Mutual Funds vs Index Funds vs ETFs | Ultimate Guide
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- čas přidán 15. 07. 2024
- Mutual Funds vs Index Funds vs ETFs | This video explains the differences between these 3 investments and the pros and cons toward which ones you should buy! This video uses visual animations to help you better understand Mutual Funds, Index Funds, and ETFs.
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⏰ Timestamps ⏰
00:00 Intro
02:13 Mutual Funds
05:35 Index Funds
09:29 ETFs
10:18 Detailed Summary
📝 What are Investment Funds?
Investment fund in simple terms is a gathering of securities such as stocks or bonds where you as an investor can buy this fund and receive exposure into many securities all within one purchase.
What is a Mutual Fund?
A mutual fund is an actively managed fund that contains securities that are decided upon and managed by a person known as a money manager or fund manager.
What is an Index Fund?
An index fund is a passively managed fund which is a type of mutual fund but instead of being human operated it is by a computer and the algorithm tracks companies that resemble particular markets at a much lower cost.
What is an ETF?
An ETF (Exchange Traded Fund) is a fund that mostly tracks particular indexes, although there are some that are actively managed. The main differences are that an ETF trades similar to an individual stock and also much more tax efficient by the structure of an ETF (For more information on the taxes, let me know in the comments and I will make an in-depth video on it).
In my opinion, Index Funds and ETFs are the way to go. Although some investors believe Mutual Funds are the best, this video explains exactly what you need to know about each and why you may be much more interested in Index Funds and ETFs.
Understanding the differences between these investments is crucial because it can have a significant impact on your retirement.
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Disclaimer: The information provided in this video does not, and is not intended to, constitute legal, tax or financial advice; instead, all information, content, and materials available on this video and on this channel are for general informational purposes only. The presenter is not an attorney, accountant or financial advisor. Viewers of this video should contact their attorney, accountant or financial advisor to obtain advice with respect to any particular legal, tax or financial matter.
The decisions you make now play a huge role for your future. Let me know your thoughts in the comments!
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Excellent video. Explained the differences clearly.
Thank you, I appreciate that!
One thing you did not mention was the tax implications of investing in mutual funds vs ETFs. I know that you have mentioned these in some of your other videos but maybe a dedicated video about tax advantages and disadvantages of fund/ETF and different retirement accounts. Capital gains and dividend income as well as the type of accounts you have all play a key role in your tax strategy. Keep up the great work!
Thanks for pointing that out! I definitely agree a video on tax implications would be very beneficial. I will add that to my list to work on soon. I appreciate the feedback a ton, Thank you!
@@DannySullyI'll be waiting for it. Thanks in advance
had to watch this over and over a few times and then finally take notes to understand lol, but i got it finally! thanks!
I’m glad to hear you understand it now! It seems difficult but with time and experience learning it, it will come quick! Thanks for watching my content! :)
I'm so glad I came across your page! You explain all of this so well, very much appreciated!
Of course! Thank you so much for letting me know that!🙂
Great info 😊
Thank you!! :)
This deserves more views
Thank you so much!
I just wanted to add about the fact you don't have capital gain distribution with a ETF like you do with mutual funds and index funds that are held with a pool of investors. Usually Index funds have lower capital gain distributions per year than a mutual fund. These factors don't matter at all if your in a traditional IRA and or Ruth. Other than that, you explain everything very well. Thanks
Just found your channel! Great videos! Thank you!
Thank you! That means a lot to me :)
Thank you Danny; know that your work goes a long way in helping the lives of many🙏🏻
Thank you for your kind words, that truly means a lot to me and motivates me to continue making the best and most impactful videos I can!
Such a wealth of knowledge you have presented....Many thanks for posting this video.
Thank you so much for letting me know :)
Index funds vs ETFs. Which one is good for Roll IRA, Roth IRA, Individual Account (non-taxable) ? Could you explain regarding capital gain and taxes that you has mentioned in the video ?
Hi Danny great clear video. . What are the names of index funds you recommend. Thanks
😊 hi I'm new at this and your video is very informative. So I purchased fidelity fxaix sp 500 n bought Vanguards vnq . My question is I'm learning how to buy index finds and etfs. I'm don't want to overlap so should I just do 1 or the other or doing what I'm doing.
Q.2 is I have a roth ira with Betterment and I'm realizing it's only etfs in there. Should I stay with them or go somewhere else where there would be index funds ect.
Thank you so much.
Great information! Thank you!
That means a lot to me, thank you! :)
Danny, I love you and your videos! Thank you for this knowledge! God bless u cause u made sense, no one wants to teach us these and everyone is mad secretive and thank you for this info!!!!!!!!!!!!!!!!!!!!!!!!!
Thank you so much for your kind words, that means so much to me!! I'm very glad to hear that, thank you!!
wow you broke that down great, learned a lot 🔥
That means a lot to hear that, thank you!!
Thank you Danny for your work, I’ll always been wanting to get into stocks, index funds etc etc but I get overwhelmed with all the information… this video is very informative and easy to understand, thank you
I’m glad to hear that, thank you!!
This channel is incredible! Thank you!
Thank you!!
Amazing video!
Thank you!
Thouvh everything is for money..u r a good heart person
Thank you so much! And I may end up creating more content then just money one day, thank you :)
Thanks for the video. What type of account to open on fidelity to be able to invest in idex fund and ETF?
Thanks.
Of course!! And you can invest in either in any account. I personally like index funds for non taxable like my Roth and etfs for taxable accounts
I just started getting serious about investing and was finding it overwhelming. I just happened to stumble upon your videos today and have watched a bunch in the last few hours and they are very helpful! Thank you for breaking down these topics and making a very scared investor not so scared.
That means so much to me to hear that, i'm very glad you are benefiting from it! Thank you for letting me know :)
Your contents on CZcams are great! 💪🏾Keep up the good work. You now have a new subscriber
That means so much to me, thank you very much!!
Can you transfer mutual funds to index funds, if I want to avoid the higher fees?
Thank you Danny very informative video. 😊 I enjoy your content keep it up 👍🏻
Thank you so much! That means a ton to me!
Look at growth company funds. What are the top 10 holdings? Buy those! Hold! Years!
Thanks for the video. I think I understand that ETFs are more liquid than the other two, but vs Index funds not much more? I mean when can you buy and sell index funds?
Of course, thank you for watching my content. You can buy and sell index funds whenever you want, but they are not as liquid and ETFs because index mutual fund trades do not go through until the end of the market day where ETFs can be instant buy and sells just like stocks.
@DannysMoneyTalk, is it ok to share your fidelity portfolio tickers?
Hey there, I have shown some on my previous Fidelity videos. If you check out this playlist you can see other videos with Fidelity Index Funds I believe are best. czcams.com/play/PLL80XtVsEZjN7ichqUUvP54qpYQ4lVS46.html
Quick question can you buy the target date retirement fund of your age specifically and sp 500 and other muthal funds in the fidelity roth ira?
Great question and the answer is yes! You can buy any individual securities through a Fidelity Roth IRA. You can choose and manage whatever you would like to own
If you gradually & continually invest in funds, how do you determine when your selling a fund that has been held long-term vs short-term?
The shares you initially bought first that have the longest term possible should be automatically sold first.
@@DannySully That is great news! I can definitely track that!
Thanks for the useful video.
It has clear information for beginner 🎉
I'm so glad to hear that! Thank you very much :)
thank you very much much better between the index fund and the ETF, so index funds much safe investment.
Yes index funds are if in the right places. Index funds can be referred to as index mutual funds or index etfs just to be clear with you
But I just don't know how to calculate the interest for the index fund is that different from the CD
When you say interest, do you mean the dividends or expenses you will pay over time? I’m sorry I’m a bit confused what you’re asking
@@DannySully both
Awesome 😎 I own FXAIX, does it pay dividends quarterly? I was thinking about purchasing the Vanguard S&P 500, ETF through my Fidelity brokerage account.
Yes FXAIX pays quarterly, and in my taxable accounts I have ETFs instead!
@@DannySully Thank you 🙏
Buy the stocks of the companies people use...you know them. Look around? Everyone on a cell phone? TECH! I like VGT ETF😊
I really appreciate the work you put in man, it helps so many people secure their future. In every respect you're a hero for this
Thank you so much. You have no idea how much that means to me!
how do you find the index fund in fidelity. is there a list ? can you do a video to show to select index funds and mutual funds ?
Hey! I will attach two sources that can help you out with this.
1. Fidelity list of funds to search (screener tool): fundresearch.fidelity.com/fund-screener/
2. Other youtube video I created on how to use fidelity that includes the screener tool and how to use it: czcams.com/video/frXhZbyz80w/video.htmlsi=IIq-eH59fXmctiu_
Hope this helps and please let me know any other questions you have!
Thank you !
Great vids. I have a question. With index funds, I was told every time somebody buys and sells within the fund, everybody has to pay taxes on it? Is that true?
Ive been wondering this fact since investing since 2018 and never really fully looked into the difference till now. Fantastic job, still really wished they had a mandatory investing class in high school and college when i went.
Thank you for this! And I agree, many avoid teaching personal finance content in the school system.
I wish there was target date funds made specifically for taxable accounts.
I agree, I'm sure there are somewhere! Just need to research. A fiduciary could get a connection i'm sure
I been trying to invest I’m 50 I think is never to late right, do you have beginner videos, and where do I start?
Hey that's right! Never to late! And i will attach a playlist of my stock market investing videos. I have not yet created a video solely on investing for beginners but will be planning too in the next month or two!
How do recommend buying these index funds. I saw your index funds videos. But do you recommend recurring buying since fidelity has no minimum or just buy once, say like 500$ And keep on reinvest the devidents
Great question, I would say it depends on your current position. Recurring purchases are wise so that you are guaranteed to pull the amount from your income. But if you can invest more at the current moment I would recommend as much as you can at once.
This was a fucking banger
I’m struggling to understand the difference between ETFs and Index funds. Please can someone help me
Hi James, here's a simple breakdown I hope helps:
ETFs:
Shorter ticker symbols (2-4 letters) such as VOO or VTI
Can be traded instantly
Can be traded on any platform
Are much more tax efficient. Only text when you actually sell it.
Can be active or passively managed.
Passively manage refers to track an index so an sp500 etf would be known as an index ETF or "index fund" because.
Index fund can be in either ETF or Mutual Fund form. Index Fund simply means that it tracks an index.
But the other form of index fund is through a mutual fund...
Mutual Fund:
Typically five letter ticker symbols such as FXAIX
When traded, it does not go through until end of market day. Much slower
Typically only trade on the same platform. If offered elsewhere, there's a high fee.
When you own it, you get taxed on each investment that is managed inside of the fund. Therefore, less tax efficient and out of your control.
Can also be active or passively managed.
Anytime you hear index mutual fund, it tracks an index, and is passively managed.
ETFs are newer and becoming much more popular thing due to especially the more convenient features, but index (mutual) funds through in-house platforms can be very nice. For example, I prefer to use Fidelity's through my Roth IRA for growth. In a non-taxable account, ETFs are definitely the way to go.
If all this did not make sense, just think of it as a mutual fund and ETF are both two different forms of investing into a fund, that have a variety of stocks or bonds in one purchase. An index fund is simply a fund that tracks in index and can be in the form of ETF or mutual fund.
I really hope this helps and I don't understand why the system made it so complicated because as a beginner, I was completely lost as well. I hope this helps and thank you so much for watching my video! I really appreciate your support!
@dannySully would it be ok to invest $50/month towards S&P500 and $50 towards a bond for variety?
To me, that is a lot of bond. But it does depend on your own position, such as retirement or not. I recently created a video covering these two funds and Warren Buffett say about them, I think you will really benefit from watching it. I'll leave it linked below. Thank you so much for watching my content :)
czcams.com/video/CodrmrUFqtU/video.htmlsi=k_KX_b4h7Ala1AoL
@@DannySully 33 years old and just opened up a ROTH IRA with fidelity and bought into the S&P500 mutual index fund (fractional purchase of $100). After all bills and other carefully managed expenses, I can afford to invest $100/month at 100% into the S&P500 for the next 30+ years hopefully. That’s the goal……Should I just keep dumping $100 every month into s&p, or should I diversify a little, let’s say a 2 fund portfolio? If so, which other index funds should I buy that will go well with the s&p? My goal is to accrue a good chunk towards retirement. I plan to keep the investments as simple as possible. Thanks!!
Too biased towards fidelity