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  • focus on buying these five types of

  • assets and you'll become very very rich

  • there are five main asset classes to

  • know about when you get started

  • investing the ultimate goal is to own a

  • little bit of each asset class so you

  • have a really strong diversified

  • portfolio in this video I'll explain

  • each of these five asset classes in

  • detail and I'll also give you some tips

  • on how you can get started investing in

  • them even if you don't have a ton of

  • money to invest right now and before we

  • get started go ahead and hit that

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  • week the first asset class is equity aka

  • stocks or shares when you buy equity you

  • become a co-owner or a shareholder of

  • the issuing company if the company has

  • 10,000 shares outstanding and you own

  • 1000 shares then you own 10% of the

  • company as an equity investor you get

  • returns in two ways when the stock price

  • increases the market value of your

  • equity stake goes up which you can sell

  • at a profit so that's the first way you

  • can make money investing in stocks

  • the second way equity investors make a

  • return is via dividends since you're a

  • part owner of a company you're entitled

  • to a piece of its profits and you

  • generally receive that in the form of

  • dividends dividends are typically paid

  • quarterly and back in the day every

  • shareholder would actually receive their

  • quarterly dividend as a paper check in

  • the mail but nowadays you'll most likely

  • get an electronic deposit in your

  • account that looks something like this

  • there's two ways to buy stocks you can

  • either buy stocks via a fund which are

  • pooled investment vehicles or you can

  • buy individual stocks now if you want to

  • invest in individual stocks you should

  • only pick stocks and invest in companies

  • that you're knowledgeable about and it

  • does take a bit of skill and knowledge

  • to do that so I talk more about how to

  • assess companies and what factors to

  • consider when picking stocks in this

  • video right here and if you also want to

  • learn more about funds then check out

  • this other video right here so if you

  • want to invest in a fund then that's

  • gonna be really convenient for you

  • because funds package a bunch of stocks

  • into a nice diversified portfolio this

  • is the best way to earn the average

  • market return and benefit from the

  • wealth building upward trend of the

  • stock

  • get without having to go down the rabbit

  • hole of analyzing individual companies

  • because let's face it not everyone wants

  • to do that I personally love doing that

  • but it's not for everybody

  • before you can invest in stocks you

  • first need to open a brokerage account a

  • brokerage account is kind of like a bank

  • account but it's a place to hold your

  • investments instead of holding cash so

  • brokerages that you can look into our

  • fidelity Vanguard TD Ameritrade and

  • Robinhood the second asset class is debt

  • or bonds when you buy a bond you become

  • a lender so bonds are very different

  • from stocks because unlike equity

  • investors bondholders don't own anything

  • you're just lending money to the

  • borrower in return for periodic interest

  • payments which are typically semiannual

  • and then at the end of the loan you get

  • the original principal amount back you

  • can invest in either government bonds or

  • corporate bonds government bonds are

  • issued by governments in order to fund

  • infrastructure projects education and

  • pay for all the other things that

  • governments do corporate bonds are

  • issued by firms that need funding for

  • projects and initiatives to grow the

  • company so you can either buy government

  • bonds or corporate funds the number one

  • factor to consider when investing in

  • bonds is creditworthiness as long as the

  • borrower is in good financial shape

  • you're pretty much guaranteed the

  • interest payments and the return of your

  • principal but if the borrower goes

  • bankrupt then you're out of luck Moody's

  • Standard & Poor's and Fitch are agencies

  • that publish blood ratings to show a

  • borrower's creditworthiness so this

  • makes it easy for you to do your due

  • diligence before you invest your money

  • in a bond triple-a bonds are about the

  • safest you can get with basically zero

  • chance of default triple-a companies

  • have a lot of cash flow compared to

  • their debt payments so it's a very low

  • risk of default for you as a lender and

  • the further you go down the ratings

  • table you'll see bonds offering higher

  • interest rates obviously as a lender you

  • want to get as high of an interest rate

  • as possible but the key is to balance

  • that with the risk of not getting your

  • money back when you see a bond offering

  • really high interest that's because the

  • borrower is in shaky financial condition

  • and there's a high chance of you not

  • getting your money back so they have to

  • pay really high interest rates to

  • compensate for this risk for example

  • Argentina's government bond is paying

  • around 12 percent whereas US Treasuries

  • are paying

  • only around 2% and go figure Argentina's

  • defaulted eight times on its debt

  • throughout its history whereas the US

  • has never defaulted so that's kind of

  • how it works you know you get what you

  • pay for and something's too good to be

  • true then it probably is hey and if

  • you're liking this video so far give it

  • a thumbs up to let me know bonds are

  • considered to be safer than stocks

  • because when a borrower goes bankrupt

  • bondholders are usually first in line to

  • get their money back where stockholders

  • are usually the very last to get paid in

  • a default situation so you get a lot

  • less upside with bonds and with stocks

  • but it also comes with less risk if your

  • goal is to grow your money then you'd

  • want to invest most of your money in

  • stocks not in bonds that's why generally

  • for young people for basically people my

  • age around to in 20s and 30s then

  • definitely most of your money should be

  • in stocks you can invest in bonds using

  • the same brokerage account that you use

  • for stocks however the minimum

  • investment is usually $1,000 so unless

  • you have tens of thousands of dollars to

  • invest in bonds it probably makes more

  • sense for you to invest via bond runs

  • which are again pooled investment

  • vehicles just like stock funds except

  • they do bonds and they give you access

  • to a wide range of bonds with no minimum

  • investment some example of bond funds

  • you can look up to jumpstart your

  • research is the fidelity long term

  • Treasury bond index fund or FN bgx and I

  • shares Treasury bond exchange-traded

  • fund or IES the third asset class is

  • cash and cash equivalents so anything

  • that's sitting in your checking or

  • savings account or in your wallet that's

  • cash and cash equivalents also known as

  • the money market are securities that

  • earn a little bit of interest and can

  • easily be converted to cash any form of

  • debt that has a loan term of one year or

  • less is considered a cash equivalent so

  • that's CDs one month's Treasury bills

  • three months Treasury bills six months

  • Treasury bills repurchase agreements and

  • commercial paper have you ever seen

  • those news articles talking about how

  • some companies are sitting on tons of

  • cash like Apple they always have

  • hundreds of billions of dollars of cash

  • on hand that's obviously not sitting in

  • a bank account somewhere because banks

  • don't pay any interest and a company

  • like Apple wouldn't just wouldn't do

  • that so often in the business news when

  • you hear about companies

  • holding onto cash they're actually

  • parking it into cash equivalents like

  • the money market and that's something

  • you can do - there's no reason to be

  • sitting on tens of thousands of dollars

  • or even thousands of dollars of cash

  • when it's earning nothing in the bank

  • account

  • so this is where cash equivalents come

  • in one way you can invest in cash is by

  • purchasing shares in the money market

  • fund like FDL x x and vm f XX you could

  • also purchase CDs otherwise known as

  • certificates of deposit either either

  • through your bank or in your brokerage

  • account or you could just find a savings

  • account that earns decent interests and

  • park your money there I have heard of

  • some savings accounts that pay up to 2%

  • which isn't too bad I do want to point

  • out that cash and cash equivalents are

  • not an asset class for long-term

  • investing even though they pay a little

  • bit of interest cash loses its

  • purchasing power over time due to

  • inflation so it's a very very bad idea

  • to keep all your money in cash or cash

  • equivalents it's really just meant to be

  • a place to park your savings but it's

  • not gonna provide you the kind of growth

  • you get from stocks and real estate

  • which leads me to the next asset class

  • on the list real estate real estate is

  • property it can be residential office

  • commercial industrial there's two ways

  • to make money investing in real estate

  • kind of like stocks when property values

  • go up you can sell them at a profit and

  • you can also collect rental income as

  • long as you own the property real estate

  • is a lot like stocks in that sense it

  • gives you a combination of growth and

  • income and people who like real estate

  • like it because it's something tangible

  • that you can just touch and see and it's

  • a pretty simple asset class to

  • understand

  • paper assets like stocks and bonds are a

  • bit harder to wrap your head around

  • another benefit of real estate is that

  • it's the only asset class where banks

  • will lend you money to buy it you can

  • always get a mortgage to buy a property

  • but very few banks are gonna lend you

  • money to invest in stocks as long as a

  • cash flow from the property pays the

  • monthly mortgage you can use less of

  • your own money and still enjoy the

  • benefits of owning the property this is

  • called leverage and if used wisely can

  • generate a high return on your money