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How to Invest for Beginners (2026)

2023-02-26 · Long video (solo, talking head or whiteboard) · Ali · recording, 20:15 · watch on YouTube

Topic: Money and investing · mode: Explanation and tutorial · tags: Sponsor segment present, His own numbers, Lesson from a book

Ali's beginner's guide to investing: beat inflation through stocks and shares, skip stock picking for a broad index fund such as the S&P 500 bought through a broker, hold through crashes, gamble on crypto only with money you can afford to lose, and, as "fast lane" investing, put money first into your own skills and business.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — Why investing confuses beginners, and the four parts of the guide

00:00:55 — Part 1: the basics and philosophy of investing

  • ★★ The point of investing, Ali says, is for your money to make more money: money kept under a mattress or in a bank current account loses value to inflation. — 00:00:58
  • ★★ Unlike a house, which earns rent, most asset classes have no rental-like income, Ali explains: you buy and hope to sell at a higher price, some stocks and shares being the main exception. — 00:01:57
  • ★★★ Ali calls stocks and shares the basics of investing for normal people: unlike a house they need no large sums, unlike crypto no huge risk and gambling, and unlike angel investing no accredited-investor status. — 00:02:55

00:03:18 — Part 2: why and how to invest in stocks and shares, index funds and the S&P 500

  • ★★ Buying shares, Ali explains, means buying a percentage ownership of a company such as Apple, which you cannot do directly but only through a middleman called a broker. — 00:03:24 · Apple
  • ★★ Besides a rising share price, Ali says, some companies pay dividends, a share of their profits, which works like rental income on a house; in the UK, BT (British Telecom) pays dividends. — 00:03:53

  • ★★★ Agreeing with Warren Buffett, Ali says beginners who are not full-time financial professionals should not try to pick stocks: the average person cannot know which stocks to buy or when, and can instead buy all of America through an index fund. — 00:05:21 · United States

    “you should not try and pick stocks.”

  • ★★ An index fund, Ali explains, is a basket of stocks that tracks a stock market index, such as the S&P 500, basically the 500 biggest companies in the US. — 00:06:02 · S&P 500, United States

  • ★★ The S&P 500 weights companies by size, Ali says: Hasbro makes up 0.21% of it and Apple 6.4%. — 00:06:31 · S&P 500, Apple
  • ★★ The point of the S&P 500, Ali says, is a single number you can graph over time for how valuable the US stock market is, since most of that value sits in these 500 companies. — 00:06:31 · S&P 500, United States
  • ★★ Ali's example: $1,000 put into an S&P 500 index fund is split across its 500 companies by their weighting, so 6.4% of it, $64, is in Apple stock. (hypothetical) — 00:07:39 · S&P 500, Apple
  • ★★ Warren Buffett (quoted): Warren Buffett, as Ali relays him, says that with an extra $100,000 to invest you should put it straight into the S&P 500 or another big index fund, so your money tracks the market. — 00:08:08 · S&P 500
  • ★★ Putting money in the S&P 500, Ali says, spreads it across the 500 big US companies, which he thinks will go up overall over time, so you do not have to think too hard about it. — 00:08:37 · S&P 500, United States
  • ★★ Ali says studies, surveys and a challenge by Warren Buffett show that very few funds outperform the S&P 500, and a fund that beats it one year is unlikely to do so the next. — 00:09:06 · S&P 500
  • ★★ Every person Ali knows who invested by picking stocks has lost, he says, and every one who invested in an index fund has made money over time. (overstated) — 00:09:06
  • ★★ To buy an index fund you need an online investing platform as a middleman; since these vary by country, Ali advises googling stocks and shares investment platforms in your country. — 00:09:35

00:10:05 — Trading 212 sponsor read

  • ★★ In the UK Ali uses Charles Stanley Direct, the first investing platform he started using in 2015, and Vanguard, which he calls super big and super legit; for investing in individual stocks he now uses the app Trading 212. — 00:10:05 · United Kingdom

00:11:51 — Part 3: common fears, concerns and questions about investing

  • ★★ Ali says you are broadly very unlikely to lose money because a platform such as Vanguard collapses overnight; the risk is the value of your investments falling. — 00:11:51
  • ★★ Ali puts the fall of the markets in the 2008 financial crash at something like 60%, a figure he gives as a guess. (hedged) — 00:12:02
  • ★★★ Ali advises holding on when markets crash: even money invested just before the 2008 financial crisis recovered by 2012 and would have doubled or tripled by now if left in. — 00:12:31
  • ★★★ The stock market broadly goes up over a long enough time horizon, Ali says, as house prices do. — 00:12:31
  • ★★ The longer you leave money in index funds, Ali says, the more it compounds; he cites the line purportedly said by Einstein that compound interest is the eighth wonder of the world. — 00:13:00
  • ★★ Ali puts the chance that all 500 of the biggest US companies drop to zero value overnight at basically zero percent; if they did, the world would have bigger problems. — 00:13:00 · United States
  • ★★★ Ali bets the stock market rises over time because every day thousands of employees create value at companies such as Apple, researching and building new things like an extra iPhone camera, so their value should rise. — 00:13:29 · Apple, iPhone
  • ★★ You do not need to be rich to start investing, Ali says: depending on the platform, Vanguard needs about a hundred pounds and Trading 212 about five pounds, and it varies by country. (hedged) — 00:13:58
  • ★★ Besides stocks and shares, Ali invests in real estate and has a few properties in his portfolio. — 00:13:58
  • ★★★ Ali says he has put 265K into crypto and it is now worth 200K, a loss of 65K. — 00:14:28
  • ★★★ On crypto, Ali says that if you want to take the gamble, fine, but only put in money you can 100% afford to lose. — 00:14:28

00:15:18 — Part 4: fast lane investing, the alternative approach to building wealth

  • ★★ Ali takes the terms slow lane and fast lane from MJ DeMarco's book The Millionaire Fastlane, which he calls a really good book. — 00:15:19
  • ★★ Ali calls slow-lane investing, saving into stock market index funds, a very slow way to build wealth, though investing in index funds is fine and he does it too. — 00:15:48

  • ★★★ Fast lane investing, Ali explains, means investing in yourself and your own business instead of in someone else's business such as Apple, Amazon or Google. — 00:16:17 · Apple, Amazon, Google

    “you're investing instead in yourself and in your own business.”

  • ★★ Ali says the S&P 500 goes up by 7% a year on average, so $1,000 put in becomes on average $1,070 in 12 months. — 00:16:17 · S&P 500

  • ★★ Ali's example of investing in your own skills: a hospital healthcare assistant on 15 pounds an hour takes a 100-pound course to become a phlebotomist on 25 pounds an hour. (hypothetical) — 00:16:47
  • ★★ The return on 100 pounds spent on a course that raises your pay is way higher than the S&P 500's 7%, Ali says, because it increases your own value to the market and your ability to make money. — 00:17:16 · S&P 500
  • ★★ If you are broke, Ali advises, do not buy fancy courses or take out loans for them: find the free information on the internet and YouTube. — 00:17:45
  • ★★ Many of Ali's friends with a few thousand pounds spare put it in the S&P 500 for 50 years of growth, when a weekend course on a skill would let them make far more. — 00:17:45 · S&P 500
  • ★★★ The other kind of fast lane investing, Ali says, is investing in your own business: the way to get rich quickly, in the next 10 years rather than 70, is to build and own a business and increase its value rather than giving your money to Apple or Tesla. — 00:18:14 · Apple, Tesla
  • ★★ Ali backs himself to start a business, teach himself to run it and make it return more than the 7% he would get in the S&P 500. — 00:18:44 · S&P 500
  • ★ Ali describes Alex Hormozi, whom he has interviewed, as a $200 million entrepreneur. — 00:18:44

  • ★★★ Alex Hormozi (quoted): Alex Hormozi, as Ali relays him, contrasts investing in the S&P with investing in the "S&ME": you get a significantly higher return investing in your own ability to make money than in any market. — 00:18:44 · S&P 500

    “investing in the S&P versus investing in the S&ME.”

00:19:25 — Part-Time YouTuber Academy plug, his review of The Millionaire Fastlane, sign-off

  • ★★ Ali calls MJ DeMarco's The Millionaire Fastlane the best book he has ever read on making money quickly, meaning in the next 10 years rather than the next 60. — 00:19:42

Threads in this video

  • restate · How should you start investing? — Agreeing with Warren Buffett, Ali says beginners who are not full-time financial professionals should not try to pick stocks: the average person cannot know which stocks to buy or when, and can instead buy all of America through an index fund. (00:05:21)
  • refine · How should you start investing? — The other kind of fast lane investing, Ali says, is investing in your own business: the way to get rich quickly, in the next 10 years rather than 70, is to build and own a business and increase its value rather than giving your money to Apple or Tesla. (00:18:14)
  • restate · Should you invest in crypto? — On crypto, Ali says that if you want to take the gamble, fine, but only put in money you can 100% afford to lose. (00:14:28)
  • refine · Should you pay for courses and coaching? — If you are broke, Ali advises, do not buy fancy courses or take out loans for them: find the free information on the internet and YouTube. (00:17:45)
  • restate · Should you pay for courses and coaching? — Many of Ali's friends with a few thousand pounds spare put it in the S&P 500 for 50 years of growth, when a weekend course on a skill would let them make far more. (00:17:45)
  • restate · How do you reach financial freedom? — The other kind of fast lane investing, Ali says, is investing in your own business: the way to get rich quickly, in the next 10 years rather than 70, is to build and own a business and increase its value rather than giving your money to Apple or Tesla. (00:18:14)

Mentioned

Central: fast lane · index fund · S&P 500 · Warren Buffett

Also: People: Albert Einstein · Alex Hormozi · MJ DeMarco

Projects: Part-Time YouTuber Academy

Works: The Millionaire Fastlane

Organizations: Amazon · Apple · Berkshire Hathaway · BT · Charles Stanley Direct · Google · Microsoft · Netflix · Tesla · Trading 212 · Vanguard

Concepts: angel investment · compounding · dividend · inflation

Places: United States

Events: 2008 financial crisis

Products: iPhone

Also centred on index fund: How to Invest for Beginners · 9 Passive Income Ideas - How I Make $27k per Week · Revealing ALL My Investments at 27 · How to Invest as a Teenager

Also centred on Warren Buffett: The Book That Changed My Financial Life 🤑 · How Warren Buffet is worth $108 Billion

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