How to Buy Stocks

Summary

Earn Your Leisure Podcast Episode Summary: "How to Buy Stocks"

Podcast Information:

• Title: Earn Your Leisure
• Host/Author: EYL Network (Rashad Bilal and Troy Millings)
• Description: Earn Your Leisure provides behind-the-scenes financial insights into the entertainment and sports industries, highlights entrepreneurs' backstories, breaks down business models, and examines the latest trends in finance. It blends business education with pop culture for a unique and engaging perspective.
• Episode: How to Buy Stocks
• Release Date: January 19, 2025

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Introduction to Stock Investing

In the episode titled "How to Buy Stocks," hosts Rashad Bilal (A) and Troy Millings (B), along with co-host Chris (C), delve into the fundamentals of investing in the stock market. They aim to simplify the process for listeners who are new to investing, providing step-by-step guidance on getting started.

Choosing a Brokerage Account

Understanding Brokerage Accounts: The conversation begins with a clear explanation of what a brokerage account is and its significance in stock investing. Troy emphasizes, "A brokerage account simply allows you to buy stocks, sell stocks, invest" ([03:57]).

Recommended Brokerage Firms: The hosts discuss various brokerage options, highlighting both long-standing firms and newer, user-friendly apps:

• Traditional Firms: Vanguard and Fidelity are recommended for those with a long-term investment mindset. Troy states, "Vanguard and Fidelity are phenomenal... You're buying and holding for at least 10 years" ([10:29]).
• Modern Platforms: Robin Hood, Webull, Interactive Brokers, and Tastyworks are mentioned as excellent choices for those seeking more interactive and modern interfaces.

Setting Up Your Brokerage Account

Account Setup Process: Chris elaborates on the practical steps required to set up a brokerage account. This includes downloading the brokerage app (e.g., Charles Schwab, Fidelity) from the app store, filling in personal information such as Social Security number and email, and linking a bank account to fund the brokerage account ([05:52]).

Security and Privacy Concerns: A notable moment occurs when Rashad expresses hesitation about sharing personal information: "I ain't putting my social in there" ([07:01]). Chris responds firmly, "You gotta provide this information" ([07:04]), emphasizing the necessity of completing these steps to establish the account.

Funding Your Brokerage Account

Funding Methods: Chris explains that funding the brokerage account can be done through two primary methods:

1. ACH Transfers: Typically take 3-5 days to process.
2. Wire Transfers: Provide a faster alternative, often completing within 30 minutes. Rashad shares a personal tip: "When I get the wire instructions from E Trade, sending money reaches my account within 30 minutes rather than five to seven days" ([07:54]).

Importance of Timely Funding: Rashad highlights the importance of timely transfers, especially in volatile markets: "Five to seven days in the market can change a lot... you could have lost a lot or you could have gained a lot" ([07:38]).

Selecting Investments

Public vs. Private Companies: Chris distinguishes between public and private companies: "Public companies, anybody can own it, like Tesla, like Microsoft. A private company is like Earn Your Leisure" ([05:52]). Investing in public companies allows individuals to benefit from their growth and value increase over time.

Avoiding Common Mistakes: A critical point raised is the misconception that simply transferring money to a brokerage account equates to being invested: "Just because you open it, you put it in, now you're invested into the stock market. That's not, you're not invested" ([09:31]). Chris warns that funds often remain in a money market, not actively invested, unless deliberate investment decisions are made ([10:08]).

Tips and Best Practices

Active Management: The hosts stress the importance of actively managing investments. Chris shares insights from his experience as a financial advisor, noting that many individuals neglect to direct their retirement funds into actual investments, leaving them stagnant in money markets ([09:31]).

Long-Term Investing Strategy: Troy advocates for a long-term investment perspective, suggesting that investors should aim to "buy and hold" for extended periods (at least 10 years) to maximize growth and mitigate short-term market volatility ([10:29]).

Utilizing Multiple Platforms: Rashad expresses a preference for E*TRADE due to its comprehensive information resources: "I love E Trade because it's easier for me to get information" ([10:08]). This highlights the benefit of choosing a brokerage that offers robust tools and resources to support informed investment decisions.

Conclusion

The episode "How to Buy Stocks" serves as a comprehensive guide for beginners looking to venture into stock investing. By breaking down the essentials of choosing and setting up a brokerage account, funding it efficiently, and selecting the right investments, Rashad, Troy, and Chris equip listeners with the knowledge needed to take control of their financial futures. Their emphasis on long-term investing and active management underscores the importance of informed and deliberate investment strategies to achieve financial growth.

Notable Quotes:

• Troy (B) at [03:57]: "A brokerage account simply allows you to buy stocks, sell stocks, invest."
• Chris (C) at [07:04]: "You gotta provide this information."
• Rashad (A) at [07:01]: "I ain't putting my social in there."
• Troy (B) at [10:29]: "Vanguard and Fidelity are phenomenal... You're buying and holding for at least 10 years."
• Chris (C) at [09:31]: "Just because you open it, you put it in, now you're invested into the stock market. That's not, you're not invested."

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This summary encapsulates the essential discussions and insights from the "How to Buy Stocks" episode, providing a clear roadmap for aspiring investors to begin their stock market journey confidently.

Transcript

[A]

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[B]

So how to start investing in stocks and the three of us get this question all the time. So we wanted to lead with that and we want to break it down as simply as we can. So first you need a brokerage account. What is a brokerage account? Okay. A brokerage account simply guys allows you to buy stocks, sell stocks, invest. Okay. And so some of the more notable names you might know of or me be familiar with or you may not be Vanguard, Fidelity. Those are two ones that has just been around for, for the test of time now. And if you are thinking long term, these two, these two entities are ones you want to consider. Fidelity, Vanguard. You want to think about once I do take this step to invest. Let me open up a Fidelity account. Let me open up a Vanguard account. You want to start there with the premise in mind that you are thinking long term. Then you have everything from more, more newer apps, more user friendly ones like Robin Hood, Webo Interactive Brokers, Tasty trades to name a few. So listen guys, it starts with before you can invest you have to have a brokerage account to even deploy your money to okay. And this is lateral from your job. This is separate from whatever you are getting at your place of employment. This is, this is on you. The the book came out. We want to make sure this book become a number one bestseller. You deserve this is about you. This is about you guys, okay? And so you need to make sure you have your own brokerage account, you're doing your, your own investing, you're taking your, you taking your own finances and affairs in your hand. Okay, next up, I'll take it, I'll.

[C]

Take it even step further too because I want to kind of expand on that a little bit. Because for some people like to even why investing is important or what a stock is, right? Like we talk about stocks as far as that's ownership and there's private companies and then there's public companies, right? So the public companies, anybody can own it. Like Tesla, like Microsoft. A private company is like earn your leisure where only we own it, right? So it's important to invest in these public companies because as their value goes up, your investment going to go up over the course of time as well, right? So the only way we talk about inflation, only way to beat inflation is to actually invest, right? Because that's how your money's actually working for you over the course of time. But another question that I get about the brokerage is like even like how to set it up. And it's really not too complicated. Guys like you go to the app store and you download Charles Schwab is another one. Or you download Fidelity and all of these, these, these apps and platforms have similar type of things where you just got to fill in your information. So they have to, it's called like know your customer, right? So they'll ask you, you're like your social, the actual, your, your number, your email. You have to provide this information. Guys like you can't try to.

[A]

I ain't putting my social in there.

[C]

You gotta provide, you gotta provide this information.

[A]

Yeah.

[C]

And then from there you link your bank account to it. This is important for people to fully understand as well because they're like, well, how do I get money into the account? Right?

[A]

You gotta fund it.

[C]

You link your bank account to it and then you fund it. And then that, that funding goes both ways. So you put money in from your bank account. I'm gonna put $2,000 from my bank account into Fidelity. And then when it's time to move from money from Fidelity to your bank account. Vice versa. Yeah, vice versa. But where is held at? This is important, but I know we're talking about retirement.

[A]

Can I give them a hack? From what you just said, this is important too because that transaction time, it can, if you're a new customer, that might take five to seven days. And so for us, having money that we sent and we don't know where it's going. And it's taking five to seven days. It's a new account opening. You could feel a little angst, especially.

[C]

Robin Hood.

[A]

But what you can do, right? And this is, and this is a good tip. I use E Trade. And so when E Trade, I found out the wire instructions, right? So when I get the wire instructions that come from E Trade, now when I send the money, right, let's say I'm sending $5,000 to my e Trade account. That's going to get there within 30 minutes rather than waiting five to seven days. And so, yes, you can do the ACH transfers, which take three to five, or maybe five to seven if it's your new account. Or you can get your brokerage's wire information and have that money expedited. Because five to seven days in the market can change a lot, right? Like we, we saw over the past week, right? On Monday, it's up by Friday. You could have lost a lot or you could have gained a lot. So you want to make sure that your money gets there in expedited fashion. Why? Transfers is another way that you can, you can hack that.

[C]

And the last thing I'll say before we move on is that I, I used to get this a lot. When people talk about their 401ks, they'll have a 401k. The money's coming out of the. They're checking, their money's coming out of their paycheck, and they automatically assume that it's being invested. And I ask, like, what are you investing in? They're like, I don't know. Then I see their statements, and they're not actually invested in anything. When your money goes into a brokerage account, it goes into what's called the money market. That's like a savings account pretty much for a brokerage account. Like, it's sitting on the sideline. You have to direct where the money's going. So the next thing we'll talk about, like, actual investments. But don't think that, okay, I open up Fidelity, I link it to my Chase bank account. I put $2,000 from Chase into Fidelity, and now I'm invested into the stock market. You. That's not, you're not invested.

[A]

But like I said, that's not quite how it works.

[C]

That actually happened. Like I said, I've seen that. I see that. I saw that with retirement when I was a financial advisor, to see that with retirements, people had money. They used to have like 20, $50,000 into their retirement account because they didn't, they didn't. They were never fully educated that you had to pick something and they just. The default for their retirement plans was a money market account until they decided what they wanted to do with the money. They never decided what they wanted to do with the money. And the money was not growing. It's not. A money market is not invested right. That's like a point zero. It's sitting on, it's sitting on the sideline. So that's just important. Just because you open it, you put it in. Now from there you have to actually put into investment.

[A]

That's a fact. Chris, I'm gonna go back up to this, this slide where we're looking at the, the brokerages.

[B]

Yeah.

[A]

Is there one that you prefer or the other or this case by case like I know E Trade is not on there. Everybody Eylu knows I love E Trade but I'm using that because for informational purposes it, it's easier for me. I love the way that we can get information. Is there, is there one that is.

[B]

Preferred or the other Vanguard for long term. I prefer for strictly long term and. Or Fidelity. You can't go wrong if that's the mindset. I'm buying and holding this for at least 10 years. Vanguard and Fidelity are phenomenal. E Trade, Robin Hood, M1 Finance, some of those other ones are good too because they provide even more information and news and other things that is helpful to the user. So there's no order. But except for the long term piece, Fidelity and Vanguard are the ones you're not trying to trade in those. Well Vanguard at least. You're not using that to be a trader. You trying to.

[C]

You're trying.

[B]

You're purposely intently trying to invest.

[D]

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