Short monologue advising new investors to buy broad index funds (e.g., S&P 500 or a 2,000-company developed-world index) instead of picking individual stocks. The speaker emphasizes diversification, automation (regular direct-debit purchases), lower fees, passive investing benefits, and claims most active managers underperform the market.
99%
£20 per month
If you're a brand new investor, you don't know how to do all this, you could actually buy the whole market rather than trying to find the needle in the haystack. Which company can do better? You can buy all the top 500 companies in the US which represents the market average S&P 500, or you can buy all the top 2000 companies in the developed world. Now, doing this thing is not that difficult and obviously it's not personal financial advice for you. It's just so that you know it's existing and then you can go and look into it. Now you can buy that basket of index. That way you are diversifying and reducing your risk. You're not putting all your eggs in one basket. So you're not putting all your eggs in one basket. And you can actually automate these things. You don't want to be disciplined about it. If you're not buying individual companies and you are buying the index, you can actually set up a direct debit that goes out every month, lands in your account, and you set up the account in a way that whatever money is landing there going into buying this index fund. So you are buying a broad, well diversified index fund. I can't begin to go into the advantages including you pay less fees and fees compound. You are investing without actually going to do all the headaches. You are not flying to Omaha or doing investors call or analyzing balance sheets. But you are just investing passively. And one good thing, 99% of active investors, hedge fund managers, experts, people who are finance dealers, they wear a tie and suit and everything. 99% of them underperform the S&P 500. So even if my grandmother who is late now, if you didn't know, if she didn't know what she was doing, but she was putting £20 every month in S&P 500, she's going to beat all the people in Wall street. Apart from 1%. Those 1%. We hear about the Warren Buffett type of people, the celebrities. And from an investor's point of view, yeah, okay, some years I make 87, some years I made 75% and all that. But I'm also just managing my money. I'm not managing a billion dollars or something. So 99 of active hedge fund managers, people who are out there trading, don't even with all their mass and computer and everything, they know they don't even beat you. If you are just investing passively in the index fund.
