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What i’m going to recommend to you as far as the passive investment is to invest in what’s called an index fund index funds give you the added benefit of diversification without the active management fees in fact in most cases these index funds i’ll perform the actively managed mutual funds so the guy that you’re paying to manage your money is not even able
To beat market returns in most cases so what exactly are you paying them for with those management fees and those transaction fees every time that they restructure the portfolio and change around the investments you’re paying some kind of fee for that and if they’re not even able to beat what the market pays why are you doing that what is the benefit of having
Active money management that’s a big question rather than paying someone to actively manage your money and rack up those investing costs just invest in an index fund which gives you broad exposure to the market so index funds hold investments which results in fewer or no trading costs when you invest in the mutual fund and they’re actively trading investments
In restructuring it you’re paying trading costs every time you do that now if you decide to invest in individual stocks and you trade stocks or a stock broker you’re going to be paying transaction costs every time you buy a stock and sell a stock now this may not seem like a lot of money but for active traders this adds up to a lot of money being wasted just in
Transaction costs index funds are also more tax efficient every time investments are sold within the mutual fund you have to pay a capital gains tax on that but when investments are not being sold there’s actually less of a tax drag on that so you get a better return on your investment over time so that’s just one of many benefits of index funds over mutual funds
As far as which index fund is the best i highly recommend vanguard index funds the average vanguard index fund expense ratio is 71% less than the industry average and the lower the expense ratio is the more money stays in your pocket and the more money is being reinvested i know this may not sound like a lot of money but if you look up the cost of mutual funds
With just one or two percent expense ratios over 30 or 40 years we’re talking hundreds of thousands of dollars or more that you’ve lost expense ratios this is largely due to compound interest something that you want to take advantage of as an investor so just understand that even though it sounds like a small amount of money we’re talking hundreds of thousands
Of dollars in long-term investments being lost with high expense ratios as far as which index funds to invest in i’m going to give you guys six recommendations here if you want to learn more about these i’m going to give you the symbol of them just type them into google it will bring it right to the vanguard page and you can learn more about them i just want to
Speak to you guys that i am in no way being paid by vanguard to offer these i simply want to give you guys the best advice possible and give you my best recommendation these are the funds that i recommend to anyone and i am in no way getting any kind of kickback by recommending these to you guys number one is vti which is the vanguard total stock market etf this
Basically gives you exposure to the total united states stock market number two is vx us which is the vanguard total international stock market etf this gives you exposure to all non united states stocks so this is exposure to global stocks outside of the us number three is vt which is vanguard total world stock etf which gives you exposure to not only the united
States tax but the stocks and the rest of the globe as well the vt vanguard total world stock etf gives you the most diversification and the broadest exposure possible and etf is an exchange created fund what this means is that exchange-traded funds trade on a secondary market through a stock broker so in order to invest in an etf you would need to have a trading
Account of some kind you would have to go through a secondary market through a stock broker and buy these funds on an exchange so in order to do that you would have to open up a trading account and do this online yourself or call up a stock broker who could do this for you there is an easier way to do this and this is called admiral shares through vanguard when
You invest through admiral shares you don’t have to do this through a secondary market through a stock broker so my fourth recommendation would be dts a x which is the vanguard total stock market admiral shares this gives you exposure to the total us stock market through admiral share i’ll explain what that is in a second and then we have vti ax which gives you
Exposure to vanguard total international stock market which is going to be everything outside of the us and this is also admiral shares now admiral shares are a special class of vanguard index funds with a lower expense ratio as a result of larger accounts so basically because there’s a larger amount of money under management – they can charge a significantly
Lower expense ratio the only thing with this is there is a higher minimum account balance so there is a higher minimum balance to open up one of these accounts with admiral shares but the benefit of this is you don’t have to go through a secondary market or through a stock broker you can just go on vanguard comm and invest directly in this now if you’re looking
To have exposure to all global markets not just international or just us there is the bt wsx which is the vanguard total world stock but this is investor shares so this is a slightly higher expense ratio than those admiral shares they don’t have a vanguard total world stock admiral shares plan available yet so it’s not a ton of money it’s still a very low expense
Ratio but it is slightly higher than those admiral shares
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INVESTING IN INDEX FUNDS 📈 Best Vanguard Index Funds To Invest In! By Ryan Scribner
