S&P500 vs Global Index - Don't get it wrong!
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- เผยแพร่เมื่อ 28 ก.ย. 2024
- The S&P500 has been the dominant index globally for over a decade and is now the most popular investment for most.. But is this the wrong choice?
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Here to say I am also an idiot
Me too 😊
We know 😂.
*also puts hand up*
I am also an idiot. If I think I’ll probably get it wrong
Virgin British finance youtuber: Buy the World
Chad American finance youtuber: USA USA USA!!!!!!
Outside of the US, with S&P500 you're also taking exchange rate risk. It can work in your favor or against you.
But if you invest in say ftse dev world, msci world or ftse all world index etc you are still getting a large exposure to the US and currency fluctuation risk. Plus the UK hasn't exactly done well since about 2009. Plus the UK hasn't exactly done well since about 2009
If you invest in a ftse all world index, ftse dev world or msci world etc you are still getting a large exposure to the US and currency fluctuation risk
That’s exactly what Japanese like. They want to get foreign exchange exposure (without paying big spread). Japanese are escaping from their own currency
Thank you for your honest opinion. I agree with you on 90% in global index for a better sleep and remaining 10% you can enjoy in putting on some individual stocks, gold or crypto.
Would be great to see a video going over all the aspects of VWRL as I’m sure many people will be using or considering this fund. Things like past performance, geographical spread, how often it pays out and how that process works, etc. for people that find the info on Vanguard’s website confusing.
Yes I would love that tooo...
Do you invest into the VWRL?
Isnt VWRP better?
I look forward to these videos, the quality of production and the content is always epic! Great job!
Thank you so much! Glad you enjoy the editing I sometimes watch them before launching and think Damien… what the hell you playing at here. This is a finance video
Wonderful direction and music
Fantastic production value and brilliantly concise and wry delivery of good content.
@@DamienTalksMoneyahh mate don’t change, you have the perfect balance of humour to quality seriousness
Great
I've only been investing for a couple of years and I've seen on many TH-cam channels the advice to diversify by going 50/50 S&P500 and Global, but, as you point out, by doing this the portfolio is heavily weighted towards US stocks and the cost of the Global fund is quite high (by Vanguard's standards). What I have done is to invest 50% in the S&P500 but then invested the rest in funds which together make up the rest of the world, Developed Europe ex UK, FTSE 100, Emerging Markets and Developed Asia/Pacific. This keeps the US stocks down to 50% and also reduces the charges. Like I said, I'm a Newbie so if I'm missing something please let me know. Great channel by the way.
I had a very similar portfolio up until recently, with 5 ETFs covering S&P 500, Developed Europe ex UK, FTSE 100, FTSE Japan, and emerging markets. I really liked that way of doing it and it is nice being able to clearly see which regions are doing well at any given time!
Now I have decided to just do the same with 2 funds. A developed markets index ETF and an emerging markets index ETF. The first 4 ETFs I mentioned above are all covered by a developed markets index, whilst still keeping emerging markets separate allows me to control the proportion I want between developed and emerging. Also, there are some very low fee developed markets indexes out there when you shop around!
Correct 50/50 creates a massive overweight in US stocks.
The only issue I see with your strategy is you will need to often rebalance your weighting to ensure there’s not any over exposure etc. effectively timing the market which historically is not good.
Personally a set and forget is ideal for most small investors and to focus their time on improving skill sets to earn more money to invest more capital. Instead of wasting time worrying about a few basis points.
Just to be clear I understand your reasoning and strategy 👊🏽
I didn’t even know anything about the S&P500 or Vanguard or Index Funds until I saw your channel. I’ve been consistently investing every month in the S&P500 and a lifestrategy fund. I can’t believe amidst all my investments the S&P500 ALWAYS outperforms everyone else. The others bring a profit, but S&P500 brings the biggest profits. I still keep my hand in the globe because I think as economies grow they tend to make foreign partnerships and this boosts other economies. That’s my basic theory. I think it’s a more reliable idea of a pension than the state pension because the maths is real and the returns are potentially enormous
Plus, just because USA has been great who’s to say that won’t change? Anything can happen, as we have seen many changes happen across the world
I was thinking about this very issue lately and came across your video - very helpful, thank you!
I use the HSBC All World at 0.12 fee in my pension. I use the Invesco FTSE All World in my ISA at 0.15 fee. Its a no brainer.
Do you invest in hsbc via the app or on a trading platform?
Always great videos! Watching them from someone who failed miserably at Maths at school. Now at 44, you’ve got me engaged about investing. So thanks 👏👏👍
Just found your channel, its brilliant. All u say totally makes sense
Thank you!
I opted for a s&p 500 etf, an EU and a "developing" rest of world fund. This way I can control the percentage invested in each region myself. But .. its hard to see the EU region performing well over the next 10 years and events in America will hugely impact the EU anyway so it's not great for diversification either. So I opted to reduce the amount i invest into the EU region and increase the rest-of-world investment.
Your outlook on the economies you're investing in is completely irrelevant. If you can't see the EU performing well so does market which will price European equities accordingly. That's why Europe has a lower P/E ratio than the US. That does not mean that those markets will underperform
It’s worth mentioning the exchange rate implications here.. When investing in overseas markets a strengthening pound will reduce your returns. A weakening pound improves your return
Yeah I do mention them at the end but very briefly
In your video you say that investing in a global fund means you don’t have to worry about FX rates… but from what I’ve seen most global funds are not hedged so are subject to FX fluctuations… the weak pound helped my portfolio a lot last year (btw love your videos, thank you for the content)
@@mdubaj Yes sorry i should have clarified this more, FX impact is there especially exposure to the dollar with a 65% allocation to that market, what i meant was I am exposed to all manner of currencies through a global approach and I really just work on the basis of it will all average out in the end. I don't change my investment strategy as a result. Also long term the pound has fallen against the dollar and if that trend continues i do ok anyway.
Maybe FX could be a topic discussed in a future video… after all, Argentinian stock market returns have smashed the S&P 500 (just a shame their currency tanked too 😂)
Funds will usually offer the ability to invest in the currency you want to take the investment in.
Could you not just pick the currency share class of the fund in your home currency and remove the fx fluctuation on your investment?
Nice one Damien. I am very similar to you in how I think and its good to see I have already come to the same conclusion as you and stuck with the global index vanguard!
You see things so clearly Damien, superb video
For myself, I’ve always been an avid saver & investor throughout my life and done quite well I think being 67 in a week! But I’ve always been surrounded by nay sayers saying invest in domestic property, which has also done well. So my question is have your peers been saying similar and how do you respond?
In the first 25 years of your investing life, the amount you save and invest has a far bigger impact on the growth of your wealth than your returns. Global index is the way to go.
You said it better than I did
Glad to see youve recovered and your video quality is still S tier 👌
Im gona try and create a gobal portfolio with lower fees.
60% SPXP fee .05% S&P500
4.28% ISF fee .07% FTSE 100
0.72% VMID fee .11% FTSE 250
10% XUEK fee .09% EURO
7.5% VJPN fee .15% Japan
7.5% VAPX fee .15% Asia
10% HMEF fee .15% Emerging
Kinda follows VWRL though its a little more work, the fees are quite a bit less.
Not gona lie though invested into single stocks during the bull run 😅 still super heavy into UK right now. Looking to trim down if things get better.
Well said at the end, applies to everyone. Bonds : no one appears to talk about these and makeup of their portfolio but appreciate the common theme is 20yr+ strategy.
So believably candid, I do appreciate your candor and wisdom. Looking forward to next time, cheers.
Thank you!
Thank you!
In my ISA I do just Life-strategy 100. My pension is split between VWRL and VUSA. 50/50.
This guys the real deal, love the approach. Got a subscriber!
Thank you!
I think Vanguard is being a bit naughty with the management fee for VWRL/VWRP.
The developed world ETF VEVE/VHVG has a fee of 0.12%. Their emerging market ETF VFEG/VFEM has a fee of 0.22%.
VWRL/VWRP is approximately 90% VEVE/VHVG & 10% VFEG/VFEM so the fee should be around 0.13% really, not the 0.22% they charge.
Cheers Damien! I've been thinking about this recently so was looking forward to your take on it
Great to see you looking well Damo. Good content
Good to see you back 🫡
Cheers mate, good to see you're more than "back on your feet".
What impact will AI have on returns? KMPG says over next 10 years, economies will grow by 1/3rd more annually. JP Morgan says double the growth annually by 12 years out.
Excellent vid again as usual!
This really highlights to me the long term. For now im pushing hard into the US based tech lead (S&P 500 plus additional buy into individual tech stocks - NVDA, MSFT, META etc) but i think for long term (which i am anyway) maybe more emerging markets would be useful if this world order might shift in next 20 - 25 years (time i have left to invest).
India is somewhere i see really pushing up at a considerable rate, as is China, but then theres the curveball of climate change which may impact these locations considerably.
Lots to consider as always!
To me most other countries face more problems than the USA. From social systems to borders close to aggresive neighbours while the USA mindset is mostly USA first which helps the growth of some of the most powerful companies we see today. I am European and my bet is still the USA. We will see who is right in the next 50 years. And even if the S&P500 isn't outperforming the global market for a while it doesn't mean it won't give you enough return to beat the inflation.
I'd love to see a global index fund that doesn't include Apple, Alphabet, Microsoft, Amazon, Nvidia and Tesla, does one exist? These names always seem to come up in the top 10 when ordered by weight, all my efforts to add a bit of diversity to my investments always seems to be thwarted by the same names at the top of the list.
Loved this video, so helpful! Would appreciate a video covering your thoughts on a SIPP/the pots you have going for your retirement. Thanks for the great content as always
The stock market is a complex system that is influenced by a variety of factors, including economic indicators, political events, and global trends. The relationship between policies and the stock market can be complex and multifaceted, and it can take time for the full effects of policies to be reflected in market trends. Therefore, it is possible that policies implemented in the past may have a "lagged effect" on the stock market, as their full impact may not be felt until later on.
you're absolutely right, the stock market is a dynamic and constantly changing environment that can be influenced by a wide range of factors, including government policies. It is important to approach investing with a long-term perspective, also, understand the potential factors that contribute to your financial growth, I'll advise you to seek the help of a professional investment coach and to carefully consider the potential risks and rewards of any investment decision.
Thank you for this Pointer. It was easy to find her handler, She seems very proficient and flexible. I booked a call session with her.
I have a life strategy 100 fund vanguard. I listened to all your advice an decided to “Just buy the haystack” And I’ll stick with it, there’s bound to be strong interest
Apart from the fact the lifestrategy is heavily overweight on the UK…
Do what feels right for you. If that means overweight on UK and you are comfortable with that, it's not an issue. None of us can predict the future with any degree of confidence.
Nicely said. another informative video
We can't know for certain how ex-US companies will perform compared to US. But betting on US is still a solid and safe bet, but so is diversifying with international funds like Vanguards VXUS. Since the inception of Vanguard's Total International fund in 1996, it has beaten the S&P 500 10 out of the past 27 years. Both US and International funds correlate highly with slight deviations that mostly favor the US but sometimes favors international. Whether you go all in US or diversity into international, what matters is staying the course and not constantly tinkering with your portfolio. Over 10, 15, 20+ years, you will very likely come out with an annualized return of 7-11%.
As long as the US keeps vacuuming up young, ambitious, exceptional people from all over the world, they'll keep dominating the technological sectors.
Editing has taken a step up, well done mate
I have a 3 fund portfolio consisting of 33% S&P, 33% Total stock, and 33% international. I feel a need to focus on complete growth so I went 100% stocks, but does the SP500 and TSM overlap too much to make sense holding both? However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait but watching my portfolio of $450k dwindle away is such an eye -sore
There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.
I agree, that's the more reason I prefer my day to day investment decisions being guided by an advisor seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+ and I've netted over 2.8million.
@@mariaguerrero08 Interesting. I actually signed up for a few trading courses, but they didn't really help. It has been suggested that I use a qualified financial advisor. How did you get in touch with your coach?
Actually, I've changed a few advisors over the years, and *Mary Onita Wier* has consistently proven to be the most clever. Her approach is successful and tenable in both bull and bear markets. Her credentials can probably be found online, so you can verify them for yourself.
Insightful... I was curious about her, so I looked her up online. I discovered her website, and I must say that she seems knowledgeable. I sent her an email outlining my goals. I appreciate you sharing.
Excellent info. Much thanks.
Wow what a video. Lots of work! Great honest content 😊
The ending made me realise my monkey brain allowed me to stop investing when everything dropped last year, still suffering to this day with needing to average down positions...
However the Global index stuff is mighty intriguing
I do 50/50 Vanguard S&P 500 VUAG & Fidelity Global Index Acc
Seems to be giving me decent returns, I'm happy to take the bet on the rest of the world!
Damien is wise globally thinking. I switch from Global only when S&P is losing.
Interesting. I have 60% of mine in global (but it doesn't have as high US stocks). Then I have the rest split between S&P500, Emerging Markets and then specifically India (believe in this country the most) & South Africa (I know SA is not doing too well, but I'm resident here and its either sink or swim because its bad as it's going to get while still functioning. Might as well bet on it improving if I'm living here otherwise it doesn't matter anyway).
I might be wrong but would 4O1K or whatever it's called in the US be one of the major factors causing the USA to buck the trend, as this means that the US stock market should always do quite well due to money continuing to flow into the s&p500 from pension contributions.
Great vid! Didn’t you say All world has avg return of 10% over the years? But then mentioned at the end an avg return of 8.3%? Was that just factoring in inflation rates?
Excellent - Thanks. Time for me to make a move on this.
If you go all in into an All World index, then you'll have about 60% USA, yes. But in a normal (i.e. market cap weighted) index, the US part would diminish as soon as USA begins to suck. So, imho, everything perfectly fine with the All World index.
Great video, Damien. I was wondering if you haven't done so already, if you could do a video on falling birth rates in the western world and how that may affect future markets and world economies. I tend to think this gets overlooked, this is also happening in China at the moment, so not just a Western problem.
I wonder if this is what happened to Japan?Their economy has been stagnant for decades , so has their birth rates.
The current temperature of the policical situation in America worries me. Any kind of civil war would tank their economy.
Great video Damien. Just what I was after! 👌
I also recently got interested in MSCI world index which is not available in any form in our country :(
However, I would like to point out, stock markets track the companies. I see better entrepreneurs, better VCs, better investors in US.
This is not a coincidence. US market and US companies are better than rest of the world and has more disruptive advantage.
I think US market will outperform others for at least 20-30 years or so since their ecosystem has a huge head start.
Brilliant insights and analysis
Hi Damian , what’s your thoughts on 50% portfolio on snp500 and the other 50% on vwrl ? That should surely solve the problem. Another great video tho mate
Really useful video - thanks
Excellent video. Subscribed
Another quality video as always
Thoughts on investing VWRL vs. life strategy? Currently invested in life strategy for the long haul but the skew to UK is worrying me (Although from pre covid years there doesn't appear to be much difference in returns)
Another option is to invest in FTSE Developed World ex UK alongside your LS, it’ll bring down the UK overweighting and it’s a good performer with a low fee of 0.14.
Current America with a 32 TRILLION DOLLAR DEFICIT cannot continue, it can never ever pay it off, the American limitless credit card days are over !! With Brics, the petrodollar end days are close. I've invested into a cash isa at 4.5% tax free interest ready to go when the S&P drops considerably by the of 2023 bringing with it a recession !! Be careful people !,
Great video and very valuable information, as always. Just to get your opinion, what is really the difference between the FTSE All-World UCITS ETF (VWRL) and the FTSE Global All Cap Index Fund Accumulation? Why do prefer the dividends of the VWRL over the autocompound of the Global All Cap? Thank you so much for your advice!
I just like getting the notifications and investing them myself as simple as that 🤣
And the all cap also includes small businesses
I love the little references you slip in these videos, Fagin got me 🤣.
My own approach is similar, two platforms split between region oriented funds and one with sector based individual stocks (water, property, mining, energy etc.)
In this life one thing counts in the bank large amounts!
That line lives rent free in my head 🤣 I just couldn’t not slap it in the video
Thanks Damien, great video. What are your thoughts on the LifeStrategy Vanguard funds? Im considering the 100% equity one. Have you ever considered these and if so, what would put you off from picking it? It has similar exposure and fees to the FTSE Global index fund you described in the video. Your thoughts would be really appreciated, thanks
Great video! I’m looking to transfer my pension to a SIP. Is the best time to do this when the market is low or when the market is high? Does it make a difference?
I’m invested in VWRL and ftse global all cap so have some coverage in the US but I have a brain the size pea so don’t take this as financial advice.😅
Is there such thing as a non market cap weighted global index. Eg evenly spread around the world and not 60% in America. And if there is then why wouldn’t you pick that? If another country jumps a lot then your portfolio will barely be affected right? Would love to see a video about comparing weighted vs non weighted
Can anyone shed light: why reinvesting dividends instead of going for an accumulating product? In my country (Italy) it would mean paying taxes on the capital gain instead of having the full interest compounding while you hold the investment. Is it a UK thing or am I missing something? (disclaimer: I'm reeeeeeally new at this)
But vwrl pay higer div’s so we need to count this in as well
if everyone uses USD , US gotta stay ontop, even if by 1% at a time
All the instability in the world at that moment, foreign markets including China are going to struggle, I bet on America and the tech for the next 5 10 years, then reflect after that, and what do you do when your the US you produce more weaponry etc and increase manufacturing.
I have a question. Uk Gilts/bonds in a SIPP. I see the returns can be 6% currently. Would be good to see a video on this subject
I am an idiot too. I should just keep investing on global index and stop watching but your videos are too good to ignore 😊
Do you get paid dividends from Index funds, from the companies in those funds that pay dividends?
newbie question, is vanguard VWRP (0.22% fee) better than FWRG (0.15% fee) which has lower fee?
Both sample the same comparative index and should perform similarly.
Hi Damien, I know you have ISA & SIPP. Don’t recall you mentioned LISA before?!? Was there a particular reason for that?
Spread out the risk and have another sweet spot with S&S LISA at 60? 👀
I have a LISA! I fill it every year and it’s global index currently with dodl I forgot to mention it 🤣
@@DamienTalksMoney oh right cool! I have nutmeg started 2 yrs ago and was thinking of transferring to Dodl too due to the lower fee. Not looked into details of equivalent Global all caps index fund/ high risk tolerance equivalent- fund or share. I need to do bit more digging. 👍
6:18 that track is a banger, what's it called?
The thing about American exeptionalism is that you have to realize America is exceptional.
Michael Burry said the same the other day
A couple years ago you did videos on the Vanguard 100% LS....I am content with how that has gone well...as I am an idiot ...I will stick with it....recently it went up to 15%.....I do sometimes wonder if it would be worth withdrawing it when it hits such a percentage and rebuying in, in a later slump...would like your views on that! Keep up the good work..regards Danny
Isnt the point of a tracker not to try and play the market, its a passive investment
That’s timing the market . Something to avoid at all costs for long term investing.
HSBC all world fund
Was that De Bruin before he started his career as a footballer? 👀
Maybe that explains his vision and grace! All them dance moves
Good videos if you stopped putting the daft clips from movies and tv shows in it.
Where can I find this live CAPE chart?
Compelling!
Do global funds not also invest in the S&P500?
Yes they do
Where is this recession that all the experts are guaranteeing to happen every month
Zoltan!!
Well spotted haha
Great video, new sub here
Thanks for the sub!
You need to be aware that Mr Dalio wants your money into his fund to so they can buy Chinese stocks…
You need to be aware that the Chinese can force international investors to liquidate their positions.
There are differences, America is made up of many different immigrant groups, as well as the original First Nations, that makes it an incredibly diverse culture but also those who came to America and survived already had a pioneering attitude. We transported those we thought of as petty criminals to Australia and even harder country to survive in that is evident today in the success of Australia. By contrast countries like Japan were incredibly hostile to immigrants and it remains very undiverse. If you look at America’s rivals, most of them do not actually innovate yet, they manufacture what America allows them to and they copy but they don’t truly innovate. We ironically can innovate and invent but we are too small to develop and most of our best ideas end up being acquired cheaply by us companies.
If you choose the Global Index consider re-allocating to lottery tickets.
We’re all monkeys fella 🙈 another great video 👍🏻
Yes we are!! Haha
My monkey brain is still in Global All Cap, great video as always Damo.
Great video! I go all on VWRP, every month. The set it and forget it nature works best to distract me from those 'shiny things'
I was thinking about VWRP as well. Does the dividend go automatically back to the investment?
Loving the new editing and big fan of the podcast. Keep it up!
I love how Damien can create such educational content so entertaining! Thank you Damien :)
Really appreciate the effort, i would definitely say that the quality of your videos actually encouraged me to start investing journey in UK ..Thanks Damien for telling the stuff so calmly yo avoid this panic behaviour in investment strategy
Great video with Your style of editing! Awesome work Damien! Over 2 years ago I didn't know anything regarding investing. I was thinking investing is for people who have a lot of money. With your help I have started investing and slowly diversyfy my portfolio. Thank you so much for what you do! 👏👍🖖
I've just been investing in the S&P500 for the past 18 months now
Feels good knowing The sun never sets on my investments
I do only FTSE Global All cap, but it's more for my peace of mind, the fact that I can rest knowing that if an economy collapses I'll be relatively covered. Ultimately trying to game to get the best return is a bit futile, just invest in something that you can sleep at night and do it regularly
Worth noting that 60% of the FTSE Global All Cap is USA. 3.92% of the global fund is Apple. 3.43% is Microsoft.
I also have the FTSE Global All cap, I am not sure if I am going down the right road, but at least I am investing.