How to make your first investment in the stock market? How to invest in the stock exchange and what is the only security you need in my opinion.Kahneman received a Nobel Prize for this. Dan Ariely built a career on it – the understanding that people don't think rationally about risks.On the one hand, when there's a bad deal in every sense, like buying a lottery ticket or Taking out a loan because the credit card company offers, millions of people do it.On the other hand, when there's a deal that every economist would say is excellent, like participating in a coin toss game where if you guess correctly you get 30 shekels and if you guess incorrectly you lose 20 shekels, people refuse to participate.Risk aversion costs you money in the stock market.Losing 5000 that's already in my wallet They hurt most people more than a potential client who was supposed to pay them 6,000 shekels but decided not to do business with them (with me, a deal is never closed, one is always opened).Evolutionarily, we are accustomed to paying more attention to a negative event than a positive one. It is better to think that the rustling in the bushes is a lion and flee unnecessarily than to assume it is the wind and become lunch.In other words, if our father lost money in the stock market in 1985, it would leave a much more significant mark and impression on us through his stories than the five years before 1985 when our father made money in the stock market. Adding to that is technical difficulty, embarrassment to ask and learn, and of course, encouragement from various bodies such as banks and insurance companies not to invest in the stock market ourselves, but to let them manage our money. The result is that most of the public is not on the stock market, even though all economists agree that it is the best way to grow economically with a modest deposit amount each month. The absurdity takes another leap when Treasury economists declared that Investing in the stock market is the best, so it's right to direct funds from"Child savings"For parents who did not express a desire to determine where the funds would be directed, it is preferable to invest them in the stock market. But those economists didn't raise an eyebrow when Social Security eventually labeled stock market investments as a "high-risk" plan and bank deposits as "low-risk.". This is, as mentioned, despite the fact that those "at low risk" are likely to have much less money than those "at increased risk.". How do I recommend investing in the stock marketto buy the market averageAfter the long introduction, we've arrived at how I recommend investing in the stock market. I don't recommend reading financial news to invest. I don't recommend listening to tips from investment experts, taxi drivers, or "a friend who did it." Learning to read financial statements and reading reports of dozens of companies also doesn't seem practical to me.Instead of all that, I recommend Purchase the market average. There are securities on the stock exchange that are actually a collection of many different stocks, the composition of which is determined by a computer based on the logic by which that security was created.For example, a security called Tel Aviv 125 It holds shares of the 125 largest companies on the Tel Aviv Stock Exchange, as determined by a computer. Automatically. Meaning, if I buy a security called Tel Aviv 125 Index, I actually have a share in the ownership of the 125 largest companies on the Tel Aviv Stock Exchange.Basically, I bought the Average of the market And not a single stock. There are different types of indexes. For example, if instead of the 125 largest stocks, I want the 25 largest high-tech companies, I will purchase an index on the Tel Aviv 25 index.In the video below, I demonstrate how to log into my bank account and purchase a security that grants ownership of the 500 largest US stocks – the S&P 500 index.So in practice, instead of buying stock in a single company, I own a portion of the 500 largest stocks in the United States. This is the investment policy I follow.A fixed amount each monthI recommend making the investment in the amount of Fixed and every month. For example, make a decision on a fixed investment of 5,000 shekels per month. Regardless of the question Whether the stock market rose or fell in the same month. Annual return7%7%Monthly return0.58% 0.58%Number of years510Number of months60120Monthly deposit5,0005,000End-of-period amount357,965 shekels865,424 shekelsIf you want to get straight to my bank account in the video :-), you can skip to 9:00.I hope to see at least one security from all of you in the coming days. Remember that the most important key to financial progress is the ability to set money aside and not increase expenses as income grows. A second key to success is the ability to accept the fact that the world is dangerous but one can still succeed anyway, and it's worth investing where the chances of success outweigh the risks of failure.P.S.If you have 100$ and you need to double your money to get home, and there’s a casino right in front of you, what would you do? The best strategy in that case is to go To roulette And put all the money at once on black or red (in roulette you can bet on a specific number and get 35 times what you bet, or bet on a specific color and then get "only" 2 times what you bet, meaning doubling the money).The logic is thatIn a game where the odds are against me, I should play as few times as possible.. That is, it's better to do it all or nothing once, rather than many small times with opposing chances.Do you have any questions? Comments? Feel free to write below in the comments or to my email rimon@effm.co.il Or chat with me at 054-5232-799.Pomegranate
Hello Pomegranate The idea is nice. But from my familiarity with the materials you publish, it doesn't seem professional to offer an idea, however nice it may be, if you don't actually implement it. You are talking about a monthly investment of 5000 NIS when your entire investment portfolio is 7777 NIS. Again, I enjoy your material, but it seems to me that here you've thrown something in that you're not so knowledgeable about and not really invested in. I know some people who invested in the stock market irresponsibly, including using leverage, and lost hundreds of thousands of shekels. In my opinion, one needs to be cautious and know the field very, very well to recommend it. For your considerationReply
Shlomi, thank you very much for your response. It is evident that you watched the video in great detail, and that's excellent. First, would you start smoking because the doctor who recommended you quit smoking smokes himself? If you have a criticism of the things presented, then for the sake of argument, I am not relevant at all. An economic idea is good or not good. Nice, but the presenter is unprofessional. This is a failed horse. For discussion. I would like to interest you in a few more options besides the one you were considering: 1. I accumulate every month, but the amount differs from the amount shown. The sum itself has no meaning., What's important is the principle. 5000 a month is too little for some, and for others, it's a lot more. And he deposits only 200 a month. In any case, the regular deposit is what will advance each of them.2. I recently had a large expense (in one of the upcoming articles, I will write about the economic principles They are guiding me in changing vehicles. And I don't understand anything about cars, but I also won the Nobel Prize in Economics for A consumer behavior study on car replacement didn't understand anything about cars. This is irrelevant to understanding the mechanisms. The economic actors.I have more than one bank account (in fact, I have four).I once heard in a lecture that making assumptions about others is an act of – Are you and meAnd finally, "I once heard about others..." is one of those sentences I wouldn't use Almost never. For some reason, people don't say phrases like "I once heard." "I heard about others who got divorced, so I'm not getting married," "I heard about others who had an accident Paths so I don't get in a car." In the economic sphere, for some reason, many people say "I've heard about others who invested and lost money" so not only will I not invest, but I won't even I want to learn how to invest (and maybe then I'll avoid the outcome of those "others").Thank you again for reading, watching, and commenting.Reply
Doing it through the bank is also not the best recommendation (very high commission). Why not directly through investment firms?Reply
Eazy, thank you for reading and responding. First of all, you don't necessarily pay a lot at the bank. It's a matter of negotiation. I, for example, haven't paid for years. About credit cards. Every time I'm surprised to see that there are people like that Those who pay over 10 shekels per month for each card.The article is intended for beginners. Many people don't take the step The first one because they think it's complicated, cumbersome, dangerous, etc. The article is intended to show that anyone can do it with a few mouse clicks. In the next step, we can truly negotiate the fees and move to an investment house. And so on. Since I am still young, I will have time to write the follow-up article.Reply
Thank you for the post I have a question I will likely take out a mortgage in about a year., Is it still right for me to start investing at this time? If I start now, it means my own capital will decrease And is it even advisable to start [a business] after taking out a mortgage? Because then my repayment capacity will be affected.Reply
Thank you very much for reading and for your questions, Almog, Investing doesn't mean your capital will decrease. You can always exit an investment. Your capital might actually grow – if the stock market continues to rise. However, when money is needed in the short term, then investing in the stock market is not Such a great idea – we don't want to suffer from a situation where the stock market JUST dropped When we signed a purchase agreement, the "consolation" is that the stock market has been rising for years. It won't help us in this case. After all that has been said – I think our financial literacy has Continuously improve throughout life. I am still learning a lot all the time. Therefore, I wouldn't want you to wait now until the mortgage and then until something else happens. and so on. There are always reasons not to increase our trouble in life. I think That a monthly investment of a small amount will allow you to experiment, and perhaps also experience returns and in any case, the risk of a stock market decline will almost not affect you.After taking out the mortgage, it's a bit more complicated and depends on personal preference. If instead of paying an extra, let's say, 2,000 shekels towards the mortgage – we invest that money – Our mortgage will get longer and more expensive. There's a fairly high probability that over 20 years Let's assume we do more on the stock market than just cover the larger mortgage, but it doesn't suit everyone. to take that kind of risk. After all is said and done, if you know that in X years you'll have a major expense, such as replacing a car Or for a Bar Mitzvah, it is preferable to set aside an amount each month for investment, as opposed to the more common method of waiting until the event. The scenario where no money has been invested over the years and then taking out another loan to finance the expense. This is already a much more significant path. Expensive and dangerous. Good luck.Reply
Hello Pomegranate First, I'll preface by saying that this is an amazing and informative article! Like all your articles! But this is special! And now I'll get to my question After my tests, I understood why the wrapping paper you bought in the video is so successful. And you wrote in one of the comments that it's possible to buy even with a small amount per month [200 ILS] But when I wanted to buy it, they told me the minimum was 2 units, which is over 2000 NIS. Do you have something similar to recommend that doesn't have such a minimum?Reply
Hello Bar, First of all, thank you very much for your warm words. 200 shekels is truly a small amount. I'm afraid there's no way around it but to set up a standing order for the deposit. And make the purchase once every 10 months. This is not meant to discourage you. Much better than nothing. Some people think a certain course of action will lead to slow progress. and therefore they do not carry it out and do not progress at all. I also spoke about this in the article on solar collectors for generating electricity. Lots and lots of success and thank you again, RimonReply
Hi Rimmon,Thank you for your shares and advice.Asking about a provident fund for investment, for example, although we can also talk about any other fund. I am noting the funds that invest in the indexes you mentioned – only buying them and not the paper itself.What are the advantages and disadvantages of self-trading (as demonstrated and presented) compared to buying an index fund?Thank you, TsachiReply
Hello Tzachi, and thank you very much. If you buy funds instead of indices, you're just paying Management fees for another intermediary. I don't see any advantage in it.Reply
Hello Pomegranate, Thank you very much for the wonderful article.Could you please clarify the advantage of investing $5K per month for six months (as you presented in the video) versus making a single lump sum investment of $30K, for example?Reply
Hello, You're welcome. Thanks for reading. If you have 30,000 shekels, there is no problem investing it all at once. Then, when you no longer have a large sum, I highly recommend establishing a regular habit of investing every month – The salary arrived — go invest the fixed amount even before incurring more expenses. In my opinion, this is the central habit that will lead to economic growth. Good luck.Reply
Pomegranate, as always, is full of wisdom like a pomegranate. It's simply a pleasure to read every time. We are blessed!Reply
If I have a sum to invest in the stock market, should I put it in all at once or divide it and invest part of the sum each month?P.S. Thanks for the content you upload, I find it very helpful.Reply
Hello and thank you for reading. If you are one hundred percent sure that if you decide to put in every month A small sum over two years, let's say. You won't use the money for anything else, then. This could be a good policy. Personally, I would put in the entire amount and that's it. More importantly, if there are declines later on Suddenness, the worst thing you can do is withdraw all the money. Good luck.Reply
What do you mean 'More importantly, if there are further declines Suddenness, the worst thing you can do is withdraw all the money.,Reply
Hi Rimmon, Thank you for the great value you bring to us. I have a sum of 80,000 NIS that I will need in 3 to 6 months for a down payment on an investment property. Should it be deposited on the stock exchange in any case rather than held in escrow, or do you only mean a deposit of the personal growth component each month for a year or more? Thank you very muchReply
Thanks back Sharon. I wouldn't put money into the stock market that I would need in half a year or even a year. Good luck.Reply
Hello Pomegranate, First of all, thank you very much for the excellent post. I really connect with the investment approach you showed, except I'm interested in long-term investing in the global stock market average (not just US or Israeli) using as few securities as possible that can be bought through the bank (I saw recommendations to buy securities from abroad and I don't want to get complicated). Do you know of a security (or a few) that tracks the global market (or at least most of it)?Reply
Hello Yossi and thank you for reading. I suggest looking for MSCI index tracking funds. Good luck, PomegranateReply
Hi Rimón. Thank you so much for the help and the tips you give. I have a question: If I own an apartment for which I'm paying a mortgage (financed slightly more than half by the bank), and I rent out that apartment. And I live with my family in a larger apartment as a tenant (tenant and landlord). I live in the city center, and I have 90,000 NIS. What should I do? Should I find a partner who doesn’t yet have a mortgage (to qualify for a higher loan-to-value ratio, say 70:10:3:10) and buy another apartment with them as an investment, then flip it? Or should I first increase my equity through the stock market or securities? And then buy another apartment on my own? Of course, that would take many years because my salary isn’t high and I can’t save every month.Reply
Hello Alex and thank you. If you cannot save every month, you will never reach the required equity. Purchasing with a partner has pros and cons, and this is not the place to consult. Choose an advisor you believe is suitable, or at the very least, ask a lawyer about the implications of purchasing with a partner. Good luck.Reply
Pomegranate hello. I really enjoy reading your emails and articles. I wanted to understand a bit about compound interest in the capital market. In a compound interest savings account, I see the interest being added to the principal, and then earning interest as well. But let's say I buy the S&P 500 And I see that over the past five years, it has risen by 87%. Where is the compound interest here?Reply
Hi Yaakov, Thank you very much. The 87% appreciation you see over five years is made up of a certain annual appreciation. Suppose you invested 1,000 shekels in 5% in the first year and another 5% in the second year. The total increase would not be 10%, but more than that: 5% in the first year will bring the total to 1,050 shekels. 5% out of 1,050 will bring the total to 1,102. The additional two shekels are the result of compound interest. Good luck.Reply
Thank you, Pomegranate So then So you can't just take the 87%, divide it by 5, and say that the S&P rose by an average of 17.4 percent per year; instead, you have to examine each year separately, So how can I know how much he earns per year on average for the last 20 years? Where is this published?Reply
This is a piece of data that appears in many places on the internet, for example – https://tradethatswing.com/average-historical-stock-market-returns-for-sp-500-5-year-up-to-150-year-averages/ It is also possible to calculate, but the method of calculation is beyond the scope of this response. Good luck.Reply