Given the lower expense charge a buyer pays for an S&P index ETF, as compared to a bit higher management charge a buyer pays for the identical index MUTUAL fund S&P fund, I'd like to know the following: We know the index ETF trades more than a traditional index MUTUAL fund. Jack alluded to that. This creates more short term and long term capital gains with the ETF, relative to the traditional mutual fund. And that theoretically generates MORE long term and short term capital gains which investors must pay taxes on, at year end with the ETF vs. the mutual fund Does the lower ETF management fee relative to the mutual fund management fee more than compensate for the greater amount of taxes you will have to pay, assuming you own the ETF vs, the mutual fund? Anyone with experience owning both?
Isn't the ETF version of an index fund WORSE than the normal version of an index fund, because you have to pay "the spread" when you buy, and you also lose "the spread" when you sell? This evidently doesn't happen in normal index funds.
I also think normal index funds are "no load" as in NO sales commission, whereas you have to pay a commission when you both buy and sell an ETF.
So I don't understand why people ever choose to buy the ETF version. Yes, you can buy and sell ETFs on a moment's notice, but you can buy and sell at the end of every single day with a standard index fund, and that seems to be more than enough for virtually every occasion.
US "household wealth" is $100 trillion? That seems WAY off! Divided by a US population of 325 million, that works out to about $308,000 per person! So the typical American family of 4 has a net worth of over 1.2 million bucks?! I think it's maybe only a half or a third of that.
The title of this clip is way off. The Vanguard founder in no way says there is a problem with index funds. Warren Buffett and his side-kick, Charlie Munger, say for the "no nothing investor," the S&P 500 index fund is the way to go. 70% of all mutual funds don't beat the S&P 500. Why don't more people do this? Buffett says it's because it's too easy.
I listened to a podcast with Jack Bogle last year about index funds, and had never really heard of the concept. I was intrigued and absolutely loved listening to this man talk. I started doing research and sucking up information on index funds. Earlier this year I finally pulled the trigger and switched my 401K account over to a diversified portfolio of Large Cap, Mid Cap, Small Cap, International, and Emerging markets index funds. I have really enjoyed paying more attention to my retirement accounts and they have been doing great.
The problem is index funds is the huge effect being on the list or not being on the list has on the stock's value. If a company makes its way onto the S&P 500, it's stock price will jump. Fall off the list, and it'll tumble. Even if there's no sound reason behind it. It also favors companies currently on the list. However, straight up owning raw shares or ETF index funds is really the only game in town now. Mutual funds? They're just index funds bundled up and sold with a higher MER.
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I also buy publicly traded companies via an app called Robinhood. It is FREE to buy shares but not as automated as M1 Finance.
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When I first started dabbling in Cryptos, I got my feet wet with an app called Coinbase (the most user friendly to use for a beginner). You simply connect your bank account with Coinbase to start buying and selling Bitcoin and other cryptos, which you can send to anyone in the world just like you would an email.
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I save for retirement and other goals through automation. Automation is like passive saving. it just happens and i don't have to do anything!
I use an app called Acorns. It automatically takes small amounts money out of your account here and there and invests it into a broad holding of stocks via Vanguard(You'll get $5 to start through Acorns if you use this invite as well:
Just set it and forget it!
Circular logic. Whenever you make it seem like there is only one answer, the answer is always wrong. If a mutual fund outperformed an index fund by a margin greater than annual fees, should you then invest in the index fund ? Fees are only one criteria, you should also look at performance over time in both up and down markets.
Index funds make markets stupid when they are too big a share of the market, whether ETF or not. Greed is not a great character trait, sure. But Index funds do not NOW add counter greed forces even when they drive prices down. In fact, entrepreneurship is DRIVEN by a controlled greed. It's not quite as the fictional Gordon Gecko said "Greed is Good", but yes greed is a necessity to a good outcome of a ecomony and a society, in moderation, and in balance against other forces, even darker forces. It has to be controlled, and the early roll out decades of of the Index Funds helped control it. But now? Stupidity is the rule. Is it PRIDE MONTH at the Vanguard? THAT social insanity is itself a measure of stupidity.
The problem isn't day traders sellin ETF's.
The true problem is about -
Being in the market at this moment & not beying avere of whats commin.
If the Ray Dalio says that the chances for crash are 50 - 70% in the next 24 months, -
You better go Liquid & save 30% - 50% of your current portfolio.
At least have 30% of it in cash.
There have so many studies and documentaries done on this subject. Timing the market perfectly makes you rich, fast. So does picking the right numbers in the lottery. In both cases, the math and history says that you're a hell of a lot MORE likely to lose money trying. Get on the index investment roller coaster young, stay on it,and ride it to wealth.
If you care so much about active risk management, there's been a study showing maintaining an exact 80/20 Stock/Bond Index ratio gives a TINY advantage over stock only indexing over the course of a lifetime. But again, this has absolutely nothing with trying to time the market.
Preston Thomas: great genetics, great upbringing, a willingness to take responsibility and work hard, and a sympathy for his fellow man. He is not only an American hero, but he’s revered everywhere in the world. Happy 89th Birthday, Jack, and many, many happy returns.
Watch it again (about 3:30), the problem is that the business has changed from passive indexing to active indexing (With higher fees).
Financial institution have adopted indexing and are now actively managing different indexes (seems to me that they just trade traditional indexes). I noticed it on my 401k where for some fucking reason my companies 401k manager has put all my money in the least successful and most expensive index funds.
I think I understand now what you are saying. Essentially, why use a financial advisor, just place your money in index funds. I agree, but most folks are not financially literate enough to understand that, and they get taken advantage of (typically, they never figure out they got screwed). That is well explained in the Financial Gamble I mentioned earlier.
that depends on 20% since when? If we look all the way back to the 1950's we have lost closer to 80% of buying power- unless there are a lot of people with a High School diploma these days that can afford "the basics"of the 50's like 4 kids, a non working spouse, and pay for a car and a house in cash. These days 2 people working with no kids can barely afford 1 single thing on that list, let alone all of them.
Johns one of the great innovators, who really did it for the average person. However, he failed to answer the question at the end- indexation by definition does not allocate capital in the most efficient way because it cares less what a particular company is doing and just buys everything. I anticipate that when indexation goes from 45% to 80% of assets invested in stocks that there will be incredibly inefficiency that even subpar active managers could take advantage of.
It’s simple: indexation only works if there are thousands of savvy active investors making the market efficient by buying cheap and selling expensive. If they were not doing that, there could not be indexation. Remember any investment vehicle that gets the type of love ETFs are getting, are likely to get into bubble territory unless people start thinking critically again.
The hyenas (investment bankers, etc.) are so desperate to continue ripping off people they will say anything in an attempt to downplay the strength and effectiveness of index funds. Just buffet them or boggle them if you will and you will be alright.
Jack Bogle, a true American Hero.... His innovation of index funds/low cost, give the Average Working Class American access to the productivity of the Capitalist System...Don't just be another hypnotized consumer(or Complainer)... Be an OWNER of the means of production.
+Franky I couldn't disagree with you more. Why is it that every time I see a comment from a real estate investor crapping all over index investing, they sound like an angry zealot? The idea the real estate is the only asset class where one can make good money is absurd and wrong. My own success with index investing is all the evidence I need. Real estate is the smallest asset class allocation in my portfolio because, while it is a necessary component due to its non-correlation to the broader market, real estate speculators and overly exuberant buyers create real estate bubbles that frequently overvalue that market, which leads to the bubble/burst cycles we constantly see in that market. Yes, there is some of that in the broader stock market for sure, but the overall stock market is far more diversified than real estate alone and, therefore, can generate excellent returns if you choose the right mix of index funds, and it has the added benefit of reducing the investor's overall risk.
While I agree that the advent of low cost index investing opened the door to far more people than before it existed, low wages are still a massive barrier to saving/investing for low income workers. Wages in America need to catch up with productivity and profits and then the entry level worker will also be able to participate in the indexing boom.
Franky Baby .. Good that you found your specific areas of expertise.... Diversification (including RIETs and Real Estate Indexed fund) is a safer bet for the average guy.. Also over a 30 year stretch MOST people Will Lose to the casino... It could be no other way, the casino must make it's cut.
I call bullsh!t on American households having 100 trillion dollars in wealth. That comes out to an average of $800,000 per household. All we hear about is lots of people living paycheck to paycheck with no savings. There seems to be a huge disconnect.
There are obviously outliers, which drive that average up, but I would say net worth wise, $800,000 for household is probably correct. Especially considering the baby boomers (a very large portion of our population) are getting into the later phases of their professional careers.
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Trump is destroying the fake Legacy of the failed Obama - nomics, pumping printed money into the hands of greedy Corporation CEO's with bail outs and three time stimulus packages, which tax payers pay for . I'll give credit to obama for creating Government jobs that have crippled States with Trillions of dollars in Democrat policy PENSION FUNDS for those lazy democrat Government workers.. Obama's free stuff here at his yard sale don't attract people anymore, what a relief!! Besides, the National debt clock has went down instead of the exponential curved hockey stick that Obama created for Eight years
Buying and holding ETF's works- just don't sell in a panic (if anything, buy more). What he doesn't mention is that a lot of ETF's are a lot more targeted (for example, focused on companies engaged in e-commerce) than the traditional index funds he's talking about (like a 500 index). Go to iShares and powershares and check out what they have, good stuff- you just have to do your homework.
+Nick- $3K is just the initial buy in. You can actually sell $2,500.00 after your initial $3K buy in if you want to... To answer your question however, yes, you can continue to invest in small increments after your initial buy in if you so desire.
Historical data shows emphatically that when the conservatives are in power that the cost of goods always goes up, and the
economy always ends up tanking. Not sure why everyone is surprised? donald trump and his clan are Imbeciles, AND puppets to the jews. (Please stop conflating jews with Hebrews, they are different peoples)
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