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Warren Buffett made a $1 million bet that the S&P 500 index fund would beat hedge funds over 10 years
He won...
If that's the case then why don't more people invest in index funds?
Lets dive into
"Index Fund Investing For Beginners"
- A THREAD -
He won...
If that's the case then why don't more people invest in index funds?
Lets dive into
"Index Fund Investing For Beginners"
- A THREAD -
1.
An index fund tracks a market index (basket of stocks/bonds)
They usually mirror the overall performance of the market
Meaning they won't be as explosive as individual stocks like $AMZN, $APPL, or $MSFT
An index fund tracks a market index (basket of stocks/bonds)
They usually mirror the overall performance of the market
Meaning they won't be as explosive as individual stocks like $AMZN, $APPL, or $MSFT
2.
You may not get the same kind of growth but get this
From 2001 - 2016 more than 90% active fund managers UNDERPERFORMED vs the market
For the majority of investors
An index fund is the place to invest
So what are some of their benefits?
You may not get the same kind of growth but get this
From 2001 - 2016 more than 90% active fund managers UNDERPERFORMED vs the market
For the majority of investors
An index fund is the place to invest
So what are some of their benefits?
3.
Diversification:
Take the S&P 500 index fund
This fund invests in all 500 companies in the S&P 500
You'll get a healthy mix of:
- Tech
- Healthcare
- Consumer Cyclicals
- And more
One stock in the fund could have a bad day, but the overall fund can still be green
Diversification:
Take the S&P 500 index fund
This fund invests in all 500 companies in the S&P 500
You'll get a healthy mix of:
- Tech
- Healthcare
- Consumer Cyclicals
- And more
One stock in the fund could have a bad day, but the overall fund can still be green
4.
Solid Returns:
Buffett wasn't wrong when he made his bet
Only 23.51% of actively managed funds beat the S&P 500 over 5 years
Over time index funds will give you great returns at a low cost
Solid Returns:
Buffett wasn't wrong when he made his bet
Only 23.51% of actively managed funds beat the S&P 500 over 5 years
Over time index funds will give you great returns at a low cost
5.
Save Time:
Rather than researching individual stocks
You can research index funds you want to invest in
From there all you need to do is buy
The fund's portfolio manager will take care of the rest
Save Time:
Rather than researching individual stocks
You can research index funds you want to invest in
From there all you need to do is buy
The fund's portfolio manager will take care of the rest
6.
As great as index funds are
They may not be the best option for you
- You won't beat the market
- There's no loss protection in case the market falls (bringing the fund along with it)
- You won't have a choice in the stock selection
As great as index funds are
They may not be the best option for you
- You won't beat the market
- There's no loss protection in case the market falls (bringing the fund along with it)
- You won't have a choice in the stock selection
7.
You don't have to fully invest in index funds
You can mix it up and add options such as:
- Individual stocks
- ETFs
- Mutual Funds
It comes down to what you're most comfortable with
You don't have to fully invest in index funds
You can mix it up and add options such as:
- Individual stocks
- ETFs
- Mutual Funds
It comes down to what you're most comfortable with
8.
Knowing this
How can you invest in index funds?
- Open a brokerage account
- Research index funds you're interested in
- Buy index funds
It's that simple
Knowing this
How can you invest in index funds?
- Open a brokerage account
- Research index funds you're interested in
- Buy index funds
It's that simple
9.
Here are some of my recommendations to you:
- Vanguard Total Stock Market Index Fund $VTSAX
- Vanguard 500 Index $VFIAX
- Vanguard Total International Stock Market $VTIAX
- Vanguard Institutional Index Fund $VIIIX
Here are some of my recommendations to you:
- Vanguard Total Stock Market Index Fund $VTSAX
- Vanguard 500 Index $VFIAX
- Vanguard Total International Stock Market $VTIAX
- Vanguard Institutional Index Fund $VIIIX
10.
These are only recommendations for you to get started
Do your own research before investing your money
Know why you invested your money
Avoid buying every call out you see
That's a surefire way to lose your money
These are only recommendations for you to get started
Do your own research before investing your money
Know why you invested your money
Avoid buying every call out you see
That's a surefire way to lose your money
Thanks for reading!
As you can see
Index funds are a great vehicle to invest your money into
Do your research and invest in the best ones for you
See you on the next one!
As you can see
Index funds are a great vehicle to invest your money into
Do your research and invest in the best ones for you
See you on the next one!
