What Is The First Thing You Should Buy In The Stock Market? (Even Warren Buffett Does THIS)

|July 31, 2020

Andy Snyder:

Hello and welcome. So the first stock you should buy. We’ve gone over in videos, the brokerage accounts, we’ve talked about option trading strategies, but what if you’re a brand new investor and you don’t know what to buy? There’s thousands of stocks out there. Every day, they’re going up, they’re going down. A lot of them are going bankrupt these days, but which one should you buy first? Which should be the very first thing that you ever buy? This is simple. This is something that even Warren Buffett in his will specifies that he wants his money going into it. This is a hot stock. Actually, it’s a hot ETF and it’s SPY. This is the S&P 500 ETF. It’s huge. When you buy a chunk of it and for about $300, a little over $300, you’re buying a small slice of all the stocks in the S&P 500.

And the reason that’s important, there’s a lot of reasons, but the main reason that’s important is that as soon as you buy SPY or a share of the S&P 500, you are doing something that 85% of professional investors can’t do over a 10 year period and more than 95% of them can’t do over a 15 year period. You’re automatically keeping up with the market. You’re going to beat the market using this strategy. So buy the SPY, that’s the very first thing that you should buy. But I want to get to that idea that that Warren Buffett said. So here’s a line that he put into his will, “Put 10% of the cash in short-term government bonds and 90% in a very low cost S&P 500 index fund.” He recommends Vanguard when he wrote this, that was a big thing.

Mutual funds, SPY wasn’t as popular then, but now you can get into SPY with a annual fee of 0.09%. That’s incredibly low, yields almost 2%. And here’s the greatest part. We’ve talked about fractional shares before, so I mentioned the price is just over $300. You can go buy SPY for five bucks, 10 bucks. Again, if you’re starting with just $10, a hundred dollars, and you want to get into investing, try the waters, this is it. This is the way to go, but there’s one more kicker with investing in an ETF like SPY and it has to do with your head. Let’s say you go out and buy Tesla or Netflix. You’re going to be constantly watching the news thinking, you’re going to see an earnings report. The stocks going to go down, it’s going to go up. It’s going to mess with your mind.

I’ve seen it. I’ve been doing this for 20 years. I’ve seen investors get scared, go away, run away from the markets and never come back. But with a stock or an ETF that covers the whole market, you don’t have that. So it’s just this little quirk in your brain that lets you relax a little bit and get your feet under you until you become a little bit better trader. So the SPY will never make you rich. It takes a long time to make a lot of money from it, but it will get you the foundation that you need and the experience that you need. So then you can start trading and make the right moves, the right informed moves.

So, there it is. My number one pick for beginner investors, SPY. And if you like content like this, click the link below and sign up for my free daily digest, Manward digest. I talk about my investment philosophy. Why the mind matters when it comes to investing. It’s a great place to start if you’re a beginner investor, click that link, sign up, it’s free. And it goes out every day. I’ll see you in the next video. And thanks for watching.