All right, well, welcome everyone. My name is Scott Thompson, Senior Manager with Schwab Coaching, back in the saddle here teaching some webcasts. Very excited to be here with you. I've been thinking about this topic for a long time. Our webcast name here is Stock Investing for New or for Beginners. And as I was thinking about this, one of the things I wanted to know is like, what? What do I wish I knew? And so I'm gonna give you a few things today. Number one is: Time is one of your greatest assets. And I want to convince you that the earlier someone gets started in their investing journey, the more opportunity they're gonna have to build wealth. I have a few examples I want to show today regarding some tragedies in the market and some just great success stories.
So stick around. Happy to be here. I see Sharon and Will and some of you old timers that have been here in our webcast forever. And this is a very beginning class. So hopefully, you'll be able to get something out of it. If you're new, welcome. Appreciate you taking some time out of your schedule to be here today. And so let me go over our important information before we get started here. Just remind everyone that our. Presentation today is for informational and general purposes only, not a considered recommendation. We are going to be looking at a few different stocks today, and not a recommendation by any means. The other thing too is that past performance-we're going to go look at some examples of past performance-does not guarantee future success.
All investing involves risk. Be aware of that. And over the next several weeks, I want to help you maybe overcome some of those fears that maybe you've had about investing. So let me start off by just sharing my desktop here. And I want to go over some terms as far as what the what the stock market is. Like I said, stock investing for beginners. What do you need to know? Well, you got to know what a stock is. Stock's just partial ownership of a company. This is a glossary that's available on Schwab. com. I posted these links that I'm sharing with you in the chat there earlier. So just scroll up and each one's got a little headline on it. So if you want to open up these things, you can.
If you've been investing for a long time, I would encourage you, please share this with someone that's young. You know, all of us, I think, that have been investing for any length of time wish that we had started earlier. So, you know, share these links with someone. Share this video. We'll be recorded and posted later today. But what is a stock? Stocks is partial ownership in a company. The market, you may have heard the market before. An index, a group of securities designed to represent a particular market sector commodity, well-known. Market indices are the S&P 500 and the Dow Jones Industrial Average, the NASDAQ, the NASDAQ 100. You all may have heard of those. Now, just one of the things that's kind of interesting, let me jump over to this definition here of an ETF. An ETF is an exchange-traded fund. I have some interesting trivia for you. You can impress your friends with some different things.
stocks or bonds or commodities. And the ETF that tracks the S &P 500, one of them began January 22nd of 1993. The one that tracks the NASDAQ began March 10th of 1999. So that kind of gives you a feel for when these ETFs started. I want to also define a mutual fund. A mutual fund is a group of Money that's put together and investors use that to buy a range of investments. There's tons of mutual funds available right now. But here's the interesting thing. I went back and researched, when was the first mutual fund, kind of the modern mutual fund available? And it was available in 1924 for the US market. Hopefully this lays a little bit of a foundation of what the market is, a few of the terms that you probably hear.
And what I want to do is make a case here now for getting started early. I did post this link. This is our compound interest calculator. There's a whole bunch of these available on the internet. This one's investor. gov. But what I did here, and one of the things that I want to do in our webcast every week is just show some consistent weekly investments into the market. And I have a couple of ways that we'll show you how to do that. But the thing that's really, really fun about this is being able to see, and this, like, if you don't get anything else out of today's session. Write this down somewhere because this is so critical. And I wish someone told me this when I was even 15 years old or even younger, just learned about this.
But I want to show this investment calculator compound interest. Some of you may have seen this before. If you have, then please show it to your children, grandchildren, someone who can benefit from this. But let's say we're just starting out. This is stock investing for beginners. We don't have any money. You know, we're maybe working part-time somewhere. We just finished college or whatever. And we have zero to start with. And the plan here, or at least this little calculation, is if we have like $5 a day. Now, one of the things, I'm going to come back around and talk about this for a minute later, but I want you to rethink the money that you're spending on that daily coffee. I actually went back and researched Starbucks.
The average cost of a coffee is like $3. 60 to $5. 72 or something like that. But I want you to really seriously rethink where that $5 is going. I had a, one of the thoughts I had was I was putting this together is like, you know, it's possible. The example I'm going to show you, it's possible that that $5 that you invest in your coffee. Every day that you may have missed out on literally thousands of dollars. And I want to show you an example later about that. But let's say that we have $5 a day that we're trying to save. And we're just starting out. We just finished school, high school. We're out of high school. We're 18 plus years old.
And we're going to be investing for 45 years. Now, I got to say, when I was 20 and 25, 45 years was so far away. Now that I'm a little older, I think, man, time goes by so fast. But for 45 years and the estimated interest rate, you know, the S&P 500, depending on what time frames you look at, it's about 10% over the last, you know, 15 years, it's been a little bit higher. But generally, you know, I just want to use this 10%. flat interest rate here and show you and if we hit calculate uh on this, what will happen is it will show us how much is our $ 150 per month investment has grown and over 45 years, which turns into $1.
572 million dollars, and we've only invested about $100,000. So you can see the growth right there just goes exponential the longer that we're in there. And I want you to remember this number, $1. 5 million. And let's just say we started 10 years later, and so we only invest for 35 years. Maybe we don't get started at 20 years old. We get started at 30 years old. But we only invest for 35 years. What I want you to check out is the difference between the numbers. So we hit calculate for 35 years. That 10 years costs us a million dollars. So when you're talking to your children and grandchildren, try to convince them of this principle that compound interest is amazing and it makes a huge difference when starting early.
So that's one of the things I wanted to show you today. Now, how do you get started? What do you need to do to get started? Well, you need to open a brokerage account. So you can go to Schwab. Come there's lots of other brokers out there but I put this link in the chat earlier as well, but you can open an individual account. We'll probably talk more about different types of accounts later on in our presentation over the next several weeks, but you'll need to open a brokerage account now. Here's something as I was researching again on YouTube: one of the things that's just incredible to me is that people don't know that when you open a brokerage account, okay, number one, you gotta open it.
Number two, you have to fund that account. So, you know, with different brokers, it doesn't really cost anything to get started necessarily. You can open the account and then you can fund it. Okay, fund it means you're putting money in there. Now, everybody's familiar with opening a checking and a savings account, right? So, checking and savings accounts. You know, two different types of accounts. There's lots of different types of brokerage accounts as well. But the point is, is that you have to fund it. Now, here's the other thing that blew me away as I was listening to people talk about investing and getting started with investing. One of the things that's really interesting is that some people think that just by funding your account, that account's going to grow.
Well, that's not the case. You've got to invest in something. So you have to buy something in that funded account in order for that account to grow and to have the opportunity to see some of this growth, is you gotta participate somewhere in the market. Okay. So after you open your brokerage account, one of the things that you'll want to do is download Thinkorswim. This is our trading platform, award-winning trading platform. You can go to schwab. com slash trading slash Thinkorswim. I put this link in the in the chat as well. Open an account. You can download the Thinkorswim desktop. We can do it on mobile. We can do it on the Thinkorswim web. So, there's lots of different ways that you can use the Thinkorswim platform, but you need a trading platform where you can place those orders.
And you can do that on Schwab. com as well. All right. So we've gone over now the the the different terms we've gone over kind of this compound interest and how important that is; how important it is to get started-time again was one of your greatest assets. And now I want to tell you a little story, okay? Now um I have a a page I'm going to try to do this here but I want to tell a story about a company and let me pull up a whiteboard here; How many of you, I'm just checking the chat here. How many of you have heard of the company Enron? Just type in the chat if you've heard of Enron. Okay. So one of the things that's really interesting here is Enron, okay, this company formed in 1985.
So a long time ago, initially focused on natural gas trading. Enron's market cap at its peak was approximately $70 billion, okay? Now, at the time, that was the seventh largest company in the United States, okay, publicly traded company. So, you know, big, big company doing really well, 2000. And so, you know, it's interesting. This company, I'm sure, would have been on the S&P 500, where it was one of the top 500 companies. And something happened with Enron. The price of Enron shares. Now, this is where we're starting to get into some of this mentality when we're investing. Enron shares went from $90. 75 at their peak down to $0. 26. They lost everything. Someone who invested in Enron would have lost basically their full investment.
And this was one of the biggest bankruptcies in history in December of 2001. Now, why do I bring this up? Well, partly I bring this up to balance out what I want to talk about in a minute. But the point is here is that you know not all companies not all companies even big companies 70 billion you know not all companies survive and so it's possible when we say investing involves risk we really mean that you know you could lose that investment and so now i want to go over here and i was able to get a chart on this one i don't know if you guys remember but do you remember the sears catalog Do you remember the Sears catalog?
I remember when I was younger for Christmas, my mom would give us the Sears catalog and we would look through when we kind of dog-eared the different pages that were available to us of where we had something that we wanted. And I just, I loved the Sears catalog. It was awesome. Sears has amazing history. Sears Roebuck and Company started way back in 1906, was there an IPO. It was the biggest IPO at the time, and they raised $40 million, okay? u002440 million. From 1906 to 1972, they reached a market cap of $18 billion. And then in 2005, how many of you remember Kmart? Does anybody remember Kmart? Kmart. merged with Sears Roebuck and Company, and they became the Sears Holding Company. And that company in 2007 of April peaked about $.
18 on their shares, $23 billion market cap. And then they filed for bankruptcy in 2018. Now, again, this is another tragic story of a company that didn't make it. and that people invested in. I remember talking about this company with clients way back in '06, '07. This was one of those really popular companies, very similar to like Tesla and Netflix and Nvidia and Amazon. Today, Sears Holding was one of those, the buzzword ones that everybody knew about, right? So now Sears went down. Now, why did I tell you two bankrupt stories? Well, because I want to tell you a story about another company here. Now, and what I'm doing here is I'm building a case for why we invest. Now, these two examples don't encourage investing, I'm sure, by any means.
But the point is, is the next one will. And, you know, one of the things that we say all the time is investing involves risk. That's true. Past performance does not guarantee future results. And those things are it's important to understand that. And I'm going to get to the point where. You know, we don't have to pick individual stocks, which was when you're first starting out is probably one of the most difficult things to do. But I want to build a case now for why people invest. Why do people take some of their hard-earned money and pass on the weekly or daily coffee, or they pass on buying that new car for maybe six months or a year, some of those different things. So let me share with you now just a tremendous success story.
Now I have to, before I start here, this chart's a little tough to read just because it's split adjusted. And what I want to do before we go through this example is I want to talk about something that I learned in Econ 110, okay? Uh, opportunity cost. Does anybody know what opportunity costs mean? Now, opportunity costs basically is the value of the next best alternative that is foregone when we're making a choice. Now, back in 1980, I was thinking about this back in 1980, I was in ninth grade. And one of the things that I like to do to earn money is I would go buy packs of bubble gum, and then I would sell those packs of bubble gum at my school. And then I would do that the next day.
And I would, I would earn some money. And I couldn't for the life of me think what I spent that money on, but I knew that I was doing that. I did that regularly. That's, I guess, where my entrepreneurial experience started. But I checked history, the minimum wage in 1980 to 1981 was about $3. 10 to $3. 35 in California where I was raised. One of the things I thought was really interesting is this company, Apple Computer, went public on December 12th, 1980. Now, there wasn't an ETF at that time that tracked anything. There were some mutual funds. I didn't get a chance to research when Apple went into the market into a mutual fund when you could participate there. But I want to tell a story about this.
Now, before we do this, okay? I want to do something with you. Apple had an IPO. Their IPO price was $22. I think it closed at $29 that particular day. But we'll just use this IPO price. And I have a question for you that I want you to do. And I want you to go through this. If we bought one share of Apple back on December 12, 1980. Don't we all wish we could go back to that and do that? But if we had done that, you know, we would have had to work about seven hours at the minimum wage in order to pay for that. It would have taken me probably four to five or six days to put together $20 as a ninth grader at the time to buy one share.
And I didn't even know what the market or stock market was back in ninth grade. I wish that I did. My dad was a fireman and had a pension. And so he didn't really know about the market. And unfortunately, most of us don't. We don't learn about these things unless we know someone that helps us. So please, again, another big takeaway that I would love to have you do for your posterity is to share some of this information with them about the market. Now, again, market investing involves risk, but here's the exercise. If you bought one share back there in '80 and '81, one of the things I want you to do is some math. So here are the split dates.
Here are the split dates for Apple, June 16, 1987, they split two for one, so if I had one share how many shares would I have after that split? Okay we'll give you guys some times this is some tough math you know two times one and we get two shares all right okay. Now, three years later, okay, they split again. So I bought one share in December of '80, let's say, or '81. I held that through '87. And now I have two shares, June 21st, 2000. Now, most of you remember, this is kind of the internet bubble. The market was just screaming along. They split two for one again. If I had two shares, how many shares would I have now?
If I, again, held through all the ups and downs, which we're going to talk about in just a minute. OK, now I have four shares. Right. Four shares. And this, again, this is why why people invest is because companies want to grow. And one of the things that's really cool about Apple's story is the number of splits they had. And. You know, again, holding through these ups and downs long-term is what we're talking about here. Your shares could grow because the company's splitting all right a split just means that they take you know a two for one split if they have you know a hundred thousand shares out there they put two hundred thousand and the the net value doesn't change it's just you know the price goes down by half or whatever all right so February 28, 2005.
Okay, now this is after the internet bubble burst. 2004, the market kind of bottomed out and started trending back up again. And February 28th, 2005, they split two for one again. So if I have four shares, how many shares do I end up with here? Okay, BG got it right. All right, eight shares. Okay, eight shares now in 2005. And then they split. Now, this is not that long ago, 2014. So, this is about 11 years ago. I think probably all of us watching right now, we're here at this time. And the thing split seven for one. Do you guys remember this? They were just going bonkers. Apple's was screaming along and they split seven for one. So if we had eight shares and it split seven for one, now I'd have 56 shares.
If I did my math right. Oops. So equals 56 shares. All right. And then the last time they split was August 28th, 2020. They did a four for one split. And if you had that going on, sorry about that. This would be how many shares, Beach? 224. Now, here's the question. Back in 1980, and I know this is just kind of crazy here. Back in 1980, to scramble and even put $22 together for me would have been really hard. For someone who was probably working, even part-time, that probably wouldn't have been a big deal. For someone who had graduated from high school, maybe graduated from college, could have done that. And it would have been $2,224 shares. On Friday's close, that was worth $203. 92 per share.
Your $22 investment would have grown into, without doing anything else, this is just buying and holding this stock, okay? Now again, fast performance doesn't mean this is what's gonna happen in the future, but that would have turned into a value as of Friday of $45,678. Again, I'm trying to make a case here of why someone might consider investing because of the desire that a company has to grow. Now, to be fair, let me show you the history here. Apple hit their $20 billion market cap in May of 1987. They hit $100 billion in May of 2007. They hit $1 trillion in August of 2018. They hit $2 trillion in August of 2020. And then the recent history has been they peaked out here December 31st of 2024.
They had a $3,785 trillion market cap. And they had about 15. 15 billion shares outstanding that's available for you and I to trade. Okay. Looks like they're pretty flat today, but this is the history. Now, one of the things that I think is so important, you guys just, you got to get this. Okay. Is that just because the stock has done this, and this is one of the things that over the next several weeks, I want to help you with, because I would not have been able to hold this stock for that amount of time based on, check this out. When it hit that first $20 billion market cap in 87, the split-adjusted price was about 53 cents per share. During the next, what is it, about 10 years, this stock was extremely volatile.
Went above the $20 billion, below it, above, below, above, below, and it lost almost 80% of its value. There toward the end of '98, okay? So the question then is, well, can you deal with that type of volatility? And the answer probably is, well, unless you have some other tools available to you, that would have been very hard to hold through that. Even this last pullback that Apple had, okay? From the high that we had here recently in December of '24, last year at $260 a share, it dropped all the way down to $169 . 21 per share. That is about a 35% drop in value. That means your value in your portfolio could have gone down about 35%, and then it's recovered a little bit of that over the last few weeks.
Why am I talking about this? Why am I talking about this opportunity or how this works as well? Because I want to go back now. Let me share my screen on an index. Sometimes it's challenging. We talked about Enron that lost everything. We talked about Sears Holding that basically lost everything. We talked about Apple that has been a good company. And there's other successful companies that we're all familiar with, right? But how can we stay in the market? That's the hard thing. How can we stay in the market? Well, if we can invest in something that tracks an index, and again, we covered these terms a little bit earlier, but let me tell you, how do you do that?
Well, you can use a mutual fund that invests in that index or, you know, a sector or whatever, you can use what's called an ETF, an exchange-traded fund, is an investment or portfolio of securities that holds assets like stocks, bonds, commodities. And these trade just like stocks do. One of the advantages of an ETF is that they trade like a stock. So you can buy and sell those during the day versus a mutual fund that basically trades at the close of each day. And, you know, for the future, if you wanted to trade options, ETFs often have options available on them. So one of the things I want to do here today is I want to lay a foundation in the Thinkorswim platform, and I want to just talk a little bit about getting started with investing.
Now, I want to introduce you to a topic called fractional shares. Fractional shares are most brokers now will allow you to buy a part of a share. So like when we're starting, in fact, we went through an example of having $150 in a week to invest, right? Well, if I have $150, I can't even buy a share of Apple. But most brokers allow you to buy fractional shares. So what we want to try to do is decide. And this is another big takeaway for our class today. I want you to decide. If you're not already doing this, and it doesn't matter how old you are, but if you're not already having a consistent investment process, then I want you to figure out how much you can do each week or each month, and then we'll explore more of this as time goes on, but how to buy a fractional share.
And so let me show you how this works. The way this works is that you can take an amount of money, and with Charles Schwab, yeah. So if you have a Schwab account, you can log in and then go to trade and click on stock slices, okay? And this is just an easy way to invest. They have a little intro thing here, but I wanna just give you some ideas and then we'll jump to the page to show you what you can do here. You can select between one and 30 stocks and you have to invest at least $5 per stock. So that's kind of a cool thing. And with stock slices, you can choose from the S&P 500 list.
So what I did or what I want to do with everybody is to take a look now at some of the stocks on the S&P 500. I went and looked at the top 10 holdings of the different ETFs or mutual funds that track the S&P 500. And there's a bit of an overlap between the NASDAQ 100 tracker and the S&P 500 tracker. And so one of the things that I want to do with you together is we're going to build a portfolio of the top 10 holdings. And there's actually 11 because there's some overlap. But these are the stocks. Apple, Amazon, Broadcom, Berkshire Hathaway, Costco, Google, Meta, Facebook, Microsoft, Netflix, NVIDIA, and Tesla, you'll notice there's 11 companies here.
And that's because I think the S&P 500 has Berkshire Hathaway in it, and the NASDAQ has Costco in it, and they aren't in the other ones. And then I ignored the Google G-O-O-G without the L, just figured the G-O-O-G-L is close enough to that. So what I want to do is just kind of show you with these particular shares. Now we're going to do this in paper money. And then this webcast, we'll try to go about 25 to 30 minutes in here. So we're kind of at that 30-minute mark. So this is the last thing I want to do here before we wrap up today is to show you how to do this in your paper money account. So after you go download the Thinkorswim platform and you pull up, you can log in with paper money.
Check this out. This is a really kind of cool feature. So let me come down here and let's go to that fractional shares again. And the formula is, you know, you take the amount you're able to invest per week. And so I have time to go through kind of like one example of this today. And so let's say that we wanted to buy or start this investing process. You can either do this with a mutual fund. Different brokers allow you to do this with some ETFs where you can do partial shares. But in our paper money account, we're going to do this with the top 10/ 11 holdings of the NASDAQ and the S&P 500. And we're going to just buy partial shares. And I'll show you how you can do this here.
It's really kind of cool. So let's say that we're going to invest $5 in each, because $5 is the minimum, and we want to do Apple. Okay, so we'll start off with Apple. So we take the amount that we're willing to invest, $5, divided by the current price. Now, Apple's current price is $204.41. Okay, 204 . 41. And so this will tell us how many shares we can buy. So let's open up our calculator. So we go, Let me move this up here for a second. So we have $5 divided by 204 . 41. Okay, and so we can buy 0 . 0244. We'll just call it 0 . 0245 shares.
0 . 0245. I have one share already did. I bought one share of each of those top ones to make this easier to do. But check this out. If you right click on your symbol, you can adjust your position. And this is what we're going to try to do. We're going to maintain this portfolio. None of these are recommendations. I just want to show you kind of how a real account might work if you're doing partial shares. OK, but adjust our position. Well. We're going to add some shares in. And in paper money, it allows you to add a partial share. You can't buy a partial share on the trade page. It just doesn't work. But you can add a partial share here. So I could go 0. 245.
And I'm going to say my purchase price, we just figured at $204. 41. It has changed a little bit. It's at $204. 46, but we're going to use that. $204. 41 that we just calculated. And if I hit okay, what you'll notice is my number of shares is going to change from one to 1. 0245. See how that happened there? And so as we go through this together every week, we can trade these partial shares. And that's going to be my goal going forward: is every Monday when we get together, we'll place some trades on our partial shares. For those of you that are attending live, one of the things that we'll have a bonus session toward the end.
We're not going to do that today, but toward the end, we'll have a bonus, live-only session where I show you how to do this also with those index tracking ETFs. But we're not going to do that today. So, we have 1. 0 2. 45 shares of Apple right now. I'll go ahead; your homework is to go do this. For the top 10 holdings on the S &P 500 and or NASDAQ, and our paper money is to go figure out how to add those partial shares in. And that'll make it so you can kind of follow along with what I'm doing. And our prices are going to vary a little bit, obviously, depending on what time of day we do this. But anyway, I think this is a kind of a cool thing.
Again, as we recap here, just, you know, the thing I want to convince you of, number one, time is one of your greatest assets. If you haven't started, start now. Please share this with someone that you care about, someone that's younger, as they start asking about stock investing for beginners. Hopefully, some of these concepts that you learned today, if you didn't know them, you can share with somebody else and just get them ball rolling. The partial shares or fractional shares or what Schwab calls stock slices is a way that you can start investing in the market in a really consistent, you know, low dollar amount area and it'll allow someone to build their future. So hopefully that was helpful for you today. I know we have a survey in the link there.
If you could provide some feedback, especially, especially, please, please, in that survey, if you will take a few minutes and tell me, because I read these, I read all of them every day as part of my job as the manager of the coaching team. But as a presenter of this particular webcast, let me know what things you would like to see as for a new investor or things that you wish you had known when you were 20, 30, 40 years old, some of those different ideas. So anyway, thanks for attending today. Thank you for being here. Thank you for taking time to watch our other webcast. And hope everyone has a great day today. And we'll see you next week. Thanks, everybody.
