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Vanguard Index Funds for BEGINNERS 2020 || Part 2: Vanguard Index Funds & Vanguard ETF Review
In this video we are continuing our Vanguard Index Funds for the COMPLETE BEGINNER series by talking about what types of accounts Vanguard offers as well as talking about Vanguard ETF’s and Vanguard indexed mutual funds and the differences between them.
PLAYLIST FOR VANGUARD INDEX FUNDS FOR THE COMPLETE BEGINNER:
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Vanguard Index Funds & Vanguard ETF Review: The Perfect Investment Choice for Beginners in 2020
When it comes to investing, it’s essential to make informed decisions. With the vast array of investment options available, selecting the right one can be overwhelming, especially for beginners. However, Vanguard Index Funds and Vanguard ETFs are two excellent choices for investors looking to enter the market in 2020.
What are Vanguard Index Funds?
Vanguard Index Funds are a type of mutual fund that aims to replicate the performance of a specific index, such as the S&P 500 or the Total Stock Market Index. These funds invest in a diversified range of stocks that mirror the index they follow. By doing so, Vanguard Index Funds provide investors with exposure to the broader market rather than investing in individual stocks.
Benefits of Vanguard Index Funds
One of the main advantages of Vanguard Index Funds is their low expense ratio. Vanguard has a reputation for offering some of the lowest-cost funds in the industry. With expense ratios significantly lower than actively managed funds, investing in Vanguard Index Funds allows investors to keep a more substantial portion of their returns.
Another benefit of Vanguard Index Funds is their passive management style. Unlike actively managed funds, which rely on professional fund managers to pick stocks, index funds simply aim to replicate the index they track. This passive approach eliminates the need for constant monitoring and decision-making, making it an ideal investment choice for beginners.
Additionally, Vanguard Index Funds offer broad market exposure. These funds invest in a wide range of stocks across various sectors, allowing investors to diversify their portfolios easily. By distributing investments across different companies, investors can reduce their exposure to risk associated with individual stocks.
What are Vanguard ETFs?
Vanguard ETFs, or Exchange-Traded Funds, are similar to index funds in terms of their passive management style. However, ETFs trade on the stock market, just like individual stocks, and their prices fluctuate throughout the trading day. This means that investors can buy and sell shares of Vanguard ETFs at any time during market hours.
Benefits of Vanguard ETFs
One significant advantage of Vanguard ETFs is their low cost. Similar to Vanguard Index Funds, Vanguard ETFs have a reputation for having some of the lowest expense ratios in the industry. This cost-efficiency makes them an attractive investment option, as it allows investors to maximize their returns.
Another benefit of Vanguard ETFs is their flexibility. Unlike mutual funds that have a minimum investment requirement and can only be purchased or sold at the end of the trading day, ETFs can be bought or sold at any time. This means that investors have precise control over their investments and can take advantage of market opportunities instantaneously.
Moreover, Vanguard ETFs offer diversification. These funds track a specific index, such as the Vanguard S&P 500 ETF, which includes stocks of 500 large-cap U.S. companies. By investing in one ETF, investors gain immediate exposure to a vast selection of stocks, spreading their risk and potentially increasing their chances of higher returns.
Vanguard Index Funds and Vanguard ETFs: The Perfect Investment Choice for Beginners
Whether you choose Vanguard Index Funds or Vanguard ETFs, both options offer a low-cost and diversified approach to investing. For beginners, these funds provide an excellent entry point into the market, as they require minimal investment knowledge and are relatively low risk.
In summary, Vanguard Index Funds and Vanguard ETFs are ideal investment choices for beginners in 2020. The low expense ratios, passive management style, and broad market exposure make them an attractive option for those looking to enter the market with a long-term investment strategy. So, if you are considering investing in 2020, consider Vanguard’s Index Funds and ETFs for a solid foundation to build your wealth.
Looking to start up my taxable brokerage account, can you make a video regarding high dividend etfs and/or high dividend investments? Thanks
I guess the glaringly obvious question is 'If ETFs are so much more flexible in terms of trading and minimum trading amounts, why would anyone choose a mutual index fund instead?'
Nice video! Just started investing and am a fan of index funds because of the lower MER (0.25 percent or so vs 1 or 2 percent). What are your thoughts on Vanguards ETF portfolios such as VGRO and VBAL? I'm wondering what other ETFs I should consider alongside VGRO or, given how diversified it already is, should I just add money every week into this one ETF? I appreciate getting insight from those who have been at it longer than I have.
What do you think about vtsax vs vti
Is it possible to purchase Vanguard index funds through your bank or does it have to be through the Vanguard website? I use investors edge with cibc and I can't find the Vanguard index funds on there..?
It can also be a bit of a barrier to people who may HAVE the money to put into a mutual fund, but are still just beginning. Imagine that you may want to set up 4 or 5 index funds in your portfolio as a "set it and forget it" type of investing. You say "Ok, I have $6,000 to deposit – oh wait, that burns up my Roth contribution limit for the year, and I can only buy into 2 mutual funds this year." (If it's before the tax filing deadline, you could put it in as last year's contribution though…)
As good as Vanguard is, they just aren't very friendly to new investors with low amounts of cash to invest, other than ETFs, which don't let you invest automatically. So you can win, but you also lose in other ways.
As you said in another video, Fidelity really is the better option for the absolute beginner who may be lucky to have as much as $500 to invest, let alone $3,000.
I to would like to know what metrics make an investment good to have or not to have in a Roth account vs your basic brokerage account.
All I have in my Roth account is the FDEWX.
VTI, VOO, and VGT are all great ETFs for beginners. VGT more for a taxable account.
However, the ETF prices may be too high for the average young person if they go directly to Vanguard. M1 Finance makes it very easy thanks to fractional share purchasing. $100 to start and a young person is ready to go.