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SCHWAB 1000 Index Fund vs S&P 500 Index Fund - YouTube
Channel: Money With Steven
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hey guys it's steven welcome to my
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channel this video is going to be all
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about a comparison of the swab 1000
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index fund which is unique swab and the
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s p 500 index funds that are available
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on swab vanguard fidelity and others
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i'll cover the differences and review
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the performance and returns from these
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funds i'm going to break it down for you
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so you can make the best choice for your
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index fund investing if that's the type
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of content you like go ahead and like
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and subscribe
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let's not waste any time and get right
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into it
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as one the juggernauts for investing in
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1991 charles swab launched the swab 1000
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index in a bid to capture as accurately
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and consistently as possible the
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long-term growth of america's large and
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mid-cap companies you're essentially
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getting a blend of large cap and mid cap
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us companies the swab 1000 index snx fx
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with an expense ratio of 0.05 percent
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and no investment minimum provides
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investors with a broad objective
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measurement for the value of companies
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driving the us economy
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is also available as an etf schk with an
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expense ratio of 0.05 percent by its
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very name the swap 1000 tracks twice as
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many companies as the s p 500 index
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why is that important well for several
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reasons while the s p 500 merely samples
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the u.s large cap universe the swab 1000
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index is designed to represent the
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largest 1 000 u.s common equity stocks
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by market cap by including twice as many
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companies the swab 1000 index provides
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exposure not just to the larger
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companies of today but also to many
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promising companies of tomorrow the mid
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cap opportunity the mid-size companies
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in the swap 1000 might well include a
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rising technology company a fast-growing
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consumer product maker or a rapidly
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expanding retailer in essence the
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broader exposure can potentially capture
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growth earlier before these entities
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mature into the leading corporations of
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tomorrow an example could be tesla which
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got added to the swat 1000 index long
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before it got added to the s p 500 index
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while the swap 1000 index provides ample
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exposure to potentially fast growing
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stocks
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it doesn't overextend its portfolio by
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extending into the small cap space there
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are indexes that track 2 000 or even 5
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thousand stocks digging deep into the
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shares of companies that may or may not
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be around a few years down the road
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that's not necessarily a bad thing but
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the swap 1000 index was designed to
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capture the growth of large and
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mid-sized companies not dilute this
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exposure with smaller often riskier
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companies
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the swab 1000 index comes with an
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objective methodology
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changes to the s p 500 index are made
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only when the s p 500 index committee
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deems it necessary there's no scheduled
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annual reconstitution or fixed
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guidelines for inclusion so they can add
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or subtract a company at any time that
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meets their sampling criteria
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unlike more objectively based indexes
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the s p hydrogen index methodology
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allows for picking and choosing which
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stocks to include and when
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there is an element of subjectivity to
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being added to the s p 500 index the
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swap 1000 index in contrast is very
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consistent and objective
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first the index comprises of the top 1
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000 stocks based solely on market
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capitalization that's not to say the
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list isn't dynamic the swap 1000 index
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is reconstituted every year and
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rebalance quarterly to reflect changes
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in the market caps of u.s companies
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as market caps fluctuate reconstitution
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rebalancing allow the makeup of index to
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change as well this systemic
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reconstitution ensures the index remains
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a representation in essence making the
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stock market the manager and the
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decision maker what's included in the
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swap 1000 index so what's the bottom
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line over the long haul the swap 1000
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index has been a more accurate
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reflection of the broad u.s stock market
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in fact the differences in methodology
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between the swap 1000 index and the s p
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500 index are borne out in their
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relative performances over time now
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let's take a look and compare the long
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term performance past performance is no
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guarantee of future results but over the
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past five the swap 1000 index has
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returned
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14.15 percent versus 13.99 for the s p
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500 index past 15 years the swap 1000
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indexes returned 9.79 percent versus
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nine point six one percent for the s p
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500 index and past 25 years swap 1000
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index has returned
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9.69
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versus 9.48
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the performance for the swap 1000 index
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has been by the slimmest of slim margins
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higher than the s p 500 index so if
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you're looking to understand the growth
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of the us economy through the lens of
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america's top companies
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as they evolve over time you can
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consider adding the swap 1000 index to
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your portfolio
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while the methodology of how companies
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are added to the swap 1000 index and s p
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500 index are different honestly with
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the marginal difference in performance
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both are great choices for your index
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fund portfolio let me know what you guys
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think and comment down below what your
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favorite index fund is if you found this
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helpful please like and subscribe and
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hit that notification bell for more
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videos delivered to you you guys have a
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great one
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