How to Invest Smart in 2025: Stock Market (Even for Beginners!)

Don't listen to this 17 year old pimply youtuber who is a millionaire or who claims to be a millionaire riding a rented Ferrari living in the parents basement. When they say cash is trash, don't listen to them. You do have to own some cash. Okay, so let me just say cash is not trash. But again if you understand where they're coming from, if you understand inflation, knowing that the value of your cash now is going to be less than the value of that same cash in the future, almost everybody here you understand what inflation is. Crypto Bros. And cease my sis. Because the government just printing money, printing money, printing money. It's called quantitative easing. So there's more cash in the system than products for the cash so the value goes up. It's a bit complicated. There are many other things that contribute to inflation. Actually is it a good time to invest? Should you buy the deep? I mean with the recent downturn in the stock market, many doctors and obviously professionals are wondering if it's a good time to finally take the plunge and start investing. But what if I told you that many people are jumping into the stock market but have no idea what they are really buying and could end up losing a lot. It sounds crazy right? Well it's happening every single day, even among high earning professionals like medics. Look, let me show you how to avoid that. I'm Dr. Andy Egwim. I'm 20 plus years investor, exalted NHS GP and the founder of Money Wise Dr. Our resources have already helped over 10,000 medics make smarter financial decisions. And what you're about to watch is a rare behind the scenes look into one of my most requested investment masterclasses for doctors. This session was originally part of a four week deep dive into investing that I thought a small group of UK based medics cost a lot of money to attend and many of doctors who have joined have gone on to become confident and safe investors. But for this weekend I wanted to give you this powerful section completely free. In this video I'll walk you through why cash is not trash. Despite what the finance Bros say, what earnings, dividends and book value actually mean in plain English and how to avoid overpaying 10 times more than what a stock is valued at, even when it's popular. And to make it all make sense, I'll use practical examples that you can understand. Clearly you never look at investing the same way again. So grab a cuppa, take notes if you want to and let's just dive into it. I've got a whole session on index fund we'll look at, but let's look at basically the understanding different types of investment vehicles. Now if you look at the sort of like the little pie chart I've put there, it's just to show you different asset classes, is by no means all the asset classes existing in the world, but it's just to give you a general idea of asset classes. I've added cash. I added cash just last minute. I, I left it there like it's cash with an investment. But I always teach people to have an emergency fund and I thought no, no, if I don't add cash I might forget to mention to you that you do have to own some cash. Don't listen to this 17 year old pimply youtuber who is a millionaire or who claims to be a millionaire riding the rented Ferrari, living in the parents basement when they say cash is trash. Don't listen to them. You do have to own some cash. Okay, so let me just say cash is not trash. I like being able to write something. Cash is not trash. But again, if you understand where they're coming from, if you understand inflation, knowing that the value of your cash now is going to be less than the value of that same cash in the future, almost everybody here, you understand what inflation is. And if you don't understand, feel free to pop it inside the chat box and I'll cycle back and talk about inflation. But basically what it means is that if you just had £100 and you just put it under your pillow for the next 10 years, what that £100 is able to buy is very likely going to be far less or a bit less than what it can buy now. So that's because of a number of factors and the crypto bruise and cease my says because the government is just printing money, printing money, printing money. It's called quantitative easy easing. Borrowing money, borrowing money, printing money, printing money. So there's more cash in the system than products for the cash. So the value goes up. But there is, it's a bit complicated. There are many other things that contribute to inflation actually but the bottom line of it, what you need to understand is that when it comes to inflation it means that the value of your money now is not as what, what it will be in the future. So inflation is the reason why I don't hold more than a percentage of my portfolio in cash. I try not to keep more than my emergency fund. Yeah, mommy has raised an important question so I think we should address it now. So inflation is the main reason why you are investing. That's why you want to invest. Inflation is the main reason why you don't just put your money in the bank. And inflation is the main reason why if you just buy bonds, because bonds used to be like, oh, this is the only investment you. If you go back like 100 years before the stock market became so popular in the 1920s, leading to the 1929 crash, people thought investment was just buying bonds of companies, bonds of the government and the bond, they pay you a premium. So they, they pay you with these coupons twice a year. But then stock market became popular. Bonds, most times inflation usually leaps over them, like as at yesterday when the market closed. So yesterday, Friday, I think UK bonds, UK government bonds, we call them gilt. Again, that's one of the terms I've put in that resource I sent to you, guilt. So it's called guild. And I don't want to go into the history of why it's called guild, the paper that had the gilded edge and all that, but if you hear guilt, just replace it in your head with UK government bonds so that, that makes it less confusing. And I know your banker friend might say guilt and say things like Libor rates, but just think about it as bonds. Bonds tends to be outpaced by inflation most of the time. Not all the time, but most of the time. So that's why we invest in things like stocks and other, other things as well. All right, so let's go back to types of investments and I'll address the emergency fund. Now, number one is cash. When we talk about cash, we talk about the money in your bank, money in a maybe high yield savings account, money that if you want it within 24 hours, you can get it. That is what we refer to as cash. And why do you really need to hold any cash? I don't want to answer this question because I know a lot of people here have already answered it, either on my podcast or in our one on one session and our group session. So can someone tell me why do you need to leave cash and what the cash is called and how much you can leave or how much you leave? Tell me what you do. Yeah, so the cash will be like your emergency fund. So money that is easily accessible should you need money for an emergency, ideally should be like your expenses in one month by three to six months. So for me, I did six months. Impressive. Yeah. Okay, thank you. So that's impressive. So basically your emergency fund, I'm not saying that's the only cash you keep. You can keep Cash for many other reasons. But this is, if you don't keep any cash at all, this is the one you should definitely have in your portfolio. So, emergency fund is three to six months worth of your living expenses and for some people it's 12 months. Sometimes I feel more comfortable having 12 months because I don't have a salary job, I don't have an NHS pension and, you know, even though I've got some investments and I've got things and all that, but also I don't have any sort of like sick pay, so I like to keep an emergency fund that is quite a good amount. But I usually say to people, before you start investing, seriously, try to have at least three months worth of your living expense. So that's the answer to that question with me. At least three to six months worth of your living expense. If you don't know what your living expense is, that's where to start. There's that video, which we'll share as well in the comments and I've also uploaded for you in the resources I shared is 7 things you need to do before you start investing. And one of them is have an emergency fund, have income protection, life insurance, understand how to invest, which you are learning now. So emergency fund should be three to six months worth of your expenses. How to find out what your expenses are is quite simple really. It's hard to do because most times we are, every day we are busy, we are going, going, going. But if you can bring out an hour or two hours, Sit down. I don't have to do this forever. You can do it once a year. Sit down. Look at your credit cards, look at your bank statements, look at your checkbook if you still use checks, find out how much do you typically use in a, in a month. And if you're not sure if, take the average of 12 months to figure out. And someone yesterday, my seminar yesterday for a charity group, they said it was your salary. Someone said, is your salary times six months? And I said, no, no, no, no, no. Your salary for six months is not your emergency fund, it's your expenses, whatever you need. You think about your energy bills, your car payment, if you've got car payments, your house payments, if you use rent, the mortgage, your children's, if you've got children and you're paying for them to do karate, taekwondo and cello lessons or violin lessons and all that, figure out how much do you really need? And of course, if your children can do without the cello lessons, maybe it might not be part of the emergency fund. Once you figure out what it is that you spend in a month, multiply by three, or you can go the other way. Check what you do in 12 months divided by 12 and that gives you one month's worth. Then multiply by three. That's your emergency fund. Does that make sense, Wumi? Does that clarify your point? Thanks. Yeah. All right. That's brilliant. Okay, so I want us to all move at a pace that everyone is. Everyone is following, so that when we get to that a bit more technical, we can all be there. So that's good. Now, apart from keeping money in cash, you can also keep money in cash for other reasons. Obviously, if you have somebody, your child is planning to go to school soon, you're about to make an expense, you have a wedding, I know someone has an exciting wedding coming up soon. You have a wedding or you have a party, or you have a purchase you're planning to make. You're planning to buy a house. Your money should not be in the stock market. It should be in your lifetime ISA or whatever it should be. If it's not your first house, you should not be. It's not your first house. You can't use the lifetime isa. But if it's your first house, you can use the lifetime isa. Some investors who are sophisticated, they keep cash when they want to make a big purchase. Like I know that Warren Buffett, Berkshire Hathaway, their company, they are sitting on about $180 billion worth of cash, if not more. I don't tend to suggest that for beginner investors because I feel like time in the market. So the time you spend in the market beats time in the market. Obviously, if you're investing in index fund and all that, there's no need to time the market can just buy goods. Companies invest in index fund and then you settle down. And also, I've not really had a time where I sat down and I was thinking, oh, I'm going to save some money, because I think there's a crash coming. Everyone knows there will be a stock market crash, but nobody can say with any degree of accuracy consistently when it's going to be. And you still see in the history of stock market crashes, that stock market crash is not news. It's just good for business news. They like to use it to keep us entertained and excited and frightened and all that. But crashes happen, market bubbles happen. It's just the nature of the stock market. There are crashes, there are bubbles. It's just being able to do some consistent investment. Knowing what you're doing means that you're more confident to live through that period. I don't become greedy when everybody's greedy. So you are. I'm a bit more. I'm a bit fearful when people are greedy. I'm not actually running and buying a lot of things when the market is bubbling. It's the other way around. When people are more fearful. It's easier for me to find bargains. It's a bit tough sometimes to find bargains when the market is booming. Because I'm looking for a bargain and I'm looking for a discount. I'm looking for that, what I call margin of safety. All right, so that's cash. I will come back to margin of safety when we talk about valuation. I'm just going to pack it here. So that's cash as an asset. Now, there are the other asset classes. There's common stock and it's just basically the shares of a company, the shares of a business. Again, let's go back again to basics to help us understand this thing. When we talk about common stocks, it's not a paper, it's not something on the screen that you just see. It is part of a business, your own part of a business. Now, let's think about it this way. Yes, let's say, Mary Jane, you own a business. I know you're a doctor, you own a hospital, let's say, and the hospital itself is a business. You have staff, you are generating some income from the hospital. It's a private hospital. All you do there is heap replacement and knee joint replacement. So you're even excited that the labor government is about to hand you quite a lot of business very soon. So it's generating some income, it is a business. But let's say there are 20 people who invested into that business. 20 people. So there is you, there's your partner, I mean, your husband or your, you know, your spouse. And then you have like maybe your business partners, the other. You have other surgeons who are part of it. And you guys are in a nice area of London and then you have an investor who just invested money, but they are not part of the team running it. But basically there are 20 of you who brought in money and you own that business. I'm going somewhere with this. Let's say that the business is generating, every year, is generating a total of £1 million. So let's just use 1 million for use of calculation and for it to generate £1 million, it means that every year you're doing at least 100,000. So by the end of the year generating about £1.2 million or thereabouts. Follow me on this now, along the line as you go. This business is valued because of the amount. Remember what we said at the beginning. Remember those cows and those poor files? We are talking about your business. The egg is generating, the milk is generating, is the £1 million. That's a lot of milk is generating. But that is not the cow. That is not the foul. That's not the chicken. It's still there. So that's the business. But someone comes and says, I want to buy this business off here. And Mary Jane, will you agree to sell that business for £1 million? Okay, does someone want to make it go? If you have a business generating £1 million, but you will agree to sell it for £1 million? Yes. No, no. Okay. Obviously this one seems obvious, right? Yeah, it's obvious, obviously, because that's the. The business is able to generate that much cash flow without the value of the business itself, the valuation of the business itself. So I wouldn't sell it. Definitely not. Absolutely. So that is obviously from the words they're using, cash flow. You understand where I'm going. So I make the. I made the obvious examples. Thank you so much, Siraj. I made the obvious examples so that when you move forward, you see how ridiculous it is for people to go and invest in the stock market without even attempting to establish the value of the business. Or even when it's clear that the business is overvalued. They don't care who is popular, they're buying it. The PE ratio is 1000. How are you going to get your money back anyway? Let me not get too excited. So Mary Jane's hospital is making 1 million pounds. She will not sell it for 1 million, obviously. Now will she sell it for 10 million? Maybe we can talk about that. You see, it's getting a bit interesting now because the investor is saying, I want to buy for 10 million, but I'll not pay you all the 10 million. Now, I'll pay you 1 million per year for the next 10 years. That's VC type of stuff. But basically the idea to understand is that the hospital itself is the business. The 20 people who own this hospital, they have a say. And when you sell it, the £1 million you make per year, they have a share of the profit. Does that make sense? Yes. So they have a share of that £1 million. Let's just say one. Let's just say £1 million. You make £1 million every year. I'm using hospital because I know that a lot of us here are medical. Well, everyone here is medical. So you understand what I'm saying.