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How’s it going everybody this is beat the bush today i’m gonna show you how to invest in such a way as to be 100% of the mutual funds out there within five years if you are as having investor you probably know about this in that when you buy a mutual fund they actually charge you a lot of fees so these days a lot of people just go buy low-cost etf funds where the
Fees that they charge you is gonna be something around point all four percent this is in comparison to mutual funds they may charge you something like 0.7 or even up to one percent now if i just tell you this is more like a conjecture yeah maybe you might believe me because of my channel but today i want to back it up with some actual studies now do my travels going
To new york i talked to some subscribers and they actually wondered how you can actually invest properly a person even asked me to do their investing for them and perhaps i can collect a fee but i cannot do this because i’m not a certified investor what i said in response to this is that you don’t need me to collect a fee they will actually wanted to pay me to help
Them do this but to me i’m like you don’t need to do this you can just go do this yourself go buy a low-cost etf funds and then you’ll be okay so today i want to cover exactly why you want to do this how you can actually beat the market with this method and the actual ticker symbols that you need to buy in order to do this now if you check out the study i’m gonna
Link it down in a video description below if you’re interested in reading a five page report this study basically tracked about a thousand mutual funds let me first go over what the difference between a mutual fund and a low-cost etf is a mutual fund is essentially managed by some guy or some team and they have some discretion on what to buy with the funds in their
Portfolio they have a little bit of leeway into what to buy and what to sell and essentially it can be a different kind of flavor they can go oh i’m gonna invest in oversea stocks and all this might be based on their personal research they have researchers that will do research for them and they might aggravate a whole bunch of information and then go oh you know
I’m a really good investment i’m gonna go buy this and then sell that buy more portion of this sell it at a certain point so they do all kinds of fancy stuff in order to try to beat the market however there’s this unanimous consensus among savvy investors that you can actually buy a low-cost etf once where you don’t have to pay these active fund managers and you
Can still beat their funds in this study after three years if you just buy the index fund you’re actually gonna be 95% of these act we manage funds after four years you’re actually gonna be 100% of these actively managed funds just think about this you can go and buy this low-cost etf funds you don’t have to pay this ridiculous point seven percent one percent fee
To these active managers and yet you’re gonna outperform what they’re gonna try to do now i know what you’re thinking because sometimes you might go well you know some funds they actually beat the market many many times you might actually be thinking of these hedge funds where it’s actually not open to the general public you might be able to buy individual stocks
That would actually outperform the market of course sometimes you have really great performing ones but in order to pick something like that it would take extraordinary skill for the most people and the layman investor your best bet is to just buy a low-cost etf fund and not try to time the market not try to create your own portfolio of course i do realize a lot
Of people out there want to try their luck at this you always think many people like to think that they are talented investor at least you want to give it a try to see if you’re able to do so i personally have tried to do my own portfolio and you know i can safely say that no i probably did not outperform the general smp market if i just bought a low-cost etf fine
So if you’re able to just you know put away your pride and just go you know i probably will not be able to perform better than these people that actively manage a fund as their day job they do this from day to day and you want to beat them so you just buy a low-cost etf fund now this study is actually inclusive of the fees that they charge so a mutual fund they
May perform maybe better than an smp but after they take away the fees that they charge you 0.7 percent one percent sometimes i see as high as 1.5 percent after they take away the fees then they’re not able to outperform the smp 500 so yes in the sense they might be working very hard to try to beat the market for you but in the end after they collect all the fees
Is as if all this work that they’re put in there actually pocketing in front of themselves on top of that over the long term it’s gonna be very hard for you to buy into a mutual fund and still outperform the smp so a lot of savvy investors are already noticing this and they’re not buying as much into mutual funds they’re just buying low-cost etfs instead you see a
Major outflow from these mutual funds and then you see major inflows into these etf funds now if you believe what i’m telling you you don’t actually have to build you can go look at the research paper you can just google it and then you would quickly realize that this is actually true now how are these mutual funds actually persisting well in the short term it may
Work you might go oh i want to buy oversea stock or something it might help perform very well in the short term but in you trying to buy these mutual funds maybe you’re trying to time the market as well you in itself it’s sort of like a pseudo portfolio manager as well so do you think you doing this we’ll also i’ll perform the market now with people realizing that
Mutual funds are actually not that a great deal you would think that these fund managers are gonna start losing a lot of jobs because they’re actually not adding value to the marketplace but in reality a lot of people still don’t know that this is the thing that you’re supposed to do this is evident by all the people that i talk to they ask me how do you invest
What are you supposed to buy what is the ticker symbol that you need to buy what is the theory behind it that you need to do this is why mutual funds keeps on going because people do tell me oh yeah i just bought into so-and-so mutual fund they’re paying i don’t know they don’t even know what the fee that they’re paying it over the long term you can be paying tens
Of thousands of dollars in fees even when it’s just like half a percent difference without further ado here are the low cost etf funds that tracks the s&p 500 1sp why it has an expense ratio of 0.09 percent so it’s a little bit high to ivv which has an expense ratio of 0.043 you can buy vo which also has an expense ratio of 0.04 if you look at these 401ks that
You have and you look at the target date funds if you drill into it and look at the expense ratio it’s likely on the order of 0.7 0.9 percent so this is a lot more this is like 20 times more than this point oh four percent expense ratio of this iv v or vo snp 500 atf fund and now i got a few comments in the comment section that says if you work for a bank you might
Be able to get a expense ratio that’s even a little bit lower it might go as low as point o 3 but most of us cannot have access to this so just look at this and go all point o 4 it’s a pretty good one just go for that one i hope this was informative for you in order to invest properly go look at your portfolio and see how much expense ratio that you’re actually
Paying if you see anything more than 0.04 percent then you’re gonna know wow you’re getting ripped off you need to really switch your portfolio and do something else if you happen to have a 401k well sometimes you can’t take money out of it until you switch job so once you do that you might want to consider rolling over your 401k into an ira if you’re interested
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Transcribed from video
How to Beat 100% of Mutual Funds By BeatTheBush
