Index Funds vs. Actively Managed Funds: Are You Making a Mistake?
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- čas přidán 11. 09. 2024
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I’ve watched a lot of your videos and this one has got me thinking the most.
Appreciate video content! Apologies for chiming in, I would love your initial thoughts. Have you thought about - Rozardner Mind Tricks Reality (do a google search)? It is a great one of a kind product for revealing the trick to get the mind of a millionaire minus the normal expense. Ive heard some decent things about it and my close friend Aubrey at very last got astronomical success with it.
You probably dont care at all but does any of you know of a method to log back into an Instagram account..?
I was stupid forgot my account password. I love any tricks you can offer me!
Index investing is the best option for the average person who wants to set and forget their retirement savings. Active managed funds are for people who want to beat the market, I argue about 10% of the population, willing to put in the time and money to surge ahead.
Either option is better than not investing at all, drowning in debt, spending like there’s no tomorrow, and thus living paycheck-to-paycheck. Which is what most Americans are stuck with right now.
So I don’t harp on people for choosing and sticking with actively managed mutual funds, an observation I see more than a few index fund advocates doing. It’s great to see passive index investing take off like it has; it’s not great to see index advocates lord it over their active managed contemporaries.
Any research to backup that 10% of the population is beating the market? Particularly, across what time span are you basing your comment on?
How about investing both index fund (passive) and mutual funds (active)?
@@TejasM14 Any evidence I said 10% of the population is beating the market?
@@SideWalker562 This is what we do, with fairly even results.
In my opinion, this is your best video, informative and jam packed with data
The money guy show viewers will do great things with their money. Thank you for the great advice and expect my business when my assets take off.
Question for you. I’m a new investor who has always just used 401k mutual funds. Now I have an IRA and I’m playing more myself in the market. Are you saying using ETF’s or mutuals funds makes more sense? I’m not clear. Thank you
Good VID fellas,, i have been really struggling with this topic... your VID really broke this down.. I see the difference now..
When you say you're going to have a new LCD screen I hope you'll also be able to show the contents of that screen directly on our screens.
That is correct John. A lot of the articles we reference we don't own the rights to, so we still can't full screen some of those images.
Fidelity target date funds are .75 fees
Hi Guys! My Fidelity S&P Index is nice for many reasons: Very low fees, no research involved, and it's more reliable and consistent than dealing with picking stocks. It always bounces back after a downturn. I'm thinking 55% S&P index, 20% MidCap index, 15% SmallCap index, 10% Bond index. 50 year old w/high risk tolerance. What do you guys think?
Is this all in your 401K?
I’ve got a lot of Real Estate (bought it when it was cheap) but, if possible you may want to look into that too as that will diversify your bag of investments!
I’ve got no bonds with the Real Estate I’ve got too!
My roth made me close to 40% last year so i am pretty happy
Does that make you stinking rich?
This was a hugely helpful video. Thank you.
Good content. Agree with pretty much everything you've talked about in your videos.... Save for the used car thing lol.
You have me sold, after awhile of anticipation. I am selling all of my mutual funds, and am going to buy index funds. I still have 15 years to invest. You and Dave Ramsey have me so confused on which way to go. The king, Warren, helped me make my final decision.
@Oh-Long Johnson it's not the interest rate that is .015%, they're referring to the expense of the fund. Usually actively managed funds have over a 1% expense rate
What is the link to the S&P research referred to by this video? Thank you
Question. If index funds are better than active, then how do financial advisors like yourselfs make money? I’m asking because I’m at looking to get into the field but wondering if passive investing would take away the need for financial advisors.
Investing is only one component of financial planning. People are hungry for help with cash-flow planning, retirement, risk, estate, education, and anything else that deals with personal financial decisions. Glad that the industry is moving away from the sales of product. This is a great industry, and I suspect that people will always need help with financial planning.
Great question. I was wondering the same.
I know you were excited for 2019, but imagine if you knew what 2020 was gonna bring 😂😂 love the content guys. Currently going back to find older videos.
It basically doesn’t matter for people who dollar cost average which is mostly everyone. The asset class and sequence of returns is what matters. Unfortunately you can’t predict sequence of returns. Just find the right asset class for you and get it in. The rest is getting up tight about stuff that doesn’t matter.
Indexing is objectively better.
Source : a random walk down Wall Street
Lovely Video clip! Excuse me for chiming in, I would appreciate your initial thoughts. Have you researched - Rozardner Mind Tricks Reality (should be on google have a look)? It is a smashing one off guide for revealing the trick to get the mind of a millionaire without the normal expense. Ive heard some extraordinary things about it and my mate at last got amazing results with it.
How is the higher tax in the contrafund handled in a 401k or roth? Does it still effect you during savings years?
If the distributions of Active Funds is in a Roth or a 401 K, aint the distributions good since you're not getting taxed ???? You guys are assuming that these active funds are in a taxable account.
Does anyone know how to calculate mutual fund fees ?
Can you do a show on the tax-loss harvesting and direct indexing offered by Wealthfront and Betterment. Would also love your take on the Wealthfront risk parity fund.
How can we use you guys if my money is in a 401k. I plan on doing a separate account starting this month, but I am in a target retirement fund, and I am above the numbers you say I should be out of it. Currently investing `8% with a 6% match, but reaching my limits on what I can put in my 401k.
Historical Indexing results DO NOT reflect the impact of indexing flows. And more recent indexing results don't acknowledge the impact of how indexing flows have at least mark-to-market distorted the performance of the index.
Great Video. For me started with mutual funds and dealing with banks for investing. I'm 30 now and this last year have been in the process of moving alot of my retirement savings into an index fund. To me investing in the S&P 500 is almost like an actively managed account. Because they add and remove companies based on their criteria. This helped me sleep better at night. Would this be a fair assessment of index funds.
Well with an Index Fund, there is less turn over.
RB is correct. Index funds have low turnover and as a result are usually tax efficient. Less money going to our taxing uncle.
@@MoneyGuyShow - Thanks 😊
Good show, but I hate target funds with a passion. Way too conservative for me. I do 1/3 large blend, 1/3 mid blend, and 1/3 small blend. I have a high risk tolerance enjoy benefiting from the gains from the small & mid size companies. Large caps won't always do as well as it has the last 10 years. Wouldn't surprise me if large caps do the worst in the next 10 years.
People complain about fees and act like everything should be free. Your actively managed account fees pay for lots of other services that you don’t have time for or don’t know what you’re doing.
Be free to contact one of our trading expert
I really enjoy you videos. You guys do such a good job explaining the basics of it all. I'd be lost without google or CZcams with great info I get from people like you guys. I'd like to Ad by saying having a Morning Star account has helped me out when picking ETFs and Mutual funds and stocks. In my Roth I have IJR small cap 600 and ONGAX mutual fund through Chase. I'm going to put the bulk of it in my IJR over the years but I'm also going to keep watering my ONGAX to keep it growing. When I plug all my investments into my Morning Star account it tells me I'm well diversified. I'm a little over 42 years old and I just started my Roth a little over a year ago and I'm hoping I find a good couple of advisors like you guys when I'm in my 60s. Thanks for the awesome content guys.
"rising rate environment" chuckling to myself watching this in 2021 getting a 2.75% mortgage rate.
I just bought FXAIX before I saw this video haha
17:50 - I have started to read about ZERO Funds and it seems they lock you in
There are Vanguard growth mutual funds that out perform Index funds.
gerard lead Are they still outperforming after the fees have been accounted for?
Probably even out when you look at the fees. Hardly any fees with Index..
Out preform by how much? You don’t need to hit home run, just get most of market return. Slow and steady wins race.
Fidelity zero fund is not the same as the other Fidelity index fund with a (low cost) fee, which is much better in terms of what includes. Zero fund has much fewer stocks, and they are not as good as the regular one with low costs.
Vfiax or vtsax? Do you have a preference?
Craig Holland both. I love money.
Since VT is globally diversified it's even better.
Hi, I'm pretty money-savvy and I've been educating myself on investing for a while now, so I"m not a beginner at all yet I keep rewatching the segment on the % tax vs. % earning and I still can't figure out what you are saying. I think your videos can be very complicated, could you explain things a bit more clearly please? Even with Bo repeating or rewording concepts (which is very helpful so thank you for doing that), I'm still lost.
37:55 is the offer still open? (but I'm from New Zealand).
I used to live in US for a few years and have a 401k (no longer contributing as have European equivalent) with Fidelity in active managed funds. Any pitfalls I should be aware of if I moved my 401k balance from (4) active managed funds to something like FXAIX or FNILX)? Thanks
Those are terrible funds. 😞
Chris we don’t make specific fund recommendations. We have done several shows in the benefits of index investing. Check that out to help you on your data gathering.
@@MoneyGuyShow Appreciate the response but was thinking about common pitfalls for transferring 401k rather than specific index fund recommendations. What I don't want is to accidentally end up being taxed or getting hit with punitive ongoing charges. As you can appreciate, having left the US years ago I'm out of touch and European IFA's won't be able to offer much guidance. Thanks
Leave and move 80% of your funds to FZROX. Zero expense ratio and they are getting 20% return YTD. Only go to a fund manager for bonds.
@@charlitoadams777 no they arent
❤❤❤
What percentage of your portfolio would you guys recommend to contain index funds vs individual stocks?
If you are buying an index fund, You passively riding the wave of the market. If you buy single stocks, you are taking a risk at the prospect of a higher return than the market. The two are in conflict with each other.
@@thomasredding6526 yup, I currently have 55% in index funds and 45% in individual stocks I like. Let’s see how things go
If you believe you can beat the market return with your individual stocks why don't you believe you can beat the market return with your funds?
Ok, I need help with something. Should I invest in an index fund that averages 6-8% return with .15 fee or a mutual fund that averages 10-12% return with a .45 fee. I’m confused with the math.
gerard lead - yeah. Find a better index that pays 10-12%. I averaged 14.1% over the past 13 years with indexes and hardly any expenses. It is not hard.
@@ianbutters7090 any recommendations? I am new investors, learning about investment.
As they say either FXAIX or something like VOO or VTO
How can I get ahold of ya. # please
Dave Ramsey's response to this is that it's not hard to find mutual funds that do outperform the market, even if most don't. I've looked into that, but the best ones I found were closed to new investors. What do you guys think about that?
Dave Ramsey is wrong. It's not hard to find mutual funds that beat the index in the past but there is little reason to expect the same performance in the future
The intelligent investor talks about it in the commentary by Jason Zweigg. The best mutual funds will close to new investor to avoid growing out of a manageable quantity... I recommend you buy the book, even if used... it would be an amazing investment for you and your family. Chapter 9 talks about investment funds... Warren Buffett recommends paying special attention to chapters 8 and 20. Chapter 8 is all about market fluctuations and 20 about purchasing investments with a margin of safety. Will all due respect for your admiration of Dave Ramsey, he gets commissions every time a radio listener contacts and invests with a smart vestor pro... there’s a reason why he pushes mutual funds so vehemently
My mutual fund option in my 401K averages 7% higher in the 5 year return and a 3.5% higher 10 year return compared to the index fund options. The mutual fund expense ratios are 0.67% and the index funds are 0.02%. Plug those into a calculator for 30 years of what I'm contributing not even counting raises, the mutual fund will come out on top by $700k (assuming only a 2% return difference!). If the rate of return is substantial enough on mutual funds with some slightly higher expense ratios (assuming you're not in some absurd 2% fee with weak returns), why would you not go that route? There are many large cap mutual funds that have a proven track record of outperforming the index by a few percent. Even some the cheaper large cap Vanguard options perform well above the index. Unfortunately I don't have those as options in my job's 401k plan though.
Ref 20:03 - Haha, Bo Hanson is too funny (in a cute way) ... he doesn't know who/what Kodak is (or is he just jesting?), and in another show, he didn't know what travelers cheques/checks are!
I guess it is a very different world now (than ... say, a couple decades ago).
Be free to contact one of our trading experts
too bad that the only way that my nephews will get MUTHX is when they inherit it from me or my mother
I can't see a reason to use index funds during this pandemic where many large cap companies' stocks have suffered, better to focus on active ETFs within the industries that are thriving in this environment, such tech, mineral mining, and clean energy
A simple mutual fund screener offered by any discount broker shows many small value funds that outperformed their index over 5 years.. not too sure about your study
but it is very rare for actively managed funds do better for more than a year or 2
Unfortunately Kevin if you slide that 5 year period forward or backwards the list of active managers usually changes. The active manager have a ton of trouble “consistently” beating the markets. Hope this helps 👍
Let's consider one investor who bought $100,000 in the Liberty All-Star Growth Fund (ASG) a decade ago, and another investor who bought $100,000 worth of VOO. Both are broad market stock funds, but ASG's strategy is more aggressive - and expensive.
The ASG investor has paid 0.79% in annual fees; in other words, for every $100,000 invested, $790 will be taken out of the fund's performance to cover expenses. VOO will take out just $40.
However, the investor holding ASG has seen their principal grow to $443,300 after a decade, while the VOO investors has ended up with $362,300.
Get an active fund that has a proven track record of a decade or more outperforming the index by at least 2% and the fees are no longer a problem when you're talking fees of 0.7% vs 0.04%. There are plenty of large growth funds that are more expensive but will earn wayyy more money in the long run. If you have bad options within your company's retirement account, then index is the way to go.
Over a long term (15 years +) index funds have beaten about 92% of comparable active funds. The difficult part is to know in advance which ones will beat the index.
ive seen professional management funds beat SP500.
You show is good but its just way too long. Just give me the info and I'll be on my way. After 15 mins of dancing around I completely lose interest.