Thanks for watching everyone! Give this video a LIKE if you found it helpful. Also check out my brokerage account challenge playlist with Schwab to learn more about trading: th-cam.com/play/PLscTZuOqKWIy6s-3LSH2qNiNZW5tNIOMB.html
You can usually tell the marks for Vanguard/Fidelity, etc. Salespeople have gotten tricky. These basic tutorials are very helpful to those inquiring minds that realize brokers are going to steer them into the most lucrative commission based funds! 🤙
I just opened up my first brokerage account with Charles Schwab along with their checking account thanks to your videos! You explain things in such an easy to understand and clear format. I love your visuals and slides! It makes me feel like I'm in class having fun. I've been so confused about what ETFs and Mutual Funds are for years and you wiped that all away after 20 minutes. You are seriously amazing!
I only watched your 2 episodes: Schwab/Fidelity/Vanguard and ETF/Mutual Funds. I love your honesty and wisdom by telling me the truth and behind the scene facts, such as difference between Fidelity and Vanguard. Keep up the great work. Thank you.
Both my parents are in charge of actively managing mutual funds. Even they admit they can't beat the market but their clients are less than 10 years away from retiring and want the comfort of their money being safe.
Everyone pays for the services they want. Actively managed funds can out perform the average in the short run... but on a long enough timescale I have been convinced by the data that they all fail to a simple low cost index fund.
Jake, you are a solid Broe! Your advice about the TSP and S&P 500 last year has definitely earned you good Cuban smoke with your choice of a drink! Hopefully we'll cross our Uncle Sam's paths one day.
Thanks Artem! Glad you are benefiting from the boom we've had this last year. Just keep buying and holding. Don't mind any dips that might happen along the way!
I'm coming up on 30, and am just now looking at investing outside of my TSP for diversity. Wasted a lot of years not knowing what to do with that. Just modified it to %14, 80 C 20 S. I am looking at Vanguard, but couldn't decide between VFIAX or VTSAX. I may be looking at VTSAX, mainly because I am a little intimidated by active trading. I really appreciate the content, keep it coming.
I didn't start saving anything anywhere until I was 34! So you are doing great Matthew. And active trading isn't for everyone, Index Funds is a no-lose game if you just buy and hold. Vanguard is great and you can't go wrong with either VTSAX or VFIAX! Cheers!
You can't go wrong with either fund. I believe the Total Market lags the 500 because of the greater downturn losses with the small cap companies. But the difference is 1% or less. My advice, TSP to 5% for the match. Then $6000 to a Roth IRA in the S&P500. Then back to the TSP up to $19500. In the TSP for a 30 year old, 100% C fund.
Jake this was the first video i ever saw of you! I show this to everyone I talk to about this subject. I’ve been a victim of back door indexing 😩 I showed this to someone at northwestern mutual and they had a huge list of why it wasn’t true 🤦🏽
Hey Misael! I just saw your PayPal payment. Thanks so much for the donation. Definitely will cover my Vanilla Coke Zeros this month to get me through all my video making. Thanks so much!
Thanks for sharing the helpful information. I was so confused between Mutual Funds and ETFs. Now, I do understand about the differences after I have watched your channel.
Love these investing vids. Well researched, meticulous attention to detail, and excellent video graphic organization. Its like attending a college finance lecture.
Good video. I think the most important thing to remember about managed funds is this: Unlike you the investor, the managers of these fund are NOT making their money from the fund's performance. Instead, their business model is to recruit investors to the fund, from whom they (effectively) charge a commission. A commission that is often unrelated to the performance. i.e. the house always wins. Hence the expensive glossy brochures, advertising campaigns, sales reps, advisors and "analysts".
Excellent. Would love a follow up regarding tax efficiency. Where is the best place to hold index funds, ETFs, bonds, and REITs. Taxable vs tax advantage accounts.
Hey Kyle! I definitely will make more videos about taxes and investments in the future. But I have already made a couple videos covering the basics on this topic if you haven't already seen them. Cheers! th-cam.com/video/hMp3ZCY0Cmg/w-d-xo.html
Thanks. That was another great video! One of my current questions involves starting my taxable investment account again soon (have 403b through work and personal Roth IRA already). Looking into the convenience of automatic index fund investing (SWTSX or SWPPX) though have heard ETFs (SCHB) may be a bit more efficient in taxable account. Lots to learn! Thanks again and look forward to future videos!
As I revisit your videos that I initially found, I found them more enlightening the second time, as I've gained more knowledge thanks to them/you. I recommend every newbie to revisit them once in a while.
Just found your station, looking for resources to share with new investors. etf and mutual fund differences have been a sticking point as i could not explain the different benefits. Thank you. I might add if you are not able to make the $3k initial investment eft might help you 'get in the door' then build up the account to purchase a mutual fund. Also no taxes until you actually sell may make some new investors more confortable with their non-retirement investing.
Thanks Gall! The $3k initial investment is a Vanguard requirement. If you open a brokerage account and buy mutual funds with either Fidelity or Schwab, you can buy in to their mutual funds with as little as $1. Cheers!
This video was extremely helpful! Thank you so much for posting your knowledge for those of us who are just getting started in retirement investing. :)
I have seen people say mutual funds are not recommended due to fees. But Dave Ramsey is all for mutual funds. So I am in a situation where I don’t know which one to choose for long term. What are your opinions?
Great stuff. On one of your previous video you mentioned that you wanted to buy a home for 2021 using a VA. Real estate is a great investment do it sooner then later.
Thanks Carlos! Yep! I am looking to buy a house starting in September. Hopefully I can find the right place for me and be a homeowner by October. Cheers!
Hey Blake! Anyone actively managing a fund who loaded it with tech stocks during this pandemic has definitely beat the average. Can they continue beating the average for longer than 10+ years. I am skeptical for sure! But lots of active funds have great years for sure.
Hey Jake - Recently started watching your videos and I am now a fan. I am brand new to the investing world. I recently used Vanguard and purchased Index funds (VTSAX, VFIAX) and a few ETF's (VOO, VTI, VYM). I did so without really knowing much about investment strategies. In your opinion, should I have used a different strategy? Did I buy at the worst time possible? HELP! 😢 BTW, I am 51 years old, recently retired and I am collecting a pension from NYC.
Hey Ray! The market is at an all time high, but "time in the market beats timing the market". You bought great funds, just be sure to keep contributing when you can and ignore the news when there is a dip. Buy and hold forever!
Ray. I know you can't answer this question, but I am going to ask anyway, Why did you invest in the same underlying security, a mutual fund and it's cousin an ETF? You have both in the S&P500 and both in the Total Stock Market index. Which if you look at them, they are nearly identical in returns. So it's almost double redundant.
Good stuff as always. ^_^ Maybe my 3rd time watching this video. 😅😅 I would like to know your opinion on OGIG Jake. Maybe you'll see this, maybe you won't.
Hi Jake, great video as always! Per the norm by now, I have a question. At the beginning of this video you said you would never recommend actively managed funds. I'm interested in a genomics ETF, but I can't seem to find a passively managed version. The most prominent seems to be ARKG at expense ratio 0.75%, and a couple of others with expense ratios at 0.5%. I will likely invest a small amount in one of these, so I'm not necessarily asking for advice, but rather how do you view a situation where a passively managed version of an interesting fund doesn't exist?
Hey Austin! At my core, I am a value investor or a passive investor. My brokerage account challenge is a way for me to explore active investing. I never will recommend an active fund with a high expense ratio, but of course there is money to be made there if you can time it right. It's up to you!
Hey Think Money! I think with my ROTH IRA I will use Mutual Funds since I will only buy and hold there. But in my taxable brokerage account I'll be using ETFs.
Ok got it. Mutual funds for me but then should I change this mutual funds down the road? Or no? Or do I have stay on top of it to see how it’s performing and switch it over to a better fun down the road if it’s not doing so well?
It would be interesting to see what the mutual fund performance for similar funds would be as you move from Schwab to Fidelity to Vanguard (eg, real estate might be SWASX v. FSREX v VGSLX; S&P 500 might be SWPPX v. FXAIX v. VFIAX). I don't think I have ever seen that but there must be some differences in performance. Wonder if there is direct correlation with fees charged?
Hello Jake how will you compare fidelity FXAIX vs vanguard VGT (ETF) Will one has better performance Than other. I love to hear your opinion. I recently open FXAIX I’m thinking about our little money on VGT. Also when compare VOO vs VGT! Much appreciated
I just started watching your videos and love it, I started with your options videos and now into your other videos as well, this is complete one stop and best. Just have a quick question, does the Mutual Fund or ETF price matter (say for example a fund with a higher price where you get fewer shares compared to the one with a lower price where you end up getting more shares, which is best in terms of overall returns ? Cheers
The share price of a mutual fund, ETF, or stock doesn't matter. The unit share price is just (total value / shares in existence) and this can be changed by a company if they increase or decrease the number of shares in existence. So don't worry about price in relation to performance.
I own some “future tech” and “future industries” ETFS: MJ, ICLN, BOTZ, DRIV, and ARKF. The assumed growth in those industries should outperform the ERs (although none are that high).
Hey Christopher! It has an expense ratio of 1.24%! It might be able to beat an index for 1, 3, 5, or 10 years, but I on a long enough time scale, I am convinced actively managed funds all eventually fall to the index.
@@JakeBroe Generally I would agree, but 10 years of beating the index is a long enough time frame to concede success regardless of the fee. Regardless, love the material you provide. Keep them coming!
Hey RSTV! Do you not think you will get more value from your Marriot card than what you pay for it in annual fees? If so, and you waited a year, then I would get rid of it.
I was wondering what the difference is so this video clears it out. By the way, Dave Ramsey claims that Mutual Funds are better than ETFs, because he knows 4 specific ones (no idea which ones) that constantly outperform the market.
Hey Evangelia! I think Dave steers people towards mutual funds because he wants his listeners to be buy and hold investors. Like I covered in the video, ETFs perform the same, but can be bought and sold like stocks and Dave opposes this idea. He also recommends 4 types of funds... but he never endorses a specific bank's fund or any bank to his listeners. Mutual Funds are better for buy and hold investors because it removes the temptation of checking the markets during the day. Just my opinion!
Jake Broe sorry jake I totally disagree. I think ETFs is as much of a buy and hold as any mutual funds out there, minus the hefty fee. The narrative that mutual funds are buy and hold and EFTs are anything less is just not true. This is misleading to the readers.
@@JakeBroe I see what you mean. I bought my first ETFs a week ago and boy, I'm checking them all the time. I obsess about any drop and become happy when I earn a couple of euros for the day. I see how it could be used for speculation. Transaction fees are not that high for ETFs so there is nothing stopping you from trading them as stocks.
@@STRpros what Jake means is that you have lots of flexibility to buy and sell during the day. In the case of a mutual fund there is a minimum hold period. So not suitable for traders.
Just found your videos, thank you for taking the time to create these. I am pretty new to investing. I have Roth IRA with Schwab I moved over to them from my 401k from previous job of about 3k. Any advice on how I should spread it out? ETF or Mutual funds? I am looking for long term hold. Thank you in advance.
Hey Amodj! If you aren't sure where to start, by default answer is to just invest everything you have in a total stock market ETF. You can buy Vanguard's Total Market ETF - ticker VTI. You can buy that with your Schwab account and it is hard to beat. Just be sure to re-invest dividends and hold forever. Do not sell if the market takes a dip.
Great job! I wish I would have found you years ago. I'll be investing my lump sum Investments in Vanguard mutual fund. Can that be done using a Roth IRA vehicle method?
I bought the SP500 ETF but it's not VOO it's UCITS. I'm from Europe. Could that have something to do with it? Is there any difference. Great video btw!
Thanks Sean! Yeah, if you don't have trading access to the New York Stock Exchange (from Europe), then you got an ETF from a local stock exchange that tracks the S&P 500.
@@JakeBroe do u think it's better than the total market ETFs? If I split my investments in more ETFs rather than one do I pay more taxes? The compound effect will be the same (as long as they're good ETFs)?
Great content. I hold IVV since one year in Fidelity taxable account and want hold on to this for 20 years. Is it tax inefficient to hold IVV in a taxable account for long term like 20 years? Planning to dollar cost average every month
Great video! If I want to do VOO through Vanguard, do you know what the Spread is like? I'm leaning ETF due to flexibility, but if there's a spread for doing this, then I'll do VFAIX or VTSAX instead
Hey poolking! If you buy during the day (always avoid the first 30 minutes of trading), then the spread is always very small (a couple cents per share) when buying VOO. Not a concern!
I am 46 years old, I can not afford 3,000 dollars for Vanguard minimum mutual funds ? Would you suggest buying ETFs? I have Vanguard, can you buy fractional ETFs through them? Are mutual funds and index funds different? What is the minimum you have to buy Index fund for vanguard?
one point: you say that a disadvantage of ETF vs. M fund, is that each transaction with ETF has tax implications, [ie. if you sell some or all of your ETF holding during the year] unlike with a Mutual Fund where that would not be the case.... well, that is ONLY true if the Mutual Fund is in an IRA or 401K. if the Mutual fund is outside of such, its just a MF you invested it. then there are tax implications on any sale of all of part of it as well. right? so, in that case, thre are tax implications equally for both the ETF index fund and the Mutal Fund index fund.
I am retired and live in Mexico, with an account with Fidelity. A few years ago they made a rule that people outside the US (even US citizens like me) are not allowed to buy mutual funds, but can buy ETFs. That settles the choice for me.
Hey Tyree! Fidelity is a great platform, but I do not see the value of Target Date Funds. If they contain any bonds and force you to hold them over decades, you will just have less money in 2060 than if you just bought the S&P 500 index Fund ETF and kept that. I would just stick with SPY and not the TDF version of it.
Hey Jake, great video. One question that I saw when you responded to someone else comment. I have a Roth IRA in fidelity with VTI,VXUX,BND. I like actively managing it but at the same time I think there’d be a point where it gets time consuming. I saw that you said you would do mutual funds for your Roth and etf for taxable. Can you explain why this is as with automatic investing in a Roth, you can only automatically invest so much until you reach the maximum contribution limit of the year (6k). Do you have to check right before it hits 6k so you don’t overinvest or do mutual funds automatically will stop you from contributing more
Hey Colton! If you setup automatic investing in your ROTH IRA, I would just auto invest $500 a month. Dollar cost averaging in to the market over a year period has many advantages to trying to time the market. Also if you setup $500 payments, then you will know you won't go over the $6,000 limit. In that comment I believe I said mutual funds in my IRA and ETFs in my brokerage account because in my IRA, I only plan to buy and hold. I don't want to be tempted to try and time the market. However, in my taxable brokerage account I am very much currently trying to be an active trader and I want the increased functionality that ETFs get me. It's possible I am doing more harm than good by trying to time the market, but I am comfortable with that risk knowing I am NOT doing that in my retirement accounts. Cheers!
Jake Broe thank Jake. Very informative. Are there any other investment vehicles of yours that you simply buy and hold besides your IRA? Maybe HSA or something else? I’m curious as after I max out my Roth, where else should I start buy and holding for maximum tax efficiency because I’m not an active trader even with etf’s.
@@coltonpope6061 , I do not have an HSA yet, but that is something more people should know about. I haven't made a video about it yet, but I will soon! HSAs are tax deductible when money goes and and tax free when money comes out. I will definitely start buying and holding in an HSA soon!
Hi there Jake , my understanding is that you can't reinvest dividends from etf , is that a problem because i would have to pay taxes everytime i get a dividen? Thank you.
Another great video as usual Jake! Keep up with the good job. I have been switching to more index funds now with Schwab for my IRA. Love that they only need $1 to start with, and super easy to set up an automatic investment option.
Yep! Schwab has no minimum to buy their mutual funds. That seems like an obvious move to get new, younger customers. Vanguard requires $3,000. They honestly does need to update some of their policies and their platform to stay competitive in the modern age.
What do you feel is your preferred asset allocation? That is, do you recommend just one S&P index fund for a Roth IRA? Or would you add another fund to it, like international funds. Also, there is the Swensen model of investing that is kind of interesting. What are you thoughts on that? Lastly, would you recommend something tax inefficient on retirement accounts to take advantage of the tax benefits?
Hey Spartan! Asset allocation really depends on how active someone wants to be. For a simple buy and hold investor, someone who doesn't need to touch or use their money for a greater than 5 year period (under the age of 55 for a ROTH IRA), then I would recommend just 100% an S&P 500 Index Fund or Total Stock Market Fund. That is what I am doing with my own ROTH IRA. But diversifying with REITs, international, and emerging markets is fine. It might beat the American index performance, it might not. The only thing I cannot support is holding ANY type of bonds in a retirement account for decades. I've looked in to this and it mathematically serves no purpose. The Swenson Portfolio contains 30% bonds. That might be wise if you plan on using or pulling money out of a taxable brokerage account in the near future, but I would never do this in a retirement account. Cheers!
On his channel he recommends actively traded funds but then never actually names the company or the name of the funds... just claims he gets 13% in his actively traded fund and beats a simple index. Weird...
So you don't recommend actively managed funds. So do you recommend those robo accounts? Those are managed accounts like Accorns, etc.. and even Fidelity has one too. What are your thoughts on those types off accounts?
Great video! Question about ETFs: right now my entire Roth IRA is in IWF. Assuming the money will be there for 40 years, to me it seems like it will outperform SPY. Am I missing something? To take it one step further, why not put it all into TQQQ if I can ride the wave for 40 years?
Hey Jeffrey! Growth stocks, those included in IWF, have performed phenomenally the last 10 years. But that hasn't always been the case. Value stocks in the past 120 years worth of data have outperformed growth stocks at numerous points in our history. If America enters a different economic period where growth stocks stagnate or actually shrink, then value stocks will outperform them. I think inevitably we will hit another point in history where this will happen, but it might still be a while. IWF might outperform IWF or VOO. As for TQQQ, it is a leveraged ETF designed for day traders. It doesn't work for buy and hold long term investors. Check out this video. th-cam.com/video/H8FIgBiuT60/w-d-xo.html
Hey TAB! FXAIX is the Fidelity mutual fund equivalent to the C Fund. FSEVX is the Fidelity mutual fund equivalent to the S Fund. If you want ETFs, then you can buy VOO of VXF with your Fidelity account.
Hi, Jake I recently opened a Roth IRA account on Vanguard. I bought 3 mutual funds and 1 Etf fund. According to your video, is an active investment not a proper option for a long term invest? I bought VTI.
Hey Erik! I think the Wells Fargo Propel is one of the best no annual fee cards anyone can get today. The Freedom Flex might be a better deal at the moment because of the 5% grocery category for a year. Both are great options!
Hey Jul He! You can do the same fund in both accounts. If you don't have a specific preference, then you can't go wrong with VTI (ETF) which is Vanguard's total stock market index ETF.
What are your thoughts for a brokerage account...which is the better way to go for tax efficiency, the index fund or ETF's? From what I've been reading I've gathered index funds are better in a retirement account and ETF's in a retirement or brokerage. Can you give some insight on this please?
Hey Keni! There should not be a difference between how you are taxed in a brokerage account between mutual funds and ETFs. You pay capital gains on any profits made from a sale, and you pay taxes on dividend distributions made throughout the year. For tax purposes, they are the same if your buying and selling timing would remain the same.
@@JakeBroe but in regards to the turnover rate of index funds. Doesn't everyone in the fund have to pay taxes when that happens? Whereas ETF's don't have that?
@@kenikenni6362 , so I think you are confused Keni. Index funds can be either mutual funds or ETFs and they are passively managed, so yes, they turn over less and have a lower tax burden. Actively managed funds (controlled by fund managers) can also be either mutual funds or ETFs and they do have a larger tax burden due to high turn over. I would never recommend an actively managed fund (either mutual fund or ETF). ETFs can either be index funds or actively managed funds.
@@JakeBroe OK. So both an index fund and an ETF will both have a turnover rate. Thats the part that was confusing me. Thanks for the clarification on that.
Thanks for watching everyone! Give this video a LIKE if you found it helpful. Also check out my brokerage account challenge playlist with Schwab to learn more about trading: th-cam.com/play/PLscTZuOqKWIy6s-3LSH2qNiNZW5tNIOMB.html
There’s lot of terminology in what I would like to call “stock field!” Thanks for making the terms crystal clear to me!
चििििििपिि
Can I just walk into a Charles Schwab and ask them to invest my money in Mutual Funds ??
Unlike most investing youtubers this one has 100% useful info and 0% bs. Love it!
Thanks Martin! I appreciate the support!
You can usually tell the marks for Vanguard/Fidelity, etc. Salespeople have gotten tricky. These basic tutorials are very helpful to those inquiring minds that realize brokers are going to steer them into the most lucrative commission based funds! 🤙
No music straight to point no bull shit.. you rock ty ty 😊 🙏
U need to be a college professor u always have the visuals put together properl!
Thanks so much CJ Mor! I appreciate the high praise!
I just opened up my first brokerage account with Charles Schwab along with their checking account thanks to your videos! You explain things in such an easy to understand and clear format. I love your visuals and slides! It makes me feel like I'm in class having fun. I've been so confused about what ETFs and Mutual Funds are for years and you wiped that all away after 20 minutes. You are seriously amazing!
Thanks for watching Chika! Glad I was able to help explain the difference! Cheers!
Your presentations are so clear and never intimidating... thanks so much!
Awesome! Thanks for watching Chris! Cheers!
I only watched your 2 episodes: Schwab/Fidelity/Vanguard and ETF/Mutual Funds. I love your honesty and wisdom by telling me the truth and behind the scene facts, such as difference between Fidelity and Vanguard. Keep up the great work. Thank you.
Your content is amazing! Success will follow, keep working.
Haha, I sure hope so! Thanks Surya!
Both my parents are in charge of actively managing mutual funds. Even they admit they can't beat the market but their clients are less than 10 years away from retiring and want the comfort of their money being safe.
Everyone pays for the services they want. Actively managed funds can out perform the average in the short run... but on a long enough timescale I have been convinced by the data that they all fail to a simple low cost index fund.
Your videos are the right length. Addresses key questions and consistent in messaging. Great stuff
Thanks so much Roshan! Glad you found them!
The best information I ever got about mutual funds vs ETFs, thanks!
Jake, you are a solid Broe! Your advice about the TSP and S&P 500 last year has definitely earned you good Cuban smoke with your choice of a drink! Hopefully we'll cross our Uncle Sam's paths one day.
Thanks Artem! Glad you are benefiting from the boom we've had this last year. Just keep buying and holding. Don't mind any dips that might happen along the way!
I'm coming up on 30, and am just now looking at investing outside of my TSP for diversity. Wasted a lot of years not knowing what to do with that. Just modified it to %14, 80 C 20 S. I am looking at Vanguard, but couldn't decide between VFIAX or VTSAX. I may be looking at VTSAX, mainly because I am a little intimidated by active trading. I really appreciate the content, keep it coming.
I didn't start saving anything anywhere until I was 34! So you are doing great Matthew. And active trading isn't for everyone, Index Funds is a no-lose game if you just buy and hold. Vanguard is great and you can't go wrong with either VTSAX or VFIAX! Cheers!
You can't go wrong with either fund. I believe the Total Market lags the 500 because of the greater downturn losses with the small cap companies. But the difference is 1% or less.
My advice, TSP to 5% for the match. Then $6000 to a Roth IRA in the S&P500. Then back to the TSP up to $19500. In the TSP for a 30 year old, 100% C fund.
Jake this was the first video i ever saw of you! I show this to everyone I talk to about this subject. I’ve been a victim of back door indexing 😩 I showed this to someone at northwestern mutual and they had a huge list of why it wasn’t true 🤦🏽
Hey Misael! I just saw your PayPal payment. Thanks so much for the donation. Definitely will cover my Vanilla Coke Zeros this month to get me through all my video making. Thanks so much!
Thanks Jake! As always, extremely helpful!
Thanks for watching CORGISAAN! Cheers!
Thanks for sharing the helpful information. I was so confused between Mutual Funds and ETFs. Now, I do understand about the differences after I have watched your channel.
Awesome! I am glad you got it now CT! Cheers!
Awesome explanation! Thanks for posting this. That made is super clear.
Thanks for watching and thanks for the support Eugene!
Outstanding information this was all very helpful 👍🏽👍🏽
Thanks for the comment Chris! Cheers!
This video was excellent. Great job man!
Glad you enjoyed it! Cheers!
Love these investing vids. Well researched, meticulous attention to detail, and excellent video graphic organization. Its like attending a college finance lecture.
Thanks for watching my content Gerry! Cheers!
Just started watching your channel. You have a great way of explaining things.
Thanks Ed! I appreciate that!
Good video.
I think the most important thing to remember about managed funds is this:
Unlike you the investor, the managers of these fund are NOT making their money from the fund's performance.
Instead, their business model is to recruit investors to the fund, from whom they (effectively) charge a commission. A commission that is often unrelated to the performance. i.e. the house always wins.
Hence the expensive glossy brochures, advertising campaigns, sales reps, advisors and "analysts".
Excellent. Would love a follow up regarding tax efficiency. Where is the best place to hold index funds, ETFs, bonds, and REITs. Taxable vs tax advantage accounts.
Hey Kyle! I definitely will make more videos about taxes and investments in the future. But I have already made a couple videos covering the basics on this topic if you haven't already seen them. Cheers!
th-cam.com/video/hMp3ZCY0Cmg/w-d-xo.html
Thanks. That was another great video! One of my current questions involves starting my taxable investment account again soon (have 403b through work and personal Roth IRA already). Looking into the convenience of automatic index fund investing (SWTSX or SWPPX) though have heard ETFs (SCHB) may be a bit more efficient in taxable account. Lots to learn! Thanks again and look forward to future videos!
As I revisit your videos that I initially found, I found them more enlightening the second time, as I've gained more knowledge thanks to them/you. I recommend every newbie to revisit them once in a while.
Thanks so much Duran! I really appreciate that!
Definitely want more of your insights. Refreshing.
Great video, very clear!!!💯💯
Thanks Jul! Cheers!
Quality content, my friend. Thoroughly enjoyed this! Thank you!
Thanks JJ!
I like watching your videos because it is the best.
Just found your station, looking for resources to share with new investors. etf and mutual fund differences have been a sticking point as i could not explain the different benefits. Thank you. I might add if you are not able to make the $3k initial investment eft might help you 'get in the door' then build up the account to purchase a mutual fund. Also no taxes until you actually sell may make some new investors more confortable with their non-retirement investing.
Thanks Gall! The $3k initial investment is a Vanguard requirement. If you open a brokerage account and buy mutual funds with either Fidelity or Schwab, you can buy in to their mutual funds with as little as $1. Cheers!
This video was extremely helpful! Thank you so much for posting your knowledge for those of us who are just getting started in retirement investing. :)
Thanks for the information. I am currently transferring my TD Ameritrade account to Charles Schwab and the information you provided in rt
You are very welcome Al! Thanks for watching!
thanks this was helpful, its like the index funds are the long term meta, now i get why
Great Video Jake, really help me.
Thanks,
MM4US
Super content. Thanks, and keep posting.
Thanks william! Will do!
Great video. I've been looking to shift some savings to open up a Roth IRA and this definitely helped!
Awesome Julius! I am glad you found this video. Cheers!
I like many of your videos, but this one was even more helpful. Thanks a lot..
Many thanks A very nice clear explanation for people like myself who are just starting in small scale investing.
Thanks for watching Andrew! I wish you the best of luck with your investments!
Video topic begins at 9:20
Jake, great content like always! Keep them coming.
Thanks Jose! I appreciate the support!
You should always pick ETF’s. They are better for taxes
I have seen people say mutual funds are not recommended due to fees. But Dave Ramsey is all for mutual funds. So I am in a situation where I don’t know which one to choose for long term. What are your opinions?
Great stuff. On one of your previous video you mentioned that you wanted to buy a home for 2021 using a VA. Real estate is a great investment do it sooner then later.
Thanks Carlos! Yep! I am looking to buy a house starting in September. Hopefully I can find the right place for me and be a homeowner by October. Cheers!
I have got a lot of return on ARKK ETF, which is actively managed, but not one I am trying to be in long-term.
Hey Blake! Anyone actively managing a fund who loaded it with tech stocks during this pandemic has definitely beat the average. Can they continue beating the average for longer than 10+ years. I am skeptical for sure! But lots of active funds have great years for sure.
Hey Jake - Recently started watching your videos and I am now a fan. I am brand new to the investing world. I recently used Vanguard and purchased Index funds (VTSAX, VFIAX) and a few ETF's (VOO, VTI, VYM). I did so without really knowing much about investment strategies. In your opinion, should I have used a different strategy? Did I buy at the worst time possible? HELP! 😢 BTW, I am 51 years old, recently retired and I am collecting a pension from NYC.
Hey Ray! The market is at an all time high, but "time in the market beats timing the market". You bought great funds, just be sure to keep contributing when you can and ignore the news when there is a dip. Buy and hold forever!
Ray. I know you can't answer this question, but I am going to ask anyway, Why did you invest in the same underlying security, a mutual fund and it's cousin an ETF? You have both in the S&P500 and both in the Total Stock Market index.
Which if you look at them, they are nearly identical in returns. So it's almost double redundant.
great content. very easy to understand your explanations, thanks!
Thanks for watching kazu! I appreciate the support!
Nice job, Broe!
Thanks so much Kevin! Cheers!
great video, thanks, subscribed!
Awesome! Welcome to the channel Eugene! Great to have you with us!
Great explanation Jake! Thanks
Thanks Anthony! Cheers!
Great video. Thank you for sharing your view points
Thanks for watching and commenting Cliff! Cheers!
Thank you for making this video
So I was going to open a Roth IRA but learned I make too much to contribute to it. I guess just a regular iRA then?
Thanks Jake. Love your Chanel
Thanks Ronald! I appreciate the support!
Thanks for the great info!
Thanks for watching Maranta! Cheers!
Thanks for the helpful info Jake!
Good stuff as always. ^_^
Maybe my 3rd time watching this video. 😅😅
I would like to know your opinion on OGIG Jake.
Maybe you'll see this, maybe you won't.
Hi Jake, great video as always! Per the norm by now, I have a question. At the beginning of this video you said you would never recommend actively managed funds. I'm interested in a genomics ETF, but I can't seem to find a passively managed version. The most prominent seems to be ARKG at expense ratio 0.75%, and a couple of others with expense ratios at 0.5%. I will likely invest a small amount in one of these, so I'm not necessarily asking for advice, but rather how do you view a situation where a passively managed version of an interesting fund doesn't exist?
Hey Austin! At my core, I am a value investor or a passive investor. My brokerage account challenge is a way for me to explore active investing. I never will recommend an active fund with a high expense ratio, but of course there is money to be made there if you can time it right. It's up to you!
I prefer ETF’s 💰💯
Hey Think Money! I think with my ROTH IRA I will use Mutual Funds since I will only buy and hold there. But in my taxable brokerage account I'll be using ETFs.
Thank you Jake💯
You are very welcome Teri! Cheers!
Ok got it. Mutual funds for me but then should I change this mutual funds down the road? Or no? Or do I have stay on top of it to see how it’s performing and switch it over to a better fun down the road if it’s not doing so well?
It would be interesting to see what the mutual fund performance for similar funds would be as you move from Schwab to Fidelity to Vanguard (eg, real estate might be SWASX v. FSREX v VGSLX; S&P 500 might be SWPPX v. FXAIX v. VFIAX). I don't think I have ever seen that but there must be some differences in performance. Wonder if there is direct correlation with fees charged?
Hello Jake how will you compare fidelity FXAIX vs vanguard VGT (ETF)
Will one has better performance Than other. I love to hear your opinion. I recently open FXAIX I’m thinking about our little money on VGT. Also when compare VOO vs VGT! Much appreciated
I just started watching your videos and love it, I started with your options videos and now into your other videos as well, this is complete one stop and best. Just have a quick question, does the Mutual Fund or ETF price matter (say for example a fund with a higher price where you get fewer shares compared to the one with a lower price where you end up getting more shares, which is best in terms of overall returns ? Cheers
The share price of a mutual fund, ETF, or stock doesn't matter. The unit share price is just (total value / shares in existence) and this can be changed by a company if they increase or decrease the number of shares in existence. So don't worry about price in relation to performance.
I own some “future tech” and “future industries” ETFS: MJ, ICLN, BOTZ, DRIV, and ARKF. The assumed growth in those industries should outperform the ERs (although none are that high).
For sure these tech ETFs have been dominating this year. Way outperforming the average. Let's see how long they can keep it up!
Jake Broe yep. The important thing is to know when to get out. Although holding them for 10-20 years at the very least, seems likely.
Mutial Fund PNSAX has done rather well compared to the relative index for the 1, 3, 5 and 10 year comparisons.
Hey Christopher! It has an expense ratio of 1.24%! It might be able to beat an index for 1, 3, 5, or 10 years, but I on a long enough time scale, I am convinced actively managed funds all eventually fall to the index.
@@JakeBroe Generally I would agree, but 10 years of beating the index is a long enough time frame to concede success regardless of the fee. Regardless, love the material you provide. Keep them coming!
This was a great video, I had no idea what an ETF was.
ETFs are great! You buy any company's ETFs with any broker. Too easy!
Great info. Thanks.👍👍
Thanks Lori! Cheers!
English is my second language love the way you talk very smooth and details. Thank you sir.
Another Great vid! I just got the Schwab Platinum, do you think I should just get rid of my marriott bonvoy brilliant?
Hey RSTV! Do you not think you will get more value from your Marriot card than what you pay for it in annual fees? If so, and you waited a year, then I would get rid of it.
I was wondering what the difference is so this video clears it out. By the way, Dave Ramsey claims that Mutual Funds are better than ETFs, because he knows 4 specific ones (no idea which ones) that constantly outperform the market.
Dave Ramsey is a fool, has real good intention but often speaks without facts and reasoning. Average people follow him, smart people turn away.
Hey Evangelia! I think Dave steers people towards mutual funds because he wants his listeners to be buy and hold investors. Like I covered in the video, ETFs perform the same, but can be bought and sold like stocks and Dave opposes this idea. He also recommends 4 types of funds... but he never endorses a specific bank's fund or any bank to his listeners. Mutual Funds are better for buy and hold investors because it removes the temptation of checking the markets during the day. Just my opinion!
Jake Broe sorry jake I totally disagree. I think ETFs is as much of a buy and hold as any mutual funds out there, minus the hefty fee. The narrative that mutual funds are buy and hold and EFTs are anything less is just not true. This is misleading to the readers.
@@JakeBroe I see what you mean. I bought my first ETFs a week ago and boy, I'm checking them all the time. I obsess about any drop and become happy when I earn a couple of euros for the day. I see how it could be used for speculation. Transaction fees are not that high for ETFs so there is nothing stopping you from trading them as stocks.
@@STRpros what Jake means is that you have lots of flexibility to buy and sell during the day. In the case of a mutual fund there is a minimum hold period. So not suitable for traders.
Great video. Small mistake you made: The s&p 500 is all large cap. You said it includes small and mid caps and that is not true. Its all large caps.
Thanks John! You are correct, I don't remember what I said but I must have misspoke. Cheers!
You can take passive approach on ETF investment too, can't you? The "active" option is there but you don't have to use it. How is that?
Just found your videos, thank you for taking the time to create these. I am pretty new to investing. I have Roth IRA with Schwab I moved over to them from my 401k from previous job of about 3k. Any advice on how I should spread it out? ETF or Mutual funds? I am looking for long term hold. Thank you in advance.
Hey Amodj! If you aren't sure where to start, by default answer is to just invest everything you have in a total stock market ETF. You can buy Vanguard's Total Market ETF - ticker VTI. You can buy that with your Schwab account and it is hard to beat. Just be sure to re-invest dividends and hold forever. Do not sell if the market takes a dip.
@@JakeBroe Thank you for the prompt reply and for the recommendation. I appreciate it. Looking forward to more of your content
Great job!
I wish I would have found you years ago.
I'll be investing my lump sum Investments in Vanguard mutual fund.
Can that be done using a Roth IRA vehicle method?
I bought the SP500 ETF but it's not VOO it's UCITS. I'm from Europe. Could that have something to do with it? Is there any difference. Great video btw!
Thanks Sean! Yeah, if you don't have trading access to the New York Stock Exchange (from Europe), then you got an ETF from a local stock exchange that tracks the S&P 500.
@@JakeBroe do u think it's better than the total market ETFs? If I split my investments in more ETFs rather than one do I pay more taxes? The compound effect will be the same (as long as they're good ETFs)?
Great content. I hold IVV since one year in Fidelity taxable account and want hold on to this for 20 years. Is it tax inefficient to hold IVV in a taxable account for long term like 20 years? Planning to dollar cost average every month
S&P500 or Target retirement fund?
Or 50/50?
Your opinion?
Great video! If I want to do VOO through Vanguard, do you know what the Spread is like? I'm leaning ETF due to flexibility, but if there's a spread for doing this, then I'll do VFAIX or VTSAX instead
Hey poolking! If you buy during the day (always avoid the first 30 minutes of trading), then the spread is always very small (a couple cents per share) when buying VOO. Not a concern!
I am 46 years old, I can not afford 3,000 dollars for Vanguard minimum mutual funds ? Would you suggest buying ETFs? I have Vanguard, can you buy fractional ETFs through them? Are mutual funds and index funds different? What is the minimum you have to buy Index fund for vanguard?
one point: you say that a disadvantage of ETF vs. M fund, is that each transaction with ETF has tax implications, [ie. if you sell some or all of your ETF holding during the year] unlike with a Mutual Fund where that would not be the case.... well, that is ONLY true if the Mutual Fund is in an IRA or 401K. if the Mutual fund is outside of such, its just a MF you invested it. then there are tax implications on any sale of all of part of it as well. right? so, in that case, thre are tax implications equally for both the ETF index fund and the Mutal Fund index fund.
Correct
If you sell shares of a Mutual Fund this is a taxable event.
If you sell shares of a EFT this is a taxable event.
No difference.
One thing I like about ETFs as opposed to MFs is that you can get in and out so much faster.
Which appears to be a bad thing for you. Make you a trader rather than an investor.
I am retired and live in Mexico, with an account with Fidelity. A few years ago they made a rule that people outside the US (even US citizens like me) are not allowed to buy mutual funds, but can buy ETFs. That settles the choice for me.
I’m holding a target date fund for 2060 and tracking the S&P 500 (SPY) on Fidelity’s platform is that good. I’m 23 by the way.
Hey Tyree! Fidelity is a great platform, but I do not see the value of Target Date Funds. If they contain any bonds and force you to hold them over decades, you will just have less money in 2060 than if you just bought the S&P 500 index Fund ETF and kept that. I would just stick with SPY and not the TDF version of it.
Hey Jake, great video. One question that I saw when you responded to someone else comment. I have a Roth IRA in fidelity with VTI,VXUX,BND. I like actively managing it but at the same time I think there’d be a point where it gets time consuming. I saw that you said you would do mutual funds for your Roth and etf for taxable. Can you explain why this is as with automatic investing in a Roth, you can only automatically invest so much until you reach the maximum contribution limit of the year (6k). Do you have to check right before it hits 6k so you don’t overinvest or do mutual funds automatically will stop you from contributing more
Hey Colton! If you setup automatic investing in your ROTH IRA, I would just auto invest $500 a month. Dollar cost averaging in to the market over a year period has many advantages to trying to time the market. Also if you setup $500 payments, then you will know you won't go over the $6,000 limit. In that comment I believe I said mutual funds in my IRA and ETFs in my brokerage account because in my IRA, I only plan to buy and hold. I don't want to be tempted to try and time the market. However, in my taxable brokerage account I am very much currently trying to be an active trader and I want the increased functionality that ETFs get me. It's possible I am doing more harm than good by trying to time the market, but I am comfortable with that risk knowing I am NOT doing that in my retirement accounts. Cheers!
Jake Broe thank Jake. Very informative. Are there any other investment vehicles of yours that you simply buy and hold besides your IRA? Maybe HSA or something else? I’m curious as after I max out my Roth, where else should I start buy and holding for maximum tax efficiency because I’m not an active trader even with etf’s.
@@coltonpope6061 , I do not have an HSA yet, but that is something more people should know about. I haven't made a video about it yet, but I will soon! HSAs are tax deductible when money goes and and tax free when money comes out. I will definitely start buying and holding in an HSA soon!
Hi there Jake , my understanding is that you can't reinvest dividends from etf , is that a problem because i would have to pay taxes everytime i get a dividen? Thank you.
Another great video as usual Jake! Keep up with the good job. I have been switching to more index funds now with Schwab for my IRA. Love that they only need $1 to start with, and super easy to set up an automatic investment option.
Yep! Schwab has no minimum to buy their mutual funds. That seems like an obvious move to get new, younger customers. Vanguard requires $3,000. They honestly does need to update some of their policies and their platform to stay competitive in the modern age.
What do you feel is your preferred asset allocation? That is, do you recommend just one S&P index fund for a Roth IRA? Or would you add another fund to it, like international funds.
Also, there is the Swensen model of investing that is kind of interesting. What are you thoughts on that?
Lastly, would you recommend something tax inefficient on retirement accounts to take advantage of the tax benefits?
Hey Spartan! Asset allocation really depends on how active someone wants to be. For a simple buy and hold investor, someone who doesn't need to touch or use their money for a greater than 5 year period (under the age of 55 for a ROTH IRA), then I would recommend just 100% an S&P 500 Index Fund or Total Stock Market Fund. That is what I am doing with my own ROTH IRA. But diversifying with REITs, international, and emerging markets is fine. It might beat the American index performance, it might not. The only thing I cannot support is holding ANY type of bonds in a retirement account for decades. I've looked in to this and it mathematically serves no purpose. The Swenson Portfolio contains 30% bonds. That might be wise if you plan on using or pulling money out of a taxable brokerage account in the near future, but I would never do this in a retirement account. Cheers!
Wonder why Dave Ramsey recommends actively managed funds 🤔
On his channel he recommends actively traded funds but then never actually names the company or the name of the funds... just claims he gets 13% in his actively traded fund and beats a simple index. Weird...
So you don't recommend actively managed funds. So do you recommend those robo accounts? Those are managed accounts like Accorns, etc.. and even Fidelity has one too. What are your thoughts on those types off accounts?
and for the newbies like me.. what is active and passive manage funds?
You can’t predict the future, unless you bought Tesla...
Great video! Question about ETFs: right now my entire Roth IRA is in IWF. Assuming the money will be there for 40 years, to me it seems like it will outperform SPY. Am I missing something? To take it one step further, why not put it all into TQQQ if I can ride the wave for 40 years?
Hey Jeffrey! Growth stocks, those included in IWF, have performed phenomenally the last 10 years. But that hasn't always been the case. Value stocks in the past 120 years worth of data have outperformed growth stocks at numerous points in our history. If America enters a different economic period where growth stocks stagnate or actually shrink, then value stocks will outperform them. I think inevitably we will hit another point in history where this will happen, but it might still be a while. IWF might outperform IWF or VOO.
As for TQQQ, it is a leveraged ETF designed for day traders. It doesn't work for buy and hold long term investors. Check out this video.
th-cam.com/video/H8FIgBiuT60/w-d-xo.html
Dem saw your channel for the war in ukraine
Question - would like to know which fidelity funds are similar to TSP C and S funds? Just trying to mimick what the tsp funds are doing. TIA
Hey TAB! FXAIX is the Fidelity mutual fund equivalent to the C Fund. FSEVX is the Fidelity mutual fund equivalent to the S Fund. If you want ETFs, then you can buy VOO of VXF with your Fidelity account.
Well played good sir
Thanks so much Andrew! Cheers!
Great Tutorials! I am in my 70’s what would you suggest if I want to invest $10,000. I will appreciate. Thanks
Hi, Jake
I recently opened a Roth IRA account on Vanguard. I bought 3 mutual funds and 1 Etf fund. According to your video, is an active investment not a proper option for a long term invest? I bought VTI.
VTI is a great total stock market ETF! Just buy and hold forever!
Hey Jake,
Would you still recommend the Wells Fargo propel or the freedom flex in your no annual trifecta ?
Hey Erik! I think the Wells Fargo Propel is one of the best no annual fee cards anyone can get today. The Freedom Flex might be a better deal at the moment because of the 5% grocery category for a year. Both are great options!
So IVV/VTI would be better than fxaix/fzrox in a taxable account?
What index fund should I put in my Roth and what in my taxable account? Planning to open an account at Vanguard. Currently at fidelity.
Hey Jul He! You can do the same fund in both accounts. If you don't have a specific preference, then you can't go wrong with VTI (ETF) which is Vanguard's total stock market index ETF.
What are your thoughts for a brokerage account...which is the better way to go for tax efficiency, the index fund or ETF's? From what I've been reading I've gathered index funds are better in a retirement account and ETF's in a retirement or brokerage. Can you give some insight on this please?
Hey Keni! There should not be a difference between how you are taxed in a brokerage account between mutual funds and ETFs. You pay capital gains on any profits made from a sale, and you pay taxes on dividend distributions made throughout the year. For tax purposes, they are the same if your buying and selling timing would remain the same.
@@JakeBroe but in regards to the turnover rate of index funds. Doesn't everyone in the fund have to pay taxes when that happens? Whereas ETF's don't have that?
@@kenikenni6362 , so I think you are confused Keni. Index funds can be either mutual funds or ETFs and they are passively managed, so yes, they turn over less and have a lower tax burden. Actively managed funds (controlled by fund managers) can also be either mutual funds or ETFs and they do have a larger tax burden due to high turn over. I would never recommend an actively managed fund (either mutual fund or ETF). ETFs can either be index funds or actively managed funds.
@@JakeBroe OK. So both an index fund and an ETF will both have a turnover rate. Thats the part that was confusing me. Thanks for the clarification on that.