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Vanguard Index Funds For Beginners | 2022 5 Best Funds - YouTube
Channel: Brad Finn
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so two years ago I really knew nothing
about the stock market and nothing about
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investing and over the last two years
I've learned so much and one of the
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things I keep hearing over and over
again during this educational process
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was the idea of simple portfolios and
using index funds to help get you
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towards financial independence and I was
super skeptical I figured there's no way
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that somebody could have one two
possibly three mutual funds and that's
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it in their entire portfolio and that
would give them enough diversification
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and also protections against volatility
in the market and it wasn't till I read
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this book a simple path to wealth that I
really got on board with index fund
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investing I am now completely on board
with using index funds to grow my wealth
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over time in this video I want to go
through the maximum five funds that
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you'd really ever need in your portfolio
to reach success and frankly for a
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couple years I'm really a 1 fun
portfolio kind of guy and then I will go
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into two and possibly three I'm gonna
give you all the options from a simple
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one fund portfolio all the way up to
five if that's the route that you want
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to take remember you are not Brad Finn
and I am NOT you whatever you decide to
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do with your money is up to you I am NOT
a professional I'm just giving you my
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life experiences so before you make any
moves your money please guys contact
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professional and make sure you're making
the right decision for you your income
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your age where you live there's so many
factors the first one is the
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bread-and-butter VTSAX I've made a
video explaining what it is how you
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could buy it how you automate it this
right now currently is the only fund
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that I have in my Roth IRA and also my
403 B's VTSAX is the Vanguard total
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stock market index fund it gives
investors exposure to the entire US
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market the equity market including small
mid large cap growth value stocks it
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gives you the full spectrum now this is
very very similar to vfi ax which is
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just the S&P index and the reason that I
go at VTSAX is because I'm gonna get
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those small cap funds - I'm gonna get a
full
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spectrum of the entire stock market not
just the s&p 500 and this makes life
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really really simple because when I was
first learning about personal finance I
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followed Dave Ramsey and he was telling
me to go in these growths and mid growth
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and international I had no idea what he
was talking about when you saw him as
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mutual funds this right here it kind of
does it all even from the International
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perspective VTSAX with all the large
companies in this country has a lot of
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indirect international exposure which
for some people even most is good enough
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if you want some more international
exposure I'll get to that in one second
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but for me right now with all the huge
companies in the United States dealing
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in foreign markets like I said you're
getting that indirect exposure to answer
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the diversity question that I get all
the time I love when somebody with a
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hundred stock portfolio comes to me and
says you can't just have one index fund
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that's not diversified enough you you
got it you got to be more diversified
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like there's over 3,000 companies in VTSAX you're you really can't get more
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exposure than the entire total stock
market can you and it's not like all
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these companies inside VTSAX are
weighted the same you're getting
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exposure to the big companies on a
larger percentage and they go down the
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chain and the smaller companies have a
very very small impact on the index font
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and the last thing that I want to
mention before I move on to my next fun
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is that BTSAX also is a very very low
expense ratio and for people that don't
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know what the expense ratio is here's a
very simple breakdown of it it is the
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amount of money that that company needs
to operate that particular index fund
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you see this number in terms of a
percentage and that percentage can
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change depending on time but right now
VTSAX has an expense ratio of 0.04
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percent and what that means is for every
$1,000 you have in that fund Vanguard is
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gonna take 40 cents it's not a lot of
money they are one of the lowest
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broad-based index funds in the entire
market you might be able to find some
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cheaper but they're not gonna have the
reputable reputation that Vanguard has
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now because stocks have a lot of
volatility meaning they can go up or
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down pretty quickly
as we get older we want to lower the
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risk of that volatility and we do so by
incorporating bonds into our portfolio
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now right now at 38 years old I do not
have any bonds in my portfolio and for
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me what choice seems right for me right
now is when I turn 40 I will start to
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slowly add bonds to my portfolio and I'm
gonna do so with the second Vanguard
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fund that I recommend VBTLX which is
the total bond market index fund this
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fund essentially does the same exact
thing as a total stock market fund but
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it does so with bonds so once again
we're gonna have this low expense of
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0.05 percent and we're gonna have this
large diversification across the entire
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bond market VBTLX has 30% in corporate
bonds 70% in US bonds all the materials
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are short intermediate long term issues
it is an awesome awesome index fund when
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it comes to bonds and bonds come with a
lot less volatility and the reason so is
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because they're gonna pay you interest
and that interest is pretty fixed unlike
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the dividend you get interest for a bond
fund and the way I see it right now at
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my age and the education that I have
which definitely could change over time
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I don't see myself ever really straying
away from VTS ax and the bond market
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index fund as well now as I mentioned
before there's gonna be some of you that
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are gonna want more direct international
exposure when it comes to your portfolio
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and more than that indirect exposure
that VTS ax has and when it comes to
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that more direct exposure I'm gonna
recommend this third Vanguard index fund
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that fund is vti ax and it is the
Vanguard total international stock
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market fund the fund offers investments
a low-cost way to gain equity exposure
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and both developed and emerging
international markets it as an expense
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ratio of 0.11% right now and it is a
great way to do what BTS ax does outside
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of the country like I said for me I
don't need that direct exposure I'm okay
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with the indirect that VTS X gives me
but some people they want that direct
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international exposure and this index
fund is really the way to go and just
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like there is
United States bond next there's also an
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international bond index if you wanted
to go even further into your portfolio
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that is VTA BX it is the Vanguard total
international bond index fund like I
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said something that most of us will
never even get into I know personally
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I'll probably never get to this fun but
hey you might want it so I wanted to
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tell you about it the last fun I want to
talk to you about is something that
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might show up in my portfolio outside of
the bond index and VTS ax and that is a
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REIT index and what a REIT is it's a
real estate investment trust and it is a
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way to get involved with the real estate
market now this sector is outside the
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stock market so gives you a little bit
of protection against the stock market
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and also is going to give you some
portfolio diversification
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it comes with an expense ratio of 0.12
percent which is a little higher but
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it's not terrible and like I said this
fund just invested in real estate
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investment trusts companies that
purchase office buildings hotels and
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other real estate properties so if you
have like a real estate itch and you
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want to get involved with real estate
indirectly from buying investment
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properties and stuff this is something
that you might want and like I said as I
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grow VTS AX and my bond index this might
be something that you do see pop into my
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portfolio even before the international
stocks and the international bond
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indexes so the way I see it you could
really get away with maybe two that VTS
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ax
and that bond index and for me the third
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one that might trickle in there is going
to be that REIT index but other than
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that guys that's really all you're ever
gonna need the one thing about these
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funds that I did talk about they have a
three thousand dollar minimum to invest
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in Vanguard into those funds so if you
don't have that amount of money they all
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have a similar ETF which is an
exchange-traded fund which pretty much
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gives you the same exact exposure with
some other small differences that you
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can look up on your own I'll leave each
one of those ETF symbols right here so
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you could check them out if you do not
have three thousand and the great news
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is once you reach 3,000 and those ETF's
you can convert them right to the
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Admiral fund with no problem if you're
inside Vanguard if you haven't got your
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hands on this book yet
highly recommended it was something that
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really put me over the edge of
understanding what's going on which is
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simple fund investing I'll leave some
other videos about VTS ax and retirement
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funds and down here YouTube will give
you something that they think you should
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watch that I have made and until I see
on the next one guys stay positive work
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really really hard always be kind to
other people hope you have yourself an
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amazing day and an even better tomorrow
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