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How to Be a Millionaire With Index Funds | Vanguard, Schwab, & Fidelity - YouTube
Channel: Informed Investors
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by investing only in index funds is it
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possible to retire as a millionaire yes
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without a doubt
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gaining financial success through index
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fund investing depends equally on the
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why and how let's look at how this can
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happen for you regardless of your
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starting financial situation welcome
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back to another interesting episode in
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today's video we will be showing you how
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to be a millionaire with index funds do
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make sure to like share and comment
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below as it also encourages us to
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produce more valuable content for you
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all if you have a specific topic you'd
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like to learn please leave us a comment
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below and we'll work on it for you
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before we dive into it let's take a look
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at what index and mutual funds are index
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funds are financial instruments that aim
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to replicate the performance of a
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specific index such as the s p 500 index
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you will earn the same amount of money a
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percent if you own an s p 500 index fund
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and the index returns a percent in a
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given year less any fund expenses which
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are currently zero percent or very close
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to it a number of years have seen
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negative returns for market indices so
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keep in mind that they do not return the
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same amount every year index funds are
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extremely effective for regular
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investors because they can earn this
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eight percent without requiring active
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management on your part as a result you
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won't have to invest time and energy
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selecting and trading stocks trying to
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predict which ones will rise and which
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ones will fall in other words if you
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invest your money and essentially leave
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it alone you will get the market return
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mutual funds are an excellent way to
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invest your money they can assist you in
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meeting your financial objectives
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because they have the potential to
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generate higher than inflation returns
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the sooner you start the sooner your
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money will start to aggressively
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compound so if you only get one of these
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rights make sure it's this one the
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longer it grows the more you will profit
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from compound interest subtle beauty
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because money grows more quickly when it
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has a larger base it's critical to
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continue investing despite where the
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market is currently trading even at
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all-time highs set up a schedule for
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investing at any frequency every week
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every two weeks etc
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as a result compounding will speed up
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while also ensuring that you keep
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expanding your portfolio consider the
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scenario where you accept that an s p
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500 index fund is beneficial to you
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choosing an s p 500 index fund from one
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of the discount brokerages fidelity
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charles schwab or vanguard and intending
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to hold it for a long time are your only
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options additionally you'll pay a lower
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tax rate on any accumulated gains after
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a year has passed in the event that the
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market declines as it most recently did
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in march 2020 there will be a temptation
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to sell the ability to preserve through
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the most challenging marketing
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conditions is a key component of
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successful investing despite the fact
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that it is much simpler to say than do
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index investing must have this aspect
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fidelity u.s sustainability index fund
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investors interested in sustainability
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should consider the fidelity u.s
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sustainability index fund the fund's
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benchmark is the msci usa esg leaders
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index which tracks the performance of
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large and mid-cap domestic stocks with
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above average esg ratings there's no
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minimum investment required and an
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expense ratio of 0.11
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for the index fund the fund's largest
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concentrations as of march 31st 2022 are
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in technology 28.6
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healthcare 13.5 percent and consumer
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directionary 12.8 percent this
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sustainability etf's top holdings
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include microsoft tesla google parent
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alphabet navidia and johnson and johnson
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although esg funds are appealing to
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those looking to invest with a conscious
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a strong esg focus is also advantageous
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to returns esg funds such as the
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fidelity u.s sustainability index fund
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are a wise choice for long-term
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investors because businesses with low
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esg related risk frequently outperform
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their competitors financially
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schwab emerging markets equity etf
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if you want portfolio exposure to high
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growth emerging markets but don't want
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your risk concentrated in a single
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economy or region the schwab merging
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markets equity etf may be a good fit the
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ftse emerging index which compiles large
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and mid-cap stocks from more than 20
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developing nations serves as its
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foundation most of the
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1843 holdings in the fund are in china
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taiwan india brazil and south africa it
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has an expense ratio of 0.11
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and in the past stocks in emerging
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markets have performed worse than those
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in the u.s between 2012 and 2021 the
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schwab emerging market funds returned
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approximately 67 percent the s p 500 has
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gained more than 350 percent since its
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beginning around 85 percent of the
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world's population lives in developing
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countries so it's long-term investors
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who are accustomed to volatility ought
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to give this fund some serious thought
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vanguard russell 2000 etf
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for investors looking to take advantage
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of the potential upside of investing in
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small cap companies the vanguard russell
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2000 etf which tracks the russell 2000
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is a good place to start the fund
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invests in 2032 small and mid cap
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companies with a 2.9 billion dollar
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median market capitalization as of march
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31st 2022 the index fund's largest
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concentrations were in health care 16.1
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percent financials 15.9 percent and
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industrials 15.4 percent the expense
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ratio of the fund is at point one
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percent is relatively low especially for
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one that provides exposure to companies
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with the greatest growth potential the
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vanguard russell 2000 etf like its
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benchmark index underperformed the s p
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500 during the first five months of 2022
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falling about 20 percent
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vanguard real estate etf the vanguard
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real estate etf is a good low cost
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option for investing in the real estate
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market it is also by far the largest
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real estate index fund with
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approximately 86.3 billion dollars in
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assets under management and an expense
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ratio of 0.12 percent
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the msci u.s investable market real
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estate 2550 index serves as its
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benchmark broadly tracking the us real
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estate market even though the index
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includes a few real estate management
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and development firms it is primarily
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comprised of equity reits which own and
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operate income producing real estate the
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etf is appealing to dividend real etf is
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appealing to dividend investors because
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it invests primarily in reits the fund's
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12 month dividend yield was 2.45
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as of may 2022 because real estate was
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traditionally been viewed as an
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inflation hedge the vanguard etf may
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also appeal to investors concerned about
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inflation
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vanguard growth etf
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vanguard growth etf is a good choice if
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you want to take on more investment risk
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in exchange for higher returns the fund
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tracks the crsp u.s large cap growth
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index which is similar to the s p 500
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growth index in terms of performance
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this etf invests in 266 large cap growth
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stocks in the united states tech stocks
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holding for 49.7 percent of the fund's
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holdings followed by consumer
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directionary stocks at 24 and industrial
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stocks at 14 percent only 0.9 percent of
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the fund's value is made up of energy
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and utility stocks this etf has an
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extremely low expense ratio of 0.04
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percent the fund's average annual return
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over five years before taxes was 24.78
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as of december 31st 2021 easily
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outperforming the s p 500.
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however as technology stocks continue to
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plummet in 2022 the fund was down by
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around 28 through may
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far more than the s p 500 investing in
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vanguard's growth etf however may
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provide an opportunity to buy the dip
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schwab s p 500 index fund the schwab s p
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500 index fund is about the cheapest
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official s p 500 index fund you'll find
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it has a 0.02 expense ratio which means
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that for every 1 000 invested you'll
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only pay 20 cents per year because of
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the low investment fee the returns are
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nearly identical to the s p 500's
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performance the fund's total returns of
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31.43 percent in 2021 were nearly
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identical to the s p 500s both the fund
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and the s p 500 had lost about 16
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date by may 2022 you can begin investing
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with as little as one dollar because
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there is no minimum investment amount
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fidelity zero large cap index fund the
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fidelity zero large cap index fund which
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tracks an index of slightly more than
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500 large cap stocks in the united
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states outperforms the s p 500 index
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fund however because this fund is not an
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official s p 500 index fund it avoids
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paying expensive licensing fees to the
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index parent company s p global new york
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stock exchange spgi
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as a benchmark the fund follows the
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fidelity u.s large cap index the word
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zero in the fund's name indicates that
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it has zero percent expense ratio there
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is also no minimum investment amount
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making the fund an excellent choice for
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new investors the fund closely tracks
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the s p 500 total returns since its
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beginning in september 2018 were 43.4
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percent as of mid-may 2022 just short of
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the s p 500's 44.2 return during the
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same period fund was down about 18 in
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early 2022 slightly more than the s p
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500. there are countless ways to reach
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one million dollars through index fund
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investing but the best way to do it is
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to invest as much as you can as soon as
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you can and to have the nerve to leave
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it alone in the market changes
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make sure your big ideas are sound and
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then let the market take care of the
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rest the content in this video is for
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educational purposes only and hence
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should not be considered financial
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advice all the financial decisions
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should be made after doing your wide
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spectrum research if you found this info
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helpful please give a thumbs up and
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subscribe for more content like this as
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it also encourages us to produce more
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valuable content for you all if you have
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a specific topic you'd like to learn
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please leave us a comment below and
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we'll work on it for you until then
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