If you are aged 35 today
it’s likely you think
investing is gambling.
After all, we saw our parents get
burned in the stock market
and saw their distress.
And it’s true!
Investing can be like gambling.
Because investing deals with
foretelling the future
You invest today’s money
into a company,
and hope it grows to return
as tomorrow's profit.
But no one has a crystal ball.
Many companies have
crashed and burned.
Leaving you with a
residual impression
of the emotions that
investing caused.
But what if there’s a company
that, across history ..
has always grown and
has never gone bankrupt?
“What is this magical company?”
you might wonder.
Well, simply put ..
it’s Economy inc.
Economy Inc is generally
all businesses as a collective whole
But for now, let’s think of
Economy Inc as a single company.
Economy Inc – has done
very well for itself over the years
and has kept growing,
growing and growing.
Why has Economy Inc
been so successful?
Well with emerging technology,
Economy Inc becomes
more productive – it’s able
to produce more with less.
And as the population grows,
there are more people to consume
what Economy Inc produces.
The second benefit?
Economy Inc can never go bust.
Companies fall, and some companies
rise under Economy Inc
That’s the natural selection of the
open market economy at work.
So the simple solution?
Just invest into Economy Inc!
"But let’s get real here,"
you might say
Even I know I have to be
a trillionaire to invest
in all the companies that
form Economy inc!
Well, actually you can ..
.. all for less than a hundred bucks.
Enter index funds
But first, we have to understand
what an Index is.
Think of indexes as rules:
America’s has the S&P 500 “rule”
Which is the top 500 listed
companies in the U.S.A.
But why stop there?
There are indexes that allow you
to invest in thousands of companies
in stock markets from
all over the world.
“Great!” you might say.
So when should I invest in
an index fund?
Well the short answer is:
as soon as possible.
The world GDP grows roughly at
a rate of 7% each year.
Boring!
If you keep at it, after 30 years,
it would have increased by 760%.
As you can see, slow compounding
growth is exponential,
but it takes years!
So.. investing now but get your
rewards years and years later..
This has been a broad overview
of a strategy called:
passive index investing
There are many different
concepts to be understood
before you head out there to
invest in an index fund.
Such as how do you evaluate
an Index fund?
How often should I invest?
Well, stay tuned and we’ll
revisit these topics in future videos.
