index funds and ETFs. I have a large portion in a global index fund, a slightly smaller portion in the S&P 500 and an even smaller portion in a fund which is UK based, but is selective about its investments and focuses on sectors such as finance, energy and retail. This is the rock solid base of my portfolio. Now, the next 20 percent is split up. And this is where I take on a little bit more of a hands on approach with 15 percent of that 20 percent. I invest in individual companies that I believe have strong growth potential over the next five, 10 or 20 years. I'm not thinking short term. I'm still thinking long term, even with the individual plays. But here's the key. I don't pick stocks on a whim or a hunch or because Dave said so. Before buying, I spend at least two to three hours researching a company's financials, their leadership, their market position, their products, their potential growth. And my holdings are mainly in things that I know. So financial technology, e-commerce, retail. And I'm pretty clued up in this space. So what it does is it gives me an edge when it comes to understanding these companies and their potential within that market. And then the last five percent. Yes, I do dabble in some crypto, but with caution. Bitcoin and Ethereum are the two crypto currencies that I actually own. And I don't mess with coins or anything of that nature. Why? Well, because crypto is just highly volatile. But I see as a calculated risk worth taking for diversification. The key is only investing money that I can afford to lose in the higher risk investments. Now, next up, I want to talk about something which is just as important as where you invest, and that's the type of account. Now, in the UK, we have something called a stocks and shares. I said we also have something called a general investment account. But for me, I only ever use a stocks and shares. I said because of two main reasons. The first reason is tax. So everything I earn inside the stocks and shares, I say, including the gains, any dividends I get paid or any interest that I might earn isn't subject to capital gains tax and no tax at all. But in the general investment account, once I go over certain thresholds, I am subject to capital gains tax and we don't want that at any point. So in my opinion, always just use the stocks and shares. I said unless you're going over the 20000 pounds allowance. Now, my favorite right now is trading 212. They have commission free trading on stocks and funds, which is just excellent. And they have zero platform fees as well. Plus, they have access to a wide range of funds, ETFs and individual stocks. I recently moved over to trading 212 full time, and I just think the app and the experience with them is one of the best right now. And if you want to get started with them, you can today with a free stock worth up to 100 pounds when you deposit just one pound using the code gains, which is on screen right now, or you can simply click the link in the description below. Now, next up, I want to talk about sticking with the strategy. So let's talk about consistency, because this is where most people fall off the wagon. You've got the account set up, you've chosen your investments, and then life happens. It always happens, right? Life's tough. You forget one month to invest or worse, you panic when the market dips and then you pull your money out. Let me share what I do to stay consistent. Every payday without fail, I put money in my investment account, rain or shine markets up, down, left, right. I stick to the plan. The money goes in my account. This approach is called pound cost averaging, and it's one of the smartest ways to invest. Now, here's why it works by investing at regular intervals. Over time, the average that you pay is much lower. So this is why pound cost averaging or dollar cost averaging. You also come across that term is such a great strategy. Over time, your costs come down. And what it does is it just takes the emotion out of investing. And trust me, the emotion will creep in. You'll see those screaming headlines about those market crashes, those recessions, as we spoke about earlier, you know, all the doom and gloom that could be thrown at you. But here's a small fact that will calm your nerves. According to Morningstar, missing just the 10 best days in a market over a 20 year period can cut your returns in half. Half. Timing the market is a losing game. And anyone that says they can buy at the top and sell at the bottom is 100 percent lying to you. They can't. And it's been proven time and time again. Otherwise, we'd all be millionaires. Right. So sticking to your strategy here is how you win. All right. Let's talk about leveling up, because while consistency is key, increasing your contributions over time is where the real magic happens. So let's say you start off by investing 200 pounds a month. Pretty solid. Right. But then you get a pay rise. So instead of letting that extra income disappear into flat whites, holidays and another Netflix subscription that you don't need, what if you bump that contribution up to 400 pounds a month? That's an extra 200 pounds a month. And it might not feel like much at the time, but over 30 years with an average of eight percent annual return rate, you could add an extra three hundred thousand pounds to your portfolio just by that one small change. And that's the thing. Lifestyle inflation is one of the sneakiest wealth killers out there. You get a pay rise and suddenly your spending rises with it. And it's fine to enjoy your money. Life is for living. 100 percent factor that into your budget. But don't let lifestyle inflation eat up all of your gains. Every time your income goes out, increase your investments with it and your future self will thank you for it. Now, if you want to learn more about growing your own portfolio, then my program, Stock Market School, is the perfect next step for you. It's designed to teach people like you how to get started, avoid the common mistakes and build your wealth step by step. It's the I wish I had when I first started investing. So whether you're completely new to the stock market or looking to up your game, this is your chance to learn how to put your money to work. Now, you can find out more about this in the description below. And if you have any questions, drop me a line or a comment and I'll get right back to you. But if you want to stay on YouTube and learn more than I think the perfect next video to follow on from this is why net worth explodes after you reach a hundred K is the perfect explainer for what we were just speaking about earlier in this video. And it goes a lot deeper into the wealth building process. It's coming up on your screen right now. Just simply hit the image right there and I'll see you guys over there so we can continue learning together. It's been a real pleasure. Make sure you're subscribed. We put videos out every few days and I'll catch you guys on the next one. Peace.