Index Funds are for LOSERS (Seriously)
Вставка
- Опубліковано 22 тра 2024
- Join the newsletter: robberger.com/newsletter/?utm...
Index funds like an S&P 500 index fund will underperform other investments each and every year. It will underperform countless stocks and even other actively managed ETFs and mutual funds. To build wealth, you have to be willing to accept that other investors will outperform your portfolio each and every year. The good news is that you'll likely outperform them every decade.
#indexfunds #investing #RobBerger
Tools & Resources
📚 My Book (of course): amzn.to/2MsRJ9B
📈 Empower (Investment Tracking): robberger.com/yt/empower
💰 M1 Finance $30 Bonus (IRA & Taxable Accounts): robberger.com/m1finance-bonus
📊 Morningstar (Fund Research): robberger.com/morningstar
💵 Tiller (Budgeting): robberger.com/tiller
🏆 Best Investment Tracking Apps: bit.ly/3wSbKZa
Portfolios
1️⃣ 3-Fund Portfolio: bit.ly/3yT6hmO
2️⃣ Merriman Ultimate Buy & Hold Portfolio: bit.ly/3g9qtse
3️⃣ Ray Dalio All Weather Portfolio: bit.ly/3cbzdwF
4️⃣ Warren Buffett Portfolio: bit.ly/3pdI8mm
ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
LET'S CONNECT
UA-cam: / @rob_berger
Facebook: / financialfreedomguy
Twitter: / robert_a_berger
DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase and/or subscribe. However, I only recommend products or services that (1) I believe in and (2) would recommend to my own mom.
I have about $250k distributed across various investing accounts, with 35% of my capital invested in an IRA and 25% in index funds. In Q3, 2023, I suffered a great deal. I'm just searching for methods to get better in 2024 right now.
Adding JEPI and JEPQ is smart for nearing retirement. As for staying committed to higher-risk investments, it's all about balancing your risk tolerance with your long-term goals. Maybe consider speaking to an advisor to help in diversifying your portfolio to spread out the risk.
I agree! Working with a fina-ncial advis0r has been a game-changer for me. They provided invaluable insights and tailored strategies that aligned perfectly with my risk tolerance and financial objectives. With their support, I've seen significant growth in my investments and gained confidence in my financial future. That’s what works for my spouse and I. We've made over 80% capital growth minus dividends.
Having an investment advisor is the best way to go about the stock market right now. I was going solo, but it wasn't working. I’ve been in touch with an advisor for a while now, and just last year, I made over 80% capital growth minus dividends.
Your advisor seems competent. Could you share how I can reach out to them? I've recently sold some property and am interested in investing in stocks, and I'm seeking guidance.
I Found her online page by searching her full name, I wrote her an email and scheduled a call, hopefully she responds
Index funds outperform the majority of hedge funds
Nah…only the ones you’ve heard of. There tons of private funds that beat it all the time.
@@lesliecuff2079 like 90% of actively managed funds underperform, over time. Sure you can outperform for 1 or 2 years but not over the course of 10 or 20.
Not to mention. VUG, (S&P 500 GROWTH ETF) outperforms the regular S&P 500. And VUG is an ETF and it outperforms the market.
@@lesliecuff2079 Source?
In average 67% of all mutual funds underperform the market with in one to 3 years, in 5 years 72.8% underperform the market, in 10 years 83.2% underperform the market and in 20 years about 86% underperform the market. To conclude, for long term investment like retirement index funds wins more than 90% of the time. So, why get in to a long term investment with a mutual fund with the wishful thinking that your mutual fund will be in that 10% when you have 90% chance that you will not outperform the market.
@@williamgonzalez8422 Good information! Can I ask for your source? Is there any time horizon on which mutual funds perform better than the market on average?
I love getting paid to hold an asset, especially while it grows in value. One of my favorite ways to do that is by holding dividend paying stocks. Nothing like a dividend index funds to give you diversification AND income! Gotta love it. $192,000 of passive income made in 2022.
Anyone have recommendations for a reliable monthly investment? I hope to ultimately supplement my income from work with a monthly income from investments. I will still make long-term investments, but it would be wonderful to have a little additional money each month.
@@MIchaelGuzman737 I came to realize that bear and bull markets provide opportunities for high gains, I used to bluff people who boasted of making a fortune in such bear markets until I do it myself. Well the US stock market has had its longest bull run in history, so the hysteria and mass panic is understandable given that we're not used to such a troubled market. However, there are opportunities everywhere if you know where to look; with the help of an investment advisor who helped me diversify my portfolio, I made over $860,000 in profit the previous year.
@@sommersalt88 Please let me know your investment adviser's name and how i can reach he/she?
I have "Jill Marie Carroll" as my investment advisor. She has a solid reputation in her field and is a true genius when it comes to diversified portfolios, which help portfolios be less vulnerable to market downturns. She may be a name you are already familiar with; a Newsweek piece helped me to do so. She's a Google-able person.
@@sommersalt88 I searched her up online and checked out her credentials since I was so intrigued. Top-notch! I emailed her to inquire about accepting new clients.
I am 50% Index Funds and 50% Individual Stocks. It took 10 years of study and practice to outperform my indexes. I would send most people to indexes because the work and time it takes to outperform the index is not for normal people.
well said!
100% correct
People forget history, wait till the market goes back to the returns of 2000-2008
Agreed. I for one prefer indexes because I'm not willing to take the time and care to focus on individual stocks. It's not for me. But I'm more than okay with that. 😉
@@princediesel1 Buy low sell high! We're in a high market right now, but when the markets go down for whatever inevitable reason there will be lots of money to be made.
I have $1.2 million to prove that index fund has been the best.
Nice!
That’s awesome!
That’s awesome. I’m next.
@@rob_berger how much you got?
Yes, but what are the details? How long did it take. How much did you start with?
Is it a good time to buy stocks right now? How long will it take for us to recover? I know everyone claims that equities are now inexpensive. Although there are tactics to be applied in this market, the common person cannot access these strategies. Would I be better off investing my money somewhere else?
Many people do, in fact, downplay the value of financial professionals until they are experiencing emotional turmoil. I definitely remember needing encouragement to continue running my business. The market has taught me that it always bounces back, but I can't seem to concentrate in the long term when important issues like my retirement and my reserve are destabilizing inflation.
You're not doing anything wrong; you just don't have the knowledge to profit in a down market. Only experts with great knowledge who must have seen the 2008 catastrophe may earn considerably during tumultuous times like these.
@@thomaslewis514 Because of the big declines, I need assistance on how to rebuild my portfolio and develop better methods. What city is this advisor located in?
@@amiltondavis Funny that you brought that up-I can definitely sympathize. I'm not sure whether I can say this, but look up "sharon lee casey"; she received a lot of press in 2020. She also manages my portfolio
@@thomaslewis514 She has an impressive profession and impressive qualifications, so I can see why she is so busy. I thus quickly copied sharon's full name and entered it into my browser.
My buddies love bragging about the growth they've gotten with specific stocks, but for some mysterious reason, they never want to talk about the value of their whole portfolio...
right? this shit is a marathon and people seem to want to play it like a sprint.
I retired at 29. I made a video on real estate investing, stocks and compound interest.
all time is their biggest enemy LOL
My wife and I are retiring this year with over $2,000,000 in tax deferred investments.
Up until 3 years ago we were 100% in the S&P.
During bear markets we had a perfect plan...........we didn't look at our statements.
When the 2000-2002 bear hit, we didn't look at our portfolio for nearly 5 years. Just kept buying at low prices.
By the way, I went to 65% S&P/35 fixed in 2018. 2019 the S&P 500 went up 31%. Oh well, if I had to do it over, I'd to the same thing.
I do "play" with about $50,000. I purchased CCL and US Oil after Covid crushed them. We'll see!
you guys been in the market for 20+ years?
would you recommend 100% S&P for someone that's 21?
Yup same here 30 years in the market no debt keep buying the dip don't need the money for 10 plus years.
@@Tyrell-Jemmott Yup recession down markets like now is the perfect time to dollar cost average to a deferral plan or Roth. But, if you got a choice at your job go with the Roth you pay the taxes now & all the gains tax-free for life. That's what I did in the late eighties' until 2014 when I retired at 49 y/o with about $500,000. But I still gotta pay the tax when I need it. I started at the same age as you we lived frugally not cheap.
@@Tyrell-Jemmott Any of these investments are great! VOO,VTI,S&P 500,VIIX,VASGX
If I could go back in time I would start again with just a Global or S&P500 index fund. I've wasted so much time and energy trying to pick the best funds or stocks and overall they have not performed as well as if I had just gone for a basic ETF. The thing is there is a massive industry that wants us to buy their funds as if we all swicthed to ETFs they would all be out of a job. Its like a massive secret that ETFs are not only cheap but the best option.
People will always tell you when they win, but seldom tell you when they lose. Talk to any gambler, they all seem to win but we know that isn't the case.
There are very few (if any) get rich quick schemes but index funds are a get rich slow scheme and it works.
How do I know, I'm that guy that you talked about. 40 years after leaving school, my wife and I are now happily retired and enjoying life.😀
Jack Bogle was right. The key to sucess is to never underperform the index. Low cost index funds guarantee that will not happen.
VOO, VTI, SPY
Trump underperformed the index. And he’s the biggest winner in American history. Try again 🤣🤣 🤡
@@buttmunch1457 you're still mad at Trump and he isn't even president anymore. Jeez dude it's time to move on
@@buttmunch1457 Why even bring up politics on this video? What's the point?
Man I really needed to hear this after listening to all of my friends bragging about "stonks" for the past year. I'm going to stick to the script of total us stock and international stock and DCA. You've earned yourself a new subscriber!
Great advice! One of the dilemmas of individual stock picking is the gnawing fear that, over time, you may find that you made a poor choice. During the early 2000 Tech bubble, many of the high flying stocks I held literally became worthless or substantially worth less. That was a very painful lesson. Broad based Index funds would mitigate such a possibility.
midcap and smallcap mutual funds outperform index funds as often as largecap index funds outperform mutual funds. So for individual stock investments, pick 2 kinds of stocks- small and midcaps from enterprises that have good performance (do some research on how to check their balance sheets) & secondly, large enterprises that virtually monopolize the market in that product (for ex, there is an car engine oil company here that owns all the most popular brands). If you research well, you will find many many monopolies like that.
individual stock picking is for "fun", not for serous investing, agreed. I also pick stocks for fun. Once, while living and working overseas, I got locked out of my individual stock brokerage account for about a year or two and I was too lazy to unlock it. Several times I wanted to sell stocks but could not. The net result was when I finally got access to my account again, I found it had grown more than if I had sold the stocks I wanted and bought new ones. And I consider myself a savvy investor. It's the "O'Dean" study from 1999 that found the same thing (inventors often sell the winners and ride the losers).
Ray Lopez - you held (by lockout). You took the long term strategy. Good for you!
Legends to embrace if you want to get rich investing Bob and Gary Joe Wilde.
cardone too. Don't know why Gary Joe Wilde chose not to own a video channel here like other pros. He is older and even more advanced.
@@p.kmccain6297 Obeying regulations he is not permitted to own or operate an investing video channel.
@@sakhalittle9206 Chris and Briana used to promote him in their vids. It's been a while though. Learned he is a mentor to quite a good number of reputable pros here.
I prefer Gary's method. In all honesty, wish I had known about him earlier.
@@DBAnalyst1 Same here.
Man, it's driving me nuts that I missed the last half of that last second..
Really liked this. Thank you Rob. Surely index funds are the way to go. The nice part about Roth is not having to worry about any tax consequences or reporting. So if a stock is bought and sold within a year, no worries about cap gains.
And one more thing - investing in an index fund will allow you sleep much better, which is much better living then constantly checking your portfolio.
This so much. I started investing in hand picked stocks. Whenever I had down days, I felt like garbage for making such bad calls.
Now I'm investing in ETFs like the S&P 500 and NASDAQ ETFs. If I have a bad day, I just say "well, I guess the entire market is down" and move on.
yup this. same with paying off your house....in a perfect world is it the best financial strategy? probably not, but you have to factor in peace of mind over many years
S&P 500 will probably still beat you in the long run
It definitely will.
People forget investing is a long term lifestyle, not one year or two
Basically 🤷🏿♂️
And without lifting a finger. You can't beat the U.S Economy!..Slow and steady wins.
Is that what I should invest in, s&p 500? I’m totally new to this so just wondering if that’s what u mean.
I completely agree with your messages that an index fund will absolutely outperform any individual stock investor and you made that clear in this video. So sorry Rob .. the title WAS clickbait. But that’s ok because I’m with you on the fact that index fund investing is the way to go for long term retirement investing.
ya gotta admit it's a brilliant hook
What are the best index funds? I want to do the the three funds
@@luischumpitaz8883 VTI is a great chose
Thanks , you saved 30 minutes of my life listing to this shit, I am downvoting and unsubcribe from now on and will share you word if i ever come across of people wanting financial advice , do not watch this old fuck
@@luischumpitaz8883 total market index, Total Bond market index and total international stock market index are the three fund portfolio
Great advice that helps me stay the course and ignore all the 'get rich quick' distractions going around. In the past I've lost money due to FOMO as many people have, but now a more mature and skeptical me is making better financial decisions. Thank you.
He's right. I've been losing since I've started. Finally gave index stocks a try and I've been winning ever since, not as much but so much better than losing all the time.
Hi Rob. I just wanted to say I really like your content. Keep up the great work.
I think many investors have given up on Index Funds in an attempt to outperform the market through individual stock picking. However, I still believe that Index Funds have their place and can be extremely effective over time. Great content!!
What are your thoughts on holding index funds and supplementing them with futures to increase systematic risk and boost expected returns?
Warren Buffett said it best years ago. "Index funds are the sure thing".
Most people can’t outperform the market so that’s hilarious
@@Zachery_ well said.
Not even over time. Index fund will match market returns every year. Trying to pick individual winners, for retail investors, is usuallly the fastest way to see below market returns.
I wish more of the discussion addressed not simply “performance”, but instead focused on “risk-adjusted performance”. It irks me that the amount of risk of a portfolio is not central to these discussions.
Agreed but I'm new to the game and still unsure how to objectively quantify the risk adjusted return.
Do you know of any good way to do that?
Maybe because "risk reward trade-off " is a given, and doesn't need to be mentioned.
As far as a way to judge risk I know of none. I look at an investment, mutual fund for example, and only buy something with a 10 year history.
Hedge funds are now unable to compete with standard indexes at this point 👍
I've seen the statements of lots of hedge funds. Some do make more than the S&P. However, the fees are significant (and in most cases are nondeductible for tax purposes). After the fees, from what I saw, almost all hedge funds make less than the S&P.
Rob, I'm slow glad you posted a video on this topic. A good reminder for me to not get emotional and stay the course of passive investing. Thanks!
What you mean with passive investing? I’m not much experienced in this field. Thanks
@@NAZAXP 7:39 Meaning to buy and hold. Active investing means to constantly buy, sell, trade, reinvest etc (think day trader or RobinHood).
@@NAZAXP I think he meant saving on a regular basis and investing those savings into an index fund. Like say, 100$ that is automatically transferred into the fund/funds of choice each month. That way you are just "passively investing" into that/those fund(s) without caring about the current price of each investment. Over time you will have an average of the market. Google "dollar cost average". It's a very easy way to save and you don't have to worry about "the noise" of the market. It's not a "get rich quick"-scheme. Of course no investment is without its risk, not even index funds, but they are a lot safer than picking individual stocks. My two cents on the matter.
Spot on. I practice this but it's great to hear it again.
Rob - impressive analysis of our investing vales and self-value. e.g. "slow and steady (index funds) win the races..." Great stuff!
I totally agree Rob. I like to invest in individual stocks because it keeps it fun. But my meat and potatoes will continue to be ETFs.
likewise
Can I ask you which eft u invest in? I’m tryin got build a portfolio with 30k.
For me, seeing my index funds do well every year, is fun for me.
Great message. The entire financial industry is designed to make you feel idiotic by indexing but The numbers are overwhelming over a long time period.
Yes. Indexing for the vast majority of people is the best way to go. Make sure you invest in a broad index like the S&P 500 and you will to great over time.
@@royjones59344 gotya. any youtubers that i should follow and binge?
@@albundy3929 I would watch anything with Jack Bogle that's a great start
@@albundy3929 Read "The Little Book of Common Sense Investing" By Jack Bogle (He's the founder of Vanguard) As for youtubers, I would highly recommend 'Ben Felix' and the channel you're currently on 'Rob Berger' haha.
@@royjones59344 indexing is the best for everyone , always.
I tend to drive near the speed limit. When going somewhere with my family the all always complain. Honestly it sometimes gets to the point where I have to raise my voice and tell them they need to stop. However, there’s always that guy who’s weaving in and out of traffic. That guy races ahead then hits the red light and who catches up? Me! I do, the tortoise. I back off the throttle when I see the red light coast and time it so that I hit it without ever having to stop. I usually get ahead of the crazy driver. But many times he catches me and passes and the whole process starts all over again. Today this exact thing happened. Me and the crazy guy were headed to the same place. He took a wrong turn and I beat him to the softball game by about 5-10 minutes. The tortoise typically wins in the end.
Well said! You are so correct about this, I hope people watch this video and learn from it!
I would like to add that chasing the new high performers also requires you to sell those assets when they fall out of favor -> pay taxes on your great gains. A buy and hold strategy is much more tax efficient.
100% agree with everything you said on here... including dabbling a little. It makes investing fun, keeps me interested in the market, and my wife and I enjoy picking stocks and seeing where they will go. That said 90% of investing dollars go to my Vanguard TDF that is essentially a 3 fund portfolio that automatically rebalances as as I cruise towards retirement.
Great message.....The Hare and the Turtle.....Slow and steady wins the race.
one of the best videos on the subject ! Peace of mind is key and you nail it.
I put my family in Mostly VOO, with a small Bond position, Some VGT and some real estate. Then a small international etf position. Set it and forget it.
@@PercyJackson93 if you are in the US fidelity is widely regarded as the best. It’s free. Just buy VOO until you learn what you are doing.
This is just my opinion though. Do a lot of research. And don’t buy single stocks until you really know what you are doing.
The brilliance of index fund investing is it let's you focus on the important things like saving enough, reducing taxes and fees, and getting the asset allocation. If you want to do more, maybe a small value tilt, or risk parity ideas, or a bit of leverage, which are all compatible with indexing, are more likely to improve results than picking specific stocks
Exactly. It teaches you to save your money and watch it compound instead of gambling with it.
That and it gives you more time to figure out how to make more money.
Side Note: I'm trying to figure out what kind of double-door that is behind you. At first glance it looks like a French door, but I see a door knob on the left side, not in the middle. There's also door hinges in the middle that french doors don't have.
What a nice change of pace on UA-cam, you sound so... reasonable, you make sense and communicate it in a nice manner.
Subscribing.
I my self run a mix of passive index funds and solid dividend growers.
I love your practical advice. I invest most of my money into index funds but do allow myself to speculate with single stock purchases. I now use the money I would spend in Vegas on single stock purchases which are much more exciting for me and keeps me engaged with market news and trends.
Keep up the great content!
Originally clicked on this because I hated the title, but loved the content. Great video, new subscriber. Dealing with emotions is key to handling the market. Also, loved that you touched on the fact that if an investor is constantly looking for "the big one" that they'll need to basically be timing the market which history and even statistics have shown us is literally impossible even for machines.
haha, same! Hated the title, but it's total clickbait... so here I am ;-)
Thanks Rob, you are my 1/2 of a Valium tab when it comes to investing anxiety! Great!!!
My thoughts would be to add extra to the underperforming stock if I believe in it. Kinda like adding fuel to car that’s low that way it goes further!
Love your videos. Very uncommon sense. Most individual investors underperform the indexes due to chasing the latest winners.
But Ben Graham taught a system that does seem to outperform - as evidenced by Warren Buffett. There are a few (sadly only a few) fund managers who follow the same concept - only buy undervalued assets in companies that you are proud to own as you plan to own them for at least 5 years.
I've yet to find a fund manager who has done as well as Berkshire Hathaway over the longer term, but now have a list of a dozen funds that outperform the S&P or the Nasdaq by 3% or more annually for at least a decade after management fees are deducted.
Please add a video on Ben Graham inspired investing techniques.
very good comment but i think there are some very well known fund managers who still apply ben graham theories like bill ackman and ray dalio
Hi David!i am New in this investing World. How you realize when a share is undervalued ?
@@orsorodrigo A stock is undervalued if you can buy it for less than its full book value. How to do that is exactly what the video I am hoping to see would describe for you.
I've slowly been pulled towards investing on higher risk things like crypto and underperformers that have potential to turn massive profit and thankfully I came across you. This video was what I needed to get my head back on straight and come back to the strategy I first had when I decided to invest. Thank you
This concept of taking risk for a higher return, is complete nonsense. We hear professionals use this in discussion based on widely adopted academic theory as it pertains to allocation.
Purchasing an asset at a very low price, is likely to produce higher cash flows because the initial cost of capital is low.
If the under-performers you are referring to are these meme stock Aark Invest and chewy’s of the world, I would expect them to do so. This has to do with the time value of money and the discount rate of future cash flows. Of which, many have none.
The future cash flows of an asset are the very foundation of what defines an asset as an asset, as it pertains to financial logic.
Beanie babies, Spacs, Crypto, NFT’s, McDonalds meal toys, lil homies, Alpha fund ETF’s, do not produce anything. They do provide revenue for people/business that monetize and sell them to you!
Disagree with the crypto comment Nick. Crypto produces financial freedom. Why should the government have their hands on every transaction you make, let alone have the ability to make more whenever they want?
Have to agree with you about the government chris. Tired of these jerkoffs shoving their hands in our pockets.
@@chrisdoody3067 This didn't age well.
@@Tomekkplk You saying the government should have full control of monetary policy with this uncontrollable debt and inflation?
I remember when cgm focus fund with Heebner was all the rage. And then when I bought in it went the other way and tanked. That fund had very high expense fees as well.
This came up on my feed as I was watching your other videos Rob. This aged very well :) Keep up the great content!
Making 160% in the ARK ETF in 1 year is the equivalent of Appalachian State beating Michigan in football in 2007. This type of matchup could happen 100 times and App St might win 1 time. This is true in the stock market too.
You HAD to bring up that game?????? Now I can't sleep tonight. Thanks lol
This Video was for me. Thank you sir.
Thanks. I needed to hear this too.
Great information. Originally clicked to hear you tell me why I’m wrong for investing in index funds but great twist. That’s why i believe it’s essential to hear out and listen to views that don’t conform with mine
Sir, I appreciate your subtle wisdom. I will take heed to your counsel. I thought you were very sincere and unbiased. Thanks a LOT.
however, I would argue that if you use risk adjusted returns as the only variable, index funds will always be #1 baby!
I needed to hear this! Thanks a bunch for sharing your experience!
The problem that I can't figure out with Index Funds is investors don't own the underlying shares (the fund manager does) and there is no opportunity to vote a proxy at the annual meeting. This means that whoever the fund manager is gets the votes and I'm not sure that person has fiduciary responsibility. So if the index fund manager thinks cigarette smoking is bad, and Phillip Morris is in the index the fund manager can vote for a activist program that is bad for Philip Morris. Rationally, it would seem the fund manager would want all the companies in the index to do well but 1) its an index and if one company falls off the list another is added and 2) the world is not rational.
Cost-average into a low-cost S&P 500 index fund over a working lifetime. Magnify that by buying dips, and you'll do even better. I am 79, & I have experience with both indexing and stock-picking. Only a few can do any better (Warren Buffett, Peter Lynch), and you won't know until much later.
The dollar-cost averager outperformed the all-time high avoider in 82% of all possible 30-year investing periods between 1928 and today. And the dollar-cost averager outperformed “God” in ~70% of the scenarios that Maggiulli analyzed.
How can the dollar-cost averager beat God, since God knows if there will be a better buying opportunity in the future?
Simple answer: dividends and compounding returns. Unless you have impeccable-perhaps supernatural-timing, leaving your money on the sidelines is a poor choice.
I’ll stay in index funds. I have 30 years of experience in the communications industry, not the investment industry.
I have learned to be
excited about index funds. I can dream and make that dream a reality in a few decades for me and my wife.
Mediocre: Index funds are not for losers..., are for mediocre. And mediocre is the average for mortals, so it is for all of us. The thing is that no one in the world accepts the reality that we are average people.
14:03 "The best thing money..." what?! I need to know!
It's all about getting enough growth for significantly reduced risk of serious losses. No single stock risk, very strong resistance to black swan event risk, reduced risk of poor selection. All this stuff is why it's a great option for the long term.
Yes!
No it is not. It’s all about the company making profit for you, the owner of the company (owning shares = owning the company). That’s why I look at dividends as salary, which I’m entitled to receive. Like… I wouldn’t invest in a company if it doesn’t pay my bills… just like I wouldn’t work for free…
@@iPizzaSlice That's a terrible strategy. You'll pay tax on dividends even if that's not a great period for your pocket. Instead you could sell some action and obtain the same result (but when you want to, not waiting for the companies to give you "a piece of the action")
Yup. 2008/2009 was a great example. As an indexer my paper loses were staggering. BUT, I didn’t do anything except keep putting money into them. Of course that strategy worked great. It’s all about time. How much time do you have before you need the cash.
Everybody's loses were staggering in 2008/09, even those who invested in individual stocks. There was nowhere to hide then.
Rob, excellent videos and links. It's interesting & enlightening to see the comparison between diff M1 Portfolios ! its amazing contrast.
I love learning from you Rob! Great videos, thanks 👍🏾
Benjamin Graham's book the Intelligent Investor talked about this. During bull markets every fund manager looks like a genius. After the Dot-Com bubble popped what happened to all those superstars.
Peter Lynch, the manager of the Magellan Fund, retired.
@@DavidEVogel You male zero sense Peter ran that fund from 1977-1990. Dot-Com happened in the 2000's troll somewhere else.
I wouldn't say index funds are for losers. They are (typically) mathematically weighted formulations of companies within the index being tracked. They are also diversified. They should typically track very very closely to how their index performs, minus the small fund fee. Buy and hold over the long term, for the average person is the best bet to not "beat the market" but closely track it. Buffett, Bogle, Munger, etc., have spelled out that actually buying individual stocks should entail some serious deep diving into the company, it's products, it's management, it's industry, into at least the quarterly financial statements, that's a lot of work to keep up with, year in and year out.
I suggest you may not have understood what he meant by 'loser'. He means as opposed to those who measure success by a, not only big but huge financial investment success - but a short-term success. He presents that over a decade, calm, consistent investing in a low-cost, index fund will out perform the flashy, consistent attempt to achieve the huge success.
The coolest plot twist I’ve ever seen!! Great message thanks for the encouragement
4x on Arc is like 4x on any crypto. Take your lottery win, don't think you're smart, and invest it for the long term. Property or indexing, preferably both. Slow and steady always wins the race.
Hey... I was that Index Fund in High School (never thought of that analogy before)... the happiest, busy Nerd ever. Some 45 years later, I am still that happy Index Fund. Yes, I actually did do something crazy with my investments a year ago. I took out about 5% to buy a 2nd family home in FL... (thank you Index Funds!). I just thought of it as diversifying my portfolio a bit (since Real Estate is a Capital Asset) ... and it is real nice to stay in my own home when we travel to FL for several months. Yup... love my Index Funds.
Great video yet again!
Darcy - can I respectfully ask what was your yearly contribution and what was the final value of your account after 45 years?
@@allenbournes4697 It was an entire career, so it was a lot of years. I would say it was anywhere from 15% to 40% at any given time. My husband and I always tried to live on one income (when ever both of us were working). We easily had a million when we originally retired (today several million)... and that is after paying for a lot of college for ourselves and our children. Also spent a substantial amount on our family home, vacations, and educational experiences (lessons, trips...) for our children... You can't replace time, so our family was highest priority. Anyway it all worked out fine.
@@darcysalmon7781 Amazing story. Love to hear it
I think the ARK funds have a place to speculate with if you have side cash toy want to get to add to your portfolio. Get in whenever it’s down by 50% or more to lower risk dramatically and increase in the asymmetry of the trade.
Very well said. These fads are not sustainable for more than a few months..... not decades like building true wealth requires. When I heard the stir caused by Kathy Wood's funds it reminded me exactly of the chatter around the Janus Funds in the late 90s. Same thing. All the hot money poured into the tech funds and they got crushed.
I NEEDED TO HEAR THIS, so thank you
I needed to hear this. Thank you.
Great video but one question though
What if everyone investing almost in the same stocks over and over again because in the future a lot of money goes into same large index funds. Then it doesn’t matter if the companies making profit. Everybody just keep buying. A huge risk in my opinion.
You are amazing man, what you said is exactly what I was thinking about!
10:24 The Boglehead approach is okay with 5% speculation to scratch that itch. As long as you don't go over 5%
That's a good rule, and also not a strict one. Depending on one's risk tolerance and ability to stomach losses and volatility, that number can be increased to 10% or even 15%.
@@willg1315 yes. However, once you get past 5% it's a not a Boglehead approach. That's perfectly okay for investors that truely know what they're doing.
It’s about winning in the aggregate over time. Seeking to be the big winner year over year is a fool’s errand. If you disagree, you’re not arguing with the indexers. You’re arguing with the math.
Well said
Very well said.
True
Applaud 👏👏! Especially if a person invests early in life and rountinely.
if you're drawing from your portfolio "winning in aggregate over time" doesn't cut it
I believe a better way to phrase this would be to say you're never going to be the top winner but you will end up a winner in the long run and that's the important point. Another great video sir.
Im heavy in index funds particularly for retirement. I experiment in a taxable account with individual stocks, my retirement is not for play.
I think index investing gives you piece of mind rather than staring at the idiot box 🖥 for graphs to go up and down ... because you know in long term slow and steady wins the race..moreover there will always be someone more fancy like ARK but will it be sustainable in long run..I doubt that.
My Simple (16yrs old) Portfolio
100% Roth IRA = VTSAX (Vanguard)
100% 403k = FSKAX (Fidelity)
I always max out my Roth IRA in the first week of the year yearly.
5% of my salary per paycheck goes to my 403k.
imo Total Stock Market beats S&P500.
Can you help me? I’m new to these things
Spot on! I invest in Two ETF Index Funds: VUG and VFV (TSX equivlent to VOO) for the past four years and you are right, they are boring and average, but they keep creeping up and up and always comes out the winner in the long run. And when they crash, they go right back up pretty fast!...I also invest in ARKK and was very happy it did very well last year, as timing was good buying it at $75, but it's struggled this year, unlike VFV and VUG that has caught up. I don't have to worry at about those two, but I have to keep a close eye on ARKK.
Arkk stocks have diluted investors about 70% TTM. 17 of top 20 holdings lose money. Get out of that garbage pile of dream story stocks with a profit while you can.
yes to VUG.
No to ARKK. It’s not worth anything.
@@Northdallasguy00 Thanks, I am keeping a very close eye on it. VUG has been great.
Thank you for this video. I have been feeling like I'm missing out. But this makes me feel better about my choice. It's not a sprint it's a marathon.
Jack Bogle talks about this in his books and refers to it as ‘reversion to the mean’.
Thank you so much for this, Rob. I’ve been binging all your videos on this Sunday afternoon, and learning/confirming a lot, but this was the first dedicated exclusively to the emotional aspect of investing and I thought you hit it out of the park, especially since it was a live stream. Please keep up the great work and looking forward to viewing more videos.
Love that your channel is getting the attention it deserves.
Great content but the volume is a little low!
Like a lot of things in life, it's not so much about hitting the grand slam, as much as it is avoiding the triple play.
Thank you, Rob. I needed this.
Subscribed just on this video! Would you say that index funds are the nerds of high school? That was me! I went to get my PhD which has put me behind in the short term, but I’m hoping will be a long term investment.
Rob, I did see the video in the fb video feed. Please keep the youtube channel, though.
Started maxing out my Roth IRA with vanguard 10 years ago and it's 10x'd over time. You win when you're a long hauler with index funds.
Wisdom not only for investing but for living a healthy life in general. Really appreciated this.
Wisdom! My favorite etf
My Fidelity index funds are at slightly over s&p right now. I don't buy stock on my own anymore. I have the Robinhood app and trade on the shitter but I'll never get rich with it. I'm up 100% but I consider it a video game with $1000 to lose. Meanwhile my Fidelity account keeps growing.
I needed to hear it! Thank you
Great message, Rob. Thank you!
Hi Rob, appreciate the video and needed to hear this to further strengthen my mentality. But just wondering if a 2 or 3 fund portfolio using a sector etfs would be okay? VGT,VHT and BND?
Index investing + individual stocks that pay you dividends works pretty great
Look up "Dividend Irrelevance Theory" for the second half of your comment.
Every study in the last 50 years shows passive outperforms active. And there are dozens and dozens of them
Hello,
I want to congratulate you on your work. Thanks for the video is a great one.