It doesn’t matter how much you’re making — you need to be investing. Most every financial expert — especially the iconic Warren Buffett who is living proof of the profitable powers of investing — champions consistent, strong investing, which needs to be not a hobby, but a habit. Investing is crucial. It’s how your money makes money, hedges against inflation and ultimately builds you wealth.
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But how can you get started investing if you’re totally new to the game and/or don’t have much money? Vincent Chan, a prominent financial influencer who achieved financial freedom in his 20s, recently shared a video on his eponymous YouTube channel in which he explained how to get started investing in 2025 and why it’s so important.
“If you’re new, it can seem really confusing and overwhelming,” Chan said. “This video is the ultimate beginner-friendly guide on how to invest for beginners in 2025.”
So, what are you waiting for? Your tax refund? That’s fine, but stick to your word and don’t delay making that baby windfall grow into a substantial piece of your retirement nest egg.
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Don’t Buy Stocks Just Because Companies Are Doing Great Right Now
Chan’s first point is less about what to do and more about what not to do. He observed that a lot of novice investors start out by looking at the stock market and selecting stocks that are performing well. It makes sense, right? Not when you really dig into it.
“The past doesn’t always represent what will happen in the future,” Chan said. “Nokia was the leading phone brand in the phone space back in 2010. By 2020, their market share dropped to less than 1%, and their stock price fell by almost 70%.”
The gist: Don’t buy into companies just because they’re doing great in 2025. What should you do then? This brings us to Chan’s next point…
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Opt For Index Funds Over Individual Companies
You should actually not invest much in individual companies when you’re just starting out investing and don’t have a lot to contribute, “because it’s a bit too risky,” Chan said. “It’s sorta like the saying, ‘You don’t want to put all your eggs in one basket.’ Because in this case, investing all your money into a single company or stock is like putting everything in one basket.”
Instead, look into investing in index funds.
“They’re a great option, especially if you want to achieve financial freedom and build wealth, without requiring you to get incredibly lucky or putting a ton of effort into investing and checking the market news everyday.”
By investing in an index fund — something that Buffett swears by — you’re financially fueling a bigger investment made up of many other investors. For example, when you invest in the index fund the S&P 500, a stock market index that tracks the stock performance of 500 of the largest public companies, your money is spread out, pooling to fuel top performers.
“You have a bunch of eggs spread across a bunch of baskets,” Chan said.
Only Invest Money You Won’t Need Soon
Don’t invest money that you’ll need to, say, pay off high-interest credit card debt, use in an emergency or put toward buying a house. Only invest money that would otherwise be lying idle in a checking or savings account — not money that has a specific purpose in the short term.
Chan’s video is nearly 30 minutes long and covers a lot of territory, including a walkthrough of a stock purchase. It’s worth checking out if you want a deep dive exploration into the nitty gritty process or a more in-depth understanding of why you should invest.
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This article originally appeared on GOBankingRates.com: How To Invest for Beginners in 2025, According to Vincent Chan
