How to invest as a beginner (and everything to do BEFORE that!)

The speaker introduces the topic of financial literacy, particularly the importance of investing in one's 20s. They emphasize that investing can be daunting but is crucial for earning money without trading time for it. The speaker shares their learnings and clarifies that the advice given is not financial advice but personal insights. They also acknowledge that discussing money is not for everyone and suggest that those not interested should not continue watching. The main focus is on when and how to start investing, highlighting the importance of addressing higher priority financial prerequisites like paying day-to-day expenses, making minimum payments on loans, and establishing an emergency fund before diving into investments.

This paragraph delves into the specifics of managing debt and the decision-making process around investing. The speaker introduces a FIRE (Financial Independence, Retire Early) flowchart as a helpful tool for prioritizing financial steps. They suggest paying off high-interest debt first, as it offers a guaranteed return compared to the unpredictable stock market. For those with lower-interest debt, they recommend balancing debt repayment with investing. The paragraph also touches on the importance of having an emergency fund in a high-yield savings account to combat inflation and the benefits of such accounts over traditional ones. The speaker shares their personal preference for Marcus by Goldman Sachs for their high-yield savings needs.

The speaker discusses the importance of investing in one's future, particularly through retirement accounts like 401k and 403b. They explain the difference between pre-tax and post-tax retirement accounts, highlighting the benefits of tax-free withdrawals from post-tax accounts like the Roth 401k. The speaker advises on the amount to contribute to these accounts, referencing the IRS limits for 2024, and stresses the value of employer matches. They also introduce the concept of a Roth IRA and its tax advantages. The paragraph concludes with a personal preference for Vanguard as a financial institution for retirement and investment accounts and the importance of actively choosing investments within these accounts, rather than just contributing money.

The speaker provides an overview of index funds, mutual funds, and ETFs as investment vehicles that track market benchmarks like the S&P 500. They explain the benefits of these funds, including lower risk due to diversification and lower costs compared to actively managed portfolios. The speaker recounts Warren Buffett's bet that an S&P 500 index fund would outperform hedge fund portfolios over time, which he won, and emphasizes the historical performance of the S&P 500. They share their personal strategy of buying index funds weekly using dollar-cost averaging and setting up autopilot investments. The speaker also addresses concerns about the initial cost of investing in index funds and suggests buying partial shares as a solution.

In the concluding paragraph, the speaker reflects on the journey of understanding financial literacy and the importance of not being scared of money. They encourage transparency and sharing advice to learn from one another. The speaker reiterates the goal of making money work for us, rather than working until we die. They invite viewers to share questions, advice, and topics they'd like to see covered in future videos, emphasizing the ongoing learning process in financial literacy.