Stock Market for Beginners: How to Start Investing Today with Chris Sain

Summary

Earn Your Leisure Podcast: Stock Market for Beginners: How to Start Investing Today with Chris Sain

Release Date: January 17, 2025

Hosts: Rashad Bilal and Troy Millings
Guest: Chris Sain, former Michigan State Spartans athlete and financial educator

1. Introduction to the Episode

At the heart of this episode, Rashad Bilal and Troy Millings welcome Chris Sain, a prominent figure in financial education with a substantial online following. Chris shares his journey from being a Division 1 athlete to becoming a dedicated mentor in the stock market arena.

Notable Quote:
Chris Sain [09:40]: "I was always intrigued with how do athletes go broke after accumulating so much money after their career is done. That was the very thing that started my journey into getting into the stock market and just wanting to learn how to be better with money."

2. The Importance of Financial Literacy and Early Investing

Chris emphasizes the alarming trend of athletes facing financial difficulties post-career, sparking his passion for financial literacy. He underscores the significance of managing personal finances to ensure long-term financial stability.

Notable Quote:
Chris Sain [10:10]: "If we could learn to live within our means, manage what we have, we could make the money stretch. The market is no different."

3. Steps to Begin Investing

a. Setting Up a Brokerage Account

Chris explains that a brokerage account is essential for buying, selling, and investing in stocks. He recommends established firms like Vanguard and Fidelity for long-term investors, while newer, user-friendly platforms like Robinhood and Webull cater to beginners and active traders.

Notable Quote:
Chris Sain [17:45]: "It starts with, before you can invest, you have to have a brokerage account to even deploy your money to."

b. Choosing the Right Brokerage

Selecting the appropriate brokerage depends on individual investment goals. Vanguard and Fidelity are ideal for those focusing on long-term investments, whereas platforms like Robinhood offer flexibility for frequent trading and fractional shares.

Notable Quote:
Chris Sain [22:18]: "Vanguard and Fidelity are phenomenal if you're thinking long term. E Trade, Robin Hood, M1 Finance are good for more active trading."

c. Funding the Account Efficiently

Chris advises using wire transfers for quicker funding compared to ACH transfers, which can take several days. This ensures that your funds are available in the market promptly, minimizing the risk of missing out on investment opportunities.

Notable Quote:
Rashad Bilal [19:26]: "Sending $5,000 via wire to E Trade can get there within 30 minutes rather than waiting five to seven days."

d. Understanding Types of Investments

ETFs (Exchange-Traded Funds):
ETFs are baskets of stocks that allow investors to diversify their portfolios without selecting individual stocks. They are likened to specific aisles in a supermarket, offering exposure to various sectors.
Growth Stocks:
These are shares in companies expected to grow at an above-average rate compared to other companies. They often reinvest profits to fuel further growth rather than paying dividends.
Value Stocks:
Value stocks are undervalued compared to their fundamentals and often provide dividends. They are typically more stable but offer slower growth.
Dividend Stocks and REITs:
Dividend-paying stocks provide regular income, while Real Estate Investment Trusts (REITs) focus on income-generating real estate properties.

Notable Quote:
Chris Sain [26:35]: "ETFs allow you to invest in quality companies without having to pick individual stocks, giving you diversification and reducing risk."

e. Investment Strategies

Dollar Cost Averaging (DCA):
Investing a fixed amount regularly, regardless of market conditions, to mitigate the impact of volatility.
Fractional Shares:
Allowing investors to purchase portions of a share, making high-priced stocks accessible to those with limited funds.

Notable Quote:
Chris Sain [34:34]: "Dollar cost averaging eliminates your ability to try to time the market. You're just always investing, you're always buying."

4. Retirement Accounts and Their Significance

a. 401(k) and Roth IRA

Chris breaks down the differences between traditional and Roth IRAs, highlighting tax implications and contribution limits. He stresses the importance of maximizing employer-sponsored retirement plans to take full advantage of potential benefits.

Notable Quote:
Chris Sain [70:13]: "The earlier you can take advantage of these vehicles, the bigger your pot will be for your future self."

b. Health Savings Accounts (HSA)

HSAs offer a dual benefit of saving for medical expenses while also serving as a retirement investment vehicle, with tax advantages.

Notable Quote:
Chris Sain [71:47]: "An HSA can effectively serve as another IRA for retirement because if you use it after 65 without penalties, it's like having an additional retirement account."

5. Managing Emotions and Psychological Factors in Investing

Chris and Rashad discuss the critical role emotions play in investing. They advocate for a disciplined approach, advising investors to stick to their investment theses and avoid becoming emotionally attached to specific stocks.

Notable Quote:
Chris Sain [55:54]: "You have to keep your emotions in check. We don't allow love to exist in investing in our stocks because sometimes management changes."

6. Tax Implications of Investments

Understanding taxes is paramount. Chris explains the difference between short-term and long-term capital gains and the benefits of Roth IRAs in tax planning.

Notable Quote:
Rashad Bilal [79:08]: "If you sell a stock within a year and a day, that’s short-term capital gains, which can be taxed up to 37%, versus long-term capital gains taxed up to 20%."

7. Essential Resources for Investors

Chris and Rashad recommend several resources to aid investors in their journey:

Morningstar: Comprehensive investment research.
Investing.com: Combines technical and fundamental analysis.
Bloomberg and CNBC: For up-to-date market news.
TradingView and Yahoo Finance: For advanced charting and technical analysis.

Notable Quote:
Chris Sain [86:28]: "Investing.com is a wealth of information, combining both technical and fundamental analysis to help you make informed decisions."

8. Building Wealth Through Consistency and Education

The episode concludes with a strong emphasis on the importance of consistency, education, and leveraging community support. Chris shares success stories from his 100k challenge, illustrating how disciplined investing and continual learning can lead to significant financial growth.

Notable Quote:
Rashad Bilal [99:08]: "Start where you are, use what you can, and do what you have. It's all about the mindset: just begin."

Conclusion

This episode serves as an invaluable guide for beginners looking to dip their toes into the stock market. With actionable advice, strategic insights, and encouragement from experienced hosts and a seasoned guest, listeners are well-equipped to embark on their investment journeys confidently.

Final Takeaway:
Investing is a marathon, not a sprint. Start early, invest consistently, educate yourself, and remain disciplined to achieve long-term financial success.