[00:00] by skipping your daily Starbucks, or resisting the temptation and instead invested it
[00:12] in 45 years you'd have nearly $1.6 million. and while many people are amazed
[00:24] can grow into a fortune, The first is, "I don't want to save. The second, "I don't wanna be a millionaire
[00:38] And the third, "What kind of investment After hearing these doubts time and time again, to the test once and for all?
[00:53] to show you that investing $5 a day and can lead to real measurable returns. how I'm setting up my investments.
[01:07] to reveal my results one year later. a whole year will have passed, Before we start, remember, I'm not a financial advisor.
[01:22] to become a millionaire investor. For this investing challenge, when it comes to what I'm looking for in a platform,
[01:35] these are the things you'll want to keep in mind too. The first thing, of course, is low fees by unnecessary charges.
[01:50] Although I'm confident with complicated investing terms, that wanna try out this challenge will be put off So we need something that's simple to understand.
[02:06] What's the point of investing if my money isn't safe? by the financial services compensation scheme. This compensates you for up to 85,000 pounds in the UK
[02:21] However, bear in mind this protection doesn't protect you that accepts pretty low minimum deposits Next, we need some kind of automatic investing feature
[02:40] to invest $5 every single day without automating it. but my boomer brain is getting pretty old. Finally, we'll need access to fractional shares.
[02:55] without needing to fork out hundreds of dollars For example, Apple is, as of August, 2023, which clearly doesn't work with our $5-a-day budget,
[03:13] we can invest any amount we want, no matter how small. However, these things are my non-negotiables. feel free to use whatever platform has these features.
[03:28] and one of my favorites is Trading 212, as it ticks all of these boxes. for this challenge.
[03:42] which is to open and fund an account. there's one key decision that many people overlook, or break your long-term results.
[03:56] And if you are taking on the $5-a-day challenge like I am, of account you choose will determine how much Let me explain.
[04:09] For now, let's call them account A and account B. Now, let's imagine we've got $2,000 to invest.
[04:23] So $1,000 goes into account A, At first, everything looks the same. but here's where things start to change.
[04:39] your profits aren't entirely yours to keep, First, he takes a slice of your dividend earnings. Now, not all companies pay them, but many do.
[04:56] depends on your income and tax bracket, Next, he takes even more for capital gains tax. for more than you paid for it.
[05:11] In the UK capital gains tax is typically 10 to 20%. range from naught to 20% based on your income level. Well, this account has special protections
[05:27] and taking your profits. That's because account B is known Meanwhile, account A is just a general investing account.
[05:42] you shouldn't even be looking at a general investing account of everything a tax-advantaged account has to offer. Well, it depends on where you live.
[05:55] are called stocks and shares ISAs, Both of these special accounts come but there are a few things to keep in mind.
[06:08] to 20,000 pounds per year into an ISA. are capped at $6,500 each year
[06:20] or $7,500 if you're over 50. allowing you to build your future The ISA allows you to withdraw money at any time tax free,
[06:34] isn't necessarily a bad option, it often falls short when it comes to maximizing your money. isn't available where you live,
[06:47] a general investing account. because when we pull the money out of this box As I mentioned earlier,
[07:03] but for this challenge, That's why I've asked my son Curtis to step in If you also want to set up an account
[07:18] or download their app from the app store. The only part you might need a bit of clarification on You'll be met with four options like this.
[07:34] we spoke about earlier. Underneath is a CFD account for short term trading, At the bottom is the cash ISA.
[07:47] This is the account I'd open if I were you. head over to this tab and select use promo code,
[08:00] and enter T-I-L-B-U-R-Y, TILBURY, worth up to 100 pound when you fund your account. but they're offering this
[08:13] to see if they'd be interested in sponsoring this portion So next, let's fund the account. You'll see a few options including instant bank transfer,
[08:27] If you're using the iPhone app, I believe you'd also have the option of Apple Pay as well. and deposit 35 pound from my son's bank account
[08:42] for the next seven days. for an entire week ahead in one go. and yes, I know the title says $5 a day,
[08:55] which is actually just a little bit more. is assuming that once they put some money their money will automatically start to grow.
[09:09] This box only protects your money from tax. That's why step three is to pick some investments.
[09:21] This is all about deciding what actually goes into the box. So we could fill it with individual stocks, like Amazon, Meta, Apple, Tesla, and Nvidia.
[09:36] putting all your money into a handful If one of these companies doesn't perform well, That's because your money is tied up
[09:51] and that increases your risk. and you might have guessed it already. This will give us exposure to loads
[10:05] of picking individual stocks and praying for a winner. sometimes even thousands of different companies at once.
[10:17] of companies all at the same time, Now, here's the best part. What makes this even more powerful is that it's going right
[10:30] So not only do I get the benefits of diversification but I also get to avoid paying taxes on dividends This is perfect for my $5-per-day challenge.
[10:46] that stocks can go up as well as down, and your capital is always at risk when investing. in an index fund like the S&P 500,
[10:58] of the top publicly traded companies in the United States, no one has lost money when they've bought Past performance isn't a guarantee of future results,
[11:12] but long-term investing in diversified funds like this Let's head over to Trading 212, you can see this option to create a pie.
[11:27] like copy and model pies, and creating your own custom pie. how your investments are divided between different stocks.
[11:42] and split it equally between four individual stocks, your pie would have four equal slices of 25% each. and click Add Instruments.
[11:56] I'm gonna search for a simple Vanguard S&P 500 index fund. One has Acc in brackets, are reinvested back into your investments.
[12:13] but has Dist in brackets at the end, that you are given a dividends reinvested into your account.
[12:27] So for me, I want this challenge to be as easy as possible, Now, I'm gonna click Add to pie. and decided what to invest in,
[12:40] investing a fiver every single day. of the hate towards this challenge comes from people imagining the effort it takes to do this every day,
[12:53] That's why step four is to set up auto investing. It's essential for any investor,
[13:07] This is because it takes your emotions out of investing Let me explain. is that it's completely unpredictable.
[13:19] Sometimes the market will be going up. and then there are times it'll be going down. because prices are lower.
[13:33] letting me pick up more shares at a discount. And when the market is up, my $5 buys fewer shares these ups and downs balance each other out,
[13:49] It's been such a reliable and stress-free strategy for me to time the market perfectly. by investing the same amount every single day,
[14:04] and still see the same results. Let's go back to Trading 212 and click Next. to invest manually or use the autoinvest feature.
[14:20] and then click Next. The first one is our initial deposit. so I'm gonna set this to five pounds.
[14:36] As you can see, you can do this every two months, but we're gonna select the daily option and press Update, and then we're gonna change this to five pound, too.
[14:51] And as you can see, which shows us what we can expect 1,970 pounds may not seem super impressive
[15:07] but if you move that slider all the way to 40 years, This value projection says our could be worth 5.52 million
[15:23] from an investment of only 73,000 pounds. and if I were you, I'd take this with a grain of salt, with these compound interest value projections
[15:39] So let's bring it back to one year and click Next. So I'm gonna call it Coffee a day,
[15:52] Now it's time to fund the pie. and as we've already funded the Trading 212 account, This isn't free money.
[16:05] So as long as we top this account up every now and again, Then, I just need to press Confirm, So a year from now, hope I'm still alive.
[16:22] (upbeat music) I know I'm about five months late on this. You just forget it's investing in the background.
[16:38] They're really interesting. I started this challenge back in August, 2023, two pounds and 37 pence,
[16:51] Not bad, but then September came along, I was actually sitting at a loss of 79 pence,
[17:04] This right here is why so many people give up on investing. I had almost nothing to show for my consistency.
[17:17] when they don't see immediate results. with my dollar cost averaging strategy, because things really started to turn around.
[17:29] and I was up 83 pounds and 70 pence, Not too shabby. I'd made 161 pounds and 34 pence in profit
[17:45] That's where the autoinvesting feature stopped, Now, it's jump to today. In total, I've invested 1,505 pounds,
[18:03] but my investment is now sitting at 1,972 pounds. of 467 pounds and three pence, and that works out at $576.59,
[18:21] which is a staggering 43.8% rate of return. that time in the market beats timing the market. after losing some in a second month
[18:35] I'd never have reached this point. It's down to the wild year the stock market has had. that these results are not typical,
[18:49] I'm thinking about continuing this challenge long term If that's something you'd like to see, If you wanna learn more about how I pick my stocks,
[19:05] but don't click on it just yet. Okay, I'll see you over there.