The Pros and Cons of Mutual Funds and ETFs (Which Option is Best?)
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- Опубліковано 13 вер 2024
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I admire the financial independence of people, But you can live better if you work a little more. After watching this I think there are people out there, on the extreme, who plan to die early just to be able to retire early. To each their own but to me, retirement isn't just about not having to work, it's about having the freedom to do whatever you might reasonably want, such as travel, buying things, enjoying life, etc. I don't think I could retire with less than $3m in income-generating investments, maybe $2m at the very minimum. I plan to work until I'm at least 45
@@MarcelPhilips Having an investment adviser is the best way to go about the market right now, especially for near-retirees, I've been in touch with a coach for a while now mostly cause I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I netted over $220K during this dip, that made it clear there's more to the market that we avg joes don't know
@@MarcelPhilips credits to KRISTIN GAIL CUNNINGHAM, one of the best portfolio managers out there. she's well known, you should look her up
3 mil you will definitely need to work till you’re atleast 45 i wouldn’t be surprised if you would be at 55 still working depending on your income
For retirement accounts: Indexed mutual funds.
For non-retirement accounts: ETFs.
@@leeklinglesmith3427 I do so no one gets them confused with ETFs. I see that happening far too often. It is technically accurate, but stiff/robotic in casual conversation.
Good option
Mutual funds all the way for TFSA
Easy.
I subscribed. I like it. No non sense, straight forward financial information and insights that are real, current and actionable. These guys are solid.
These guys are not "no nonsense" or straightforward lmao
After a terrible 2022, shell-shocked financial backers have a lot to think about and losses to recover from. An expansion report and a wealth of other data did little to alter assumptions that the Central bank would likely keep raising interest rates regardless of whether the economy slows down. This implies that portfolios will experience more losses during the first quarter of 2023. I'm currently at a crossroads deciding whether to exchange my $250k security/stock portfolio; how might the continuous market volatility work to my advantage?
If you’ve got patience I believe it’s a great time to invest… I’m no expert but as Warren buffet said he’s seen this happen a number of times throughout his life
@@raychristopher7797 I've known I had wanted to start investing for a few months but just haven't been brave enough to start due to the market so far this year. I have $60k I want to transfer into an S&S ISA but it's hard to bite the bullet and do it. $457 is a huge milestone, Please what's your strategy? I will love to have an insight
@@georgerobinson2021 I began with a fiduciary portfolio advisor by the name Margeret Ann Warnken . She’s verifiable and her works ethics is in accordance with the US investment act of 1940. Her approach is transparent allowing total ownership and control over my portfolio with fees very reasonable in comparison with my investment-income. Also, She covers things like investment insurance, making sure retirement is well funded, Go over tax advantages , ways to have a volatility buffer for investment risk. many things like that.
@@raychristopher7797 Word of the day: fiduciary. do not talk to anyone who is not a fiduciary to you, who explains everything.
@@georgerobinson2021 Margeret Ann Warnken really seems to know her stuff. I looked her up on the web using her full name and found her page, read through her resume, educational background, and qualifications and it was really impressive. She is a fiduciary who will act in my best interest. So, I'll book a session with her
Could you guys do a show on portfolio rebalancing? For instance some scenarios where investors benefit? Drawbacks of rebalancing etc ? Great show guys. It has helped me focus on important aspects of investment.
Watching from Canada, able to apply 95% of what I learn
This is an amazingly informative and accurate video for someone without much knowledge about the difference between ETFs and Mutual Funds. I saw this video last year but it came up on my feed again and was worth another listen.
Same. I just watched it again.
M1 Finance lets you auto invest into ETFs or other securities like stocks/bonds because they offer fractional shares for free. They also let you set a target allocation, like 50% VTI and 50% VGT, and they'll buy to maintain the ratio you set as best as possible
Just was going to say something like this! M1 Finance is such an underrated platform
Fidelity also allows the purchase of fractional shares for ETFs… Fidelity and M1 are the only brokerages I use, so I was very confused when they said you have to buy a full share. I’m assuming it’s that way with other brokerages? 🧐
@@Standard_MT yeah it is, which sucks. Even with Vanguard, which everyone loves, you have to buy whole share for ETFs and regular stocks
@@poolking25 i’d suggest people in that situation to move to a different brokerage. The purchase of fractional shares is mandatory for me in keeping a balanced portfolio.
@@Standard_MT completely agree, I ended up opening Fidelity for me and my wife precisely for this flexibility
This was incredibly educational. I knew what the terms meant between the two, but not really the intricacies behind them. I just kept hearing from people how awesome ETFs were. Though for me, this will be very informative on how I want to invest in my Roth IRA. Thanks for sharing! I favorited this for later viewing when the time comes.
Same same
I bought ETFs in my vanguard Roth IRA until I got to the minimum investment required for the mutual fund then switched over to mutual funds for the automatic investments.
Gotta start somewhere!
Are you able to convert ETF to the equivalent mutual fund without making a sale?
THANK YOU GUYS!! Love the way you explain everything. You guys have a great talent in teaching. Really appreciate this, you've been incredibly helpful. All the best to you. Subscribed, followed you on twitter, and went to your website. Thanks!!
I've got 1.1 million in fidelity/barron's mutual funds, as of today $225k in appian/alteryx/delta/royal caribbean stocks. If this was vice versa, I'd have twice as much because I bought appian and alteryx so cheap. Mutual funds let me sleep at night, stocks are volatile. How big are your balls, that's the way to invest. Small caps are the ticket right now trading 1-1.2 to the large caps. I'm a russell 2000 guy. Hang on to the small caps, because the run is coming.
Great information and discussion guys. I'm a seasoned investor, who is a disciple of Mr John C Bogle. I own both index mutual funds and ETFs.
10 minutes in and it's great information. You earned a subscriber!
This embedded loss thing seems really interesting. Could you make a video explaining the mechanics in more detail? I thought I understood this stuff until this video...now i have more questions than answers :D
You must LOVE these guys' energy. They have the same energy. If they were in disguise, and you could not see their faces, they are just alike. Same movements, mannerisms, and energy. Is it what they have in those cups? Are they naturally hyped? Or they just love the subject matter that much? I guess it's not important. I just subscribed and am loving the information.
How the heck did he know I was going to watch this episode in 3 years?! 17:36
You guys are fun to listen to! Cheers.
Expense ratios for mutual funds in Canada are crazy high. ETFs in Canada seem like a better option to me.
There is clear difference between the two types. Vanguard ETFs, some don’t have capitol gains and plus for taxes. Also you have better control of ETFs can sell and buy during the day. Mutual funds are better for automatic investing
I like that mutuals trade end of day. When the market gets slaughtered several percent I place a buy order 10 minutes before the bell. Don't get me wrong, I DCA on the 15th every month, bit this let's me gamble a little and try and time the market.
This comment is the dumbest thing I have ever read. Over 90% of mutual funds underperform SPY. Don’t fall for mutual funds.
@@Roger-il8iw there are different types of mutual funds, almost all assets underperform SPY anyway
@@dirtymike3329 I don’t think you read the comments above correctly.
@@Roger-il8iw mutual fund is an instrument type not a management strategy. There are sp500 index funds that are mutual funds. Second, an sp500 index fund (mutual fund or etf) will at minimum underperform its index by the expense ratio. Just FYI.
Great work guys!!
First time I have seen a ven diagram used for a pros cons list
It's a simple topic..but you guys made it freaking complex
I work for Vanguard most funds for average retail investors have minimums of 3k to open the fund. If you want a lower expense ratio for the same fund u need 50k
I have the VTI etf currently and can only buy complete shares, do I need to convert them to VTSAX to be able to buy fractional shares and auto invest?
@@bigshoe84 Hey there. dont work for vanguard anymore I work for Charles schwab now haha. but yes. etfs do not generally supprot auto invest and fractional shares. On the vanguard platform you are able to directly deposit from bank to vtsax with their auto investment plan feature.
@@LeMole93 Thank you
The only advantage of getting the distribution on a mutual fund is that it gives you more shares which in the long term will help your investment to grow quicker. An actively managed fund should ONLY be used in a retirement account. Even then, it better have a strong track record of beating the index.
I like index funds better because they're a bit more liquid and lower fees.
Good discussion. Just a fyi, my etrade account allows automatic investing of etfs and stocks. Basically set up a price range and set the days you want to execute.
22:14 Just love the way he says if u baaa .. the S P waaa
ETF’s are tax efficient in terms of capital gains but not in terms of taxable dividends. If taxes are a concern look for low turnover mutual funds.
This is golden information!!!!
I'm the buy once a month and forget about it type investor but I invested a grand in the SP500 UCITS ETF. Should I keep investing monthly in this? Should I transfer this money into the SP500 index fund? Is it even feasible? Thanks for the tips lads, subscribed :)
For ROT IRA is good to invest in mutual funds
I would love to see an updated video of what it looks like in 2024
Thanks!
This episode could benefit from being twice as long than it is. Lots of discussions about taxes and distributions with no clarification on what caused the gains or losses in the “background” of how these financial vehicles work.
great stuff guys
Mutual Funds and ETFs are priced differently. Any potential investor should know how they are priced.
Did they speak of the annual rate of return of the two products? They didn't. Mutual funds average like 8% return while ETFs mirroring the S&P return on average 12%
You should do an apples to apples comparison. VTI (ETF) and VTSAX (mutual fund) both track the same thing, the total stock market index. VOO (ETF) and VFAIX (Mutual fund) both mirror/track the S&P 500. They have identical funds
No they don’t. You’re wrong.
Why is poor Daniel referred to as FTE Daniel? Besides assuming he's working full time as the name implies.
So it sounds like mutual funds are better for tax sheltered accounts while ETFs are better in individual accounts.
That’s what it seems like to me
I’m in late 20s. We have increased substantial savings already to retirement accounts. I was wondering for taxable brokerage account with fidelity if dollar cost averaging is better with mutual funds or ETFs if I will likely use some of this savings within 2-5 years for downpayment on larger home? I would not if the market was down and hold long term. I would like to take the risk in the market because savings accounts are so low and we already have a stable living situation/income/emergency fund.
dollar cost averaging is better with mutual funds or ETFs
I like dollar cost averaging. No need to foolishly try to "time the market." Dollar cost averaging is applicable to mutual funds and EFTs. Neither has an advantage.
ok, so I currently only have VTSAX in my Roth IRA, but I also have it under my regular Brokerage account along with VDE, VGT, VNQ, and VOO. Because of the tax expense, should I exchange the VTSAX in my brokerage account and buy VTI instead? Essentially converting and investing in the same index but opting for ETF instead of mutual fund because of the tax
I have the exact same question. Thanks for articulating it.
@@SantaCruzRunner Contacted Vanguard and they will assist with the Mutual fund conversion to ETF .. "When you own shares of a Vanguard mutual fund that can be converted to an
ETF, we ask that you call us to process the conversion. These transactions are unable to be processed through email............... Conversions from the mutual fund share class to the ETF share class are tax-free" So needless to say that I will be calling them next week :)
@@chicodominicano oh dear buddy. Ur creating work for me to do lol. I work for vanguard and sometimes do exchanges for ppl on the back end systems processing this stuff lol. I hate doing exchanges too a more difficult process compared to other things ppl request lol.
I think Vanguard (and only Vanguard) mutual funds are treated as an ETF as far as taxes go.
No difference in tax between VTSAX vs VTI ETF so that is not required in my opinion.
Uh oh! Bo isn't excited to talk about this!
How does everyone feel about Acorns and their ETF situation?
In other words, just buy VOO and be happy.
What are your thoughts on Cannabis ETFs?
Been watching for a while now. Everytime you mention your employee Daniel, you say FTE Daniel. Why is that? Did he want to be known by his HR employee category?
It’s called a running joke. I hope you get to be a part of one someday.
FTE = Full-time equivalent
@@jordanbramlett347 he knows what it means he’s just being sensitive on Daniel behalf… for some strange reason.
Before you said mutual funds were worse than index funds because mutual funds have fees and are actively managed ....you even said earlier this is one point that you don't agree with from Dave Ramsey's insistence on the benefits of mutual funds. And now you are talking like mutual funds are almost better than anything else. I am 100% confused. I opened digital automatic roth ira in vanguard. I assumed it was all good and I saw my investments were put in ETF's. And I thought those ETF's represented S&P500 index funds. Now it turns out it's not that and my ETF's are even worse than mutual funds? What am I supposed to do - search for mutual funds inside my ROTH IRA and turn off automatic robo- investing? But which mutual funds to choose and why you say they are cheaper if before you said they are more expensive? I don't know anything about funds and I thought auto-digital investments were good and reliable, but after this video I'm sad and confused....and don't know what to do...
Do you need help? I can help you out.
Get an advisor and pay money
As long as either is in the s&p500 you’re fine. Just keep auto investing.
Really enjoying this channel, just went to your website to check it out. I have to say, seeing "Buy Now" everytime I scroll down comes off not so great.
I have both mutual funds and ETF’s in my Roth IRA. I can get the best of both worlds. My mutual funds are my core index funds, and my ETF’s are funds like ARKK ARKW IBUY ICLN, etc.
Best of both worlds? Every ETF you mentioned fell like 50% since you made this comment
When looking at a mutual fund, ETF, or Index fund, what information tells you whether the fund is tax efficient?
Look at turnover and historical distribution history 👍
The word index in fund name would most likely be tax efficient
ETFs typically more efficient than mutual fund equivalents
you don't discuss the pro and cons of managed v index. why?
They touched on it briefly with the stat that index funds generally beat managed funds in returns. And also went into detail at 25:00
What about AI managed funds?
I need help, is there anyone who can help me?
FKDNX has obliterated the S&P 500 over the past 1,3,5,10, and 20 year periods. And since 12/31/1999, FKDNX EVEN WITH a 4.5% sales charge has beaten the s&p by roughly double.
It’s down 32% the past year. Far worse than the S&P. lol. Just lol.
@@lockheedload OMG the sp500 is down 10% less than Dynatech over the last 12 months my point is completely invalid now! Nevermind the fact that it’s still crushed the 500 over 20 years my point is now demolished!!! Moron
What’s better qqq or voo?
QQQ has more risk and a lower dividend. VOO is more stable and a higher dividend. Depends on what your risk profile looks like.
@@nivek204 I agree I have vti and voo and vnq a stable formation in my personal opinion
What are the benefits of having a family trust?
Drinking Game: Every time he says "lions share", take a shot.
The founders name is John lol
I’ll take an actively managed Mutual Fund in the hands of an elite manager every day of the week! There is too little emphasis on the quality and talent level of the manager(s) and it makes all the difference in this conversation.
But they often underperform, which means you're paying fees... to make less money.
The research says that actively managed funds will, on average, underperform their index when fees are accounted for. Ben Felix has awesome videos out there citing all of the research.
The sum of all active managers is by definition average (not higher than the market which is also average). If you take from that average trading fees and manager fees the end net for all active managers is below average.
I think Jake Z is an active manager
lol no one wants actively managed funds anymore. This isn’t the 80s.
👍 👍
presentation is too haphazard and difficult to comprehend. Too bouncy with lack of organized info.
ZZZZZZ, good but two long.
Roy Vannoy too*
Listen to it on x2 speed