Nicholas Crown: Learn Investing Basics from Wall Street Pro | The Really Rich Podcast - Ep. 34
Aug 28, 2023
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In this episode, Nicholas Crown, a financial investing expert, simplifies the topic of investing, emphasizing the importance of doing your own research and understanding the concept of dead capital. He discusses the role of asset allocation in determining a portfolio's risk and return and highlights the risks of investing in alt coins. Additionally, he talks about the significance of dividend reinvestment and provides recommendations for choosing the right investment platform.
Investing in stocks and bonds can generate passive income over the long run.
Determining your risk tolerance is crucial in investing.
Deep dives
Investing Basics 101
Investing in stocks and bonds can help generate passive income over the long run. Stocks represent ownership in a company, and their value tends to increase over time due to growth and inflation. Bonds offer fixed interest rates and provide safety in a portfolio. It's recommended to allocate a small percentage of your dead capital to alternative investments, such as cryptocurrencies or commodities. Dividend reinvestment is a strategy to regularly reinvest dividends to buy more stock. Choose an investment platform that suits your needs and offers affordable solutions. The earlier you start investing, the better, as compound interest plays a significant role in long-term growth.
Risk vs. Reward and Allocation
Determining your risk tolerance is crucial in investing. Consider factors like age, financial goals, and reliance on the invested capital. Riskier investments, such as stocks, offer higher potential returns, while safer investments, like bonds, provide stability. The allocation between asset classes, such as stocks and bonds, will depend on your risk tolerance. Common allocation strategies include the 90-10 split for young investors, the 60-40 split for middle-aged individuals, and a more bond-heavy allocation for retirees. Regularly reviewing and adjusting your allocation can help align your investments with your risk tolerance and goals.
The Power of Index Funds
Index funds, like the Vanguard 500, provide a simple and effective way to invest in a diverse portfolio of stocks. Buying an entire asset class, rather than individual stocks, offers potential growth and diversification benefits. Stocks should be viewed as a long-term investment, with returns tied to overall market growth and inflation. Trading and active management can be stressful and lead to poorer returns over time, while investing should be a long-term, passive strategy. Diversification among asset classes and regularly reinvesting dividends can help optimize returns.
Alternative Investments and Comprehensive Research
Alternative investments, such as cryptocurrencies and commodities, should be approached cautiously and allocated only a small percentage of your investment portfolio. These markets carry higher risks due to less regulation, lower liquidity, and potential for total loss. It's crucial to conduct comprehensive research and stay informed when engaging in alternative investments. Choosing a reliable investment platform, conducting due diligence, and staying focused on long-term growth are essential steps in building a successful investment strategy.
In episode 34 of The Really Rich Podcast, Nicholas Crown talks about the world of financial investing and defines how investing takes time for value to be realized. Nicholas illuminates the craft of investing, where your money gets to work and slowly expands over time. He's simplifying the topic to make it incredibly accessible. Learn this technique now.