The Basics. How to buy Stocks.

Episode 25Reid Trego, the host of the Money Pig Podcast, is joined by Tim Goodwin, founder of GIA. They discuss investing basics and how to buy stocks. They explain why stocks exist and why some companies decide to go public. They also talk about the risks associated with individual stocks and recommend investing in mutual funds instead. Mutual funds are explained as a pool of money from multiple investors that is managed by professionals to invest in various securities based on specific objectives.Tim discusses the two main types of mutual funds: active and passive. Active mutual funds are managed by individuals or teams, while passive index funds track an index. He explains that index funds are generally less expensive because they don't require individual management. Tim also talks about different indexes, such as the Dow Jones Industrial Average and the S&P 500, which measure various industries and sectors. He mentions that index fund changes occur based on the issuer's schedule and highlights the ease with which these changes can be made in a fund. Tim recommends having a diversified portfolio of broad-based funds with low costs for long-term investment strategies. He mentions that sector-specific investments can be considered but should not make up a significant portion of one's portfolio unless there is a specific reason for it, like excess savings or play money. Lastly, he emphasizes the importance of understanding investments before investing in them.