Why I Prefer Index Funds | ETF vs Index Fund

Vanguard vs fidelity vs Schwab? Which one is best ? Thank you.

fidelity is the best brokerage on the market for now. auto deposit and auto invest whatever you want including bitcoin(not for me).

Actually Buying of just any ETFs is easy, but buying the right one without a time-tested strategy is incredibly hard. Hence which is best to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $260K for sometime now, my major challenge is not knowing the best entry and exit strategies.

For someone who thinks it’s worth it to deal with headache of buying and selling an illiquid property and maintaining it, I’m surprised that having to click “buy” once every few months for your ETF is reason enough to give up 0.1% expense ratio on a number that will eventually cost you tens of thousands of dollars.

index funds require $3000 minimum investment. ETF have no minimum.

Now Vanguard does allow ETF fractional shares. I have fractional shares in VOO and VTI.

for me they all r kind of related😅😊

From my understanding, for most people who are only using tax deferred accounts it basically doesn't matter, and index funds are just easier to automate so better for 90% of people who just need to set it and forget it. When you start contributing to taxable brokerage accounts is where ETFs can give you a bit of a boost.

lol index funds aren’t available for small money there is no second option here
The etfs can be bought at fractional lol what’s this guy talking about?😂

Index fund is any fund that passively matches a benchmarked index. This is mutual funds vs ETFs. ETFs and mutual funds can both be indexed funds or actively managed.

Index funds and /or ETFs are not the best way to invest .. In fact it’s lies .. it does not take much time to research what stocks to purchase … Investing also is not luck if you are doing well

Thanks for the video! I have a question. I understand that VOO and VFIAX are essentially the same except that VOO is an ETF and VFIAX is not. If I want to buy VFIAX there is a $19.95 commission. If I buy VOO(the ETF) there is no commission. With that in mind, and given that their yearly expenses are about the same, why would someone not want to buy VOO vs VFIAX?

Dude...I simply did not know this nuance between the two. Thanks a million. I am devising a model for parents to invest for their newborns and was all in on ETFs. Now I can do some math with this new knowledge.

Wait what? Robinhood, M1Finance and others have offered fractional shares for years now. Both platforms also allow you to auto-deposit at whatever frequency you want.

With this in mine, I really don't see any advantage with the index fund approach.

I enjoy your content; however, I feel that you over exaggerated the difficulty in buying ETFs at the end of the video. If you have a trading app on your phone it’s super simple to enter a buy order.

Low-cost Index funds, price calculated at market closed, ability to set automatic investing vs ETF's price fluctuate throughout the trading day, are generally more tax efficient.

ETF has lower expense ratio, allows for tax loss harvesting and as of today DOES allow fractional share purchases on Vanguard. So for all practical purposes ETFs are objectively better for both buy and hold investor and for day trader. If I buy manually, I buy ETFs. If I have automatic investment, it goes into index fund and then once a year I convert accumulated index funds into respective ETFs (which is not a taxable event on Vanguard).

Also the brokers who manage our funds for you take a HEFTY fee. Cutting your profits

I'm not sure the definitions are right in this video. My understanding is:

Index fund: a fund that tracks an index (e.g. s&p 500)
ETF: a share (that can be traded on an exchange) that holds the underlying shares of the fund
Mutual fund: a company that holds the underlying shares of the fund
Actively managed: a fund that is manually managed (high fees)
Passively managed: a fund that is automatically managed (low fees)

So typically an index fund is an ETF that is passively managed. But you could have an index fund that is a mutual fund. And you could have a non index fund that is an ETF.

So index funds and ETFs are not mutually exclusive terms.

Lots of brokers let buy fraccioned ETFs and also program auto ivnestments

You left out ETF'S are tax advantaged

You can also automate BUY orders for ETFs depending on your broker

Simply said Thank you for always do a great job!

Not all platforms offer access to index funds. Many do give access to 500 ETFs if not broad market ETFs

great video!😀

It seems like some information is false or outdated. Vanguard allows fractional shares in their own ETFs. I think you're also missing one of the main benefits of ETFs. They are more portable than funds. I can keep my money invested in VTI and move the shares between brokerages freely to earn bonuses. ETFs can also be used for fully paid stock lending. It doesn't pay much on index ETFs, but any risk free income is better than nothing.

Great video! What do you think about QQQ long ?

L take. ETFs are much better

You can buy fractional shares in most of the other brokerages. Like Robinhood.

Thank you professor G! ❤ Your videos are so helpful and informative. Happy holidays to you

Ignore the bots and spammers in the comments and REPORT THEM !!

Interesting there was no mention of dividends with ETFs…lol if you compare stuff please do a more comprehensive analysis

extremely well explained and excellent video. thank you!

Not being able to buy fractional shares is why I stopped buying ETFs and switched to index funds. It's the same problem with Schwab ETF's.

This was the best in depth explanation of differences between mutual funds and ETFs.👍👍

Thank you for explaining the difference between index fund and etf.
Now I know what o can do to make my investment automatic. I will share this knowledge with my children as well.

There exist ETFs which are index funds -- in other words, "index fund" is not mutually exclusive from "ETF" -- so the entire video's premise is based on a categorical error.

Outstanding video! 1 of the reasons I prefer ETF's is simply that I can sell all of my holdings in the event of an emerging black swan event. If I held a mutual fund, I would be forced to watch the entire fund value melt away all day until my sale was executed that night. I understand that selling really isn't part of the whole buy and hold strategy but I am a guy who lived through the internet collapse, the 2007-08 crash and the covid crash and it takes a lot of time to recover. I'd prefer to be able to sell and protect myself if I'm fortunate enough to see it coming before major damage is done. JMHO.

Now, if there is no index fund for your target industry, then you don't have an option(you have to buy an ETF). For example, I'm not aware of Vanguard offering an index fund that follows the Solar industry. But there is at least one ETF that follows the solar industry (e.g. TAN).

Holy crap, I’ve been looking at VOO’s ticker for years knowing that it’s the S&P 500 ETF and it just clicked during this video that the V is like Roman numeral 5 and the O O are like zeroes. VOO = 500. How clever

You didn't mention that for Index Fund you pay taxes for fund withdrawals even if you didn't withdraw anything. Also each purchase order has a fee, which makes more reasonable to make bigger purchase orders.

This video makes no sense. There are active and passive mutual funds, and there are active and passive ETFs. No offense but if you don’t understand this, you’re not qualified to give advice

I like ETF better but has been struggling with automatic investing with Fidelity so I started last year with M1, love it

Bro, your hair is amazing…

i think index funds are better then ETF

This is very misleading. You're probably talking about ETF vs Mutual Funds or maybe active vs passive management. As both ETFs and Mutual Funds can easily be either Index(Passive) or Activity managed funds.

What about platform fees (for ISA's)? The cost to hold shares/ETFs is far less than for funds - especially if you have a large-value portfolio.

ETF vs. Funds, I've heard different reasons than what is presented here. All good and it doesn't matter which route you pick. Personally, I choose ETF's and enjoy investing.

Appreciate the simplicity of this video. Call your brokerage to confirm your understanding, do not assume.