How to invest for a beginner in 2024
I cannot save money. I spend my money here and there and there is no limits to spending, sounds familiar. Yes, it is.
I am not a financial expert, but I have faced a problem with my money management. I still have a problem with money. But I got concerned about my habit of money spent. I earned a bit of money working at a restaurant and from my side hustle, which is enough.
Let’s talk about the most important thing in the early stages of the career, which is money management. When it comes to managing your money, you have to track where your money goes and how you spend it. This video will help you (Link)
Let’s talk about investing. Why do you invest money in stocks in your 20s?
Warren Buffett famously said, “The best time to plant a tree was 20 years ago. The second-best time is now.”
The best time to invest is when you’re in your 20s, with fewer responsibilities, and not higher risks, Great!
Where to invest (I don’t have any ideas)
You’re a complete beginner and don’t have enough ideas about the stock market. It’s ok not having any ideas about how stock works and how to invest in it.
“It’s not the question of leaning” – Elon Musk
Just spending 2/3 block hours can give you overall ideas of an industry.
Check out some of the articles and videos if you don’t have tiny ideas:
- How to invest for beginners (Video by Ali Abdaal)
- Investing for beginners (Article by Forbes)
Ok, this is nice. Now you may know about what is stock and how it works!
Where to invest (I don’t have any ideas)
The first method of investing is the S&P 500.
I like this method because it somewhat “guarantees” the results. Historically speaking (for more than the last 100 years) – people who have invested in S&P have done well.
The S&P 500 is nothing but a weighted basket of the 500 biggest companies in the USA. If you think the USA will continue to do well, S&P is a safe bet.
However, if you need to sell your stock in the next 5 years – S&P will not work.
Here’s how I will recommend investing in S&P to become a millionaire:
- Invest $1686/month
- The average annual return will be 8%
- Time required: 20 years
You will become a millionaire (yes, you will actually have $1000000) in 20 years if you follow the above numbers.
Now, $1686 is not a small amount. So, here’s a more realistic plan, but it will require more time.
- Invest $664/month
- The average annual return will be 8%
- Time required: 30 years
I know 20 or 30 years seems like a lot. But time flies and also, you don’t always need a “million USD” to live a good life.
Let’s imagine you want USD 500,000. Here’s how to do it:
- Invest USD 843/month for 20 years
- Or invest USD 337/month for 30 years
Now, I will give you a basic plan too. Assuming all of us can save $100/month – this is how it will look like in 10-year windows.
If you invest $100/month from today, in S&P 500, you will have:
- $18,000 in 10 years
- $60,000 in 20 years
- $150,000 in 30 years
Yes, compound interest is magic.
If you take one thing from this email, it is that you should immediately start investing in S&P 500 and you should do that every month.
2nd Method: Investing in Crypto
Unlike the S&P 500, this is risky. This is very risky, and you might lose everything. So be careful.
I invest 80% of my money in S&P and 10% to crypto, 10% to other businesses.
I think you should do the same.
If you invest $100 in Bitcoin every month from now, this is what it might look like in the future:
- $75k in 10 years
- $1.5 million in 20 years
- $29 million in 30 years
This is somewhat unrealistic – because I had to predict it based on a small history. BTC doesn’t have a history like S&P 500 and many still consider crypto as a speculative asset.
But yes, I think you have a higher chance of becoming a millionaire with crypto than the S&P 500. But the risks are also way higher.
What if you invest $100/month in ETH? Here’s what it will look like:
- $53k in 10 years
- $685k in 20 years
- $8m in 30 years
Again, the above examples consider that BTC and ETH will perform similarly as they did in the last 10 years.
Here’s what I think you should do if you are under 40 years old:
Every month, invest $100 in crypto and $100 in the S&P 500.
If you can do more, add more to the S&P 500, don’t add more to crypto.
How to Invest
If you are from the EU / North America – you can use any platform you want. I like Coinbase.com. Trade Republic is also nice. A lot of people use Revolut or Robinhood.
There are also a lot of platforms that can help you!