Скачать или смотреть Don't Buy Stocks | Buy THESE Instead

If you buy individual stocks, you may want to rethink your strategy. In this video, I'll talk about an alternative to individual stocks.

#Stocks #ETF #Investing

When I first started investing, I went all in on Microsoft because I figured the world ran on Microsoft products. While it's been a good investment so far, I could have easily chosen a stock that has not done well, like GoPro. It's really easy to fall into this trap, as well as the opposite (over diversification).

You might say, "well, just diversify a little more". But how do you know what companies to pick? What if you're not an experienced investor, ya know, like most of the world. Most people don't even know what a stock is. Most new investors usually want a simple option, as it takes lots of time to do the research.

What if instead, you could buy shares of single "company", let's call it. This company will do all the complex research and analysis for you. Then invest your money into what they think, are the best investments. To top it, they'll actively continue to do research and move your money around for you, to get you the best bang for your buck. Exchange-trades funds or ETFs, are exactly this. Instead of investing in individual companies like Microsoft, you purchase shares of and ETF. It looks and feels the same as purchasing stocks, but with the benefits of having experts taking care of the research and transactions for you.

One popular ETF is the SPDR S&P 500 or "SPY" fund. SPY is an ETF that tracks the S&P 500, which is just a fancy way of saying, 500 publicly traded companies (like Microsoft). SPY is about 30 years old and has an average annual return of 10%. The last 5 years had a return of over 100%. That means, if you invested 5 years ago, you would have doubled your money by now. SPY is one of the most popular ETFs out there because it's safe (well diversified), mature (~30 years old) and has a reliable return.

According to Fidelity's investment calculator (link below), if you invest $10,000 into SPY today and continue to invest $500 every month for the next 30 years, you'll have around $1.25 Million before inflation. This assumes an average annual return of %10, which may not always be the case.

Another popular ETF is ARK Innovation or "ARKK". ARKK is less than 7 years old and has an average annual return of about 34%. In the last 5 years, ARKK has had a return of over 400%. That means, if you invested 5 years ago, you would have quadrupled your money. ARKK is significantly riskier than SPY, because there are only 50 companies (securities) in the fund, compared to 500 in the SPY fund. Most of the fund's money, goes into 20 of the 50 companies, making it even more risky.

ETFs are not perfect, no investment is. One down side to ETFs is a poorly managed fund. If you happen to choose a fund that is poorly managed, you could potentially lose money. This is where a little bit of research goes a long way! I would also avoid new funds and one that sound too good to be true. The biggest downside to ETFs, in my opinion is that there are fees for having a company manage the fund for you. The most common type of fee is called an expense ratio. It's just a small percentage taken out of your investment each year (or over the course of the year). SPY and ARKK have an expense ratio of 0.095% and 0.75% respectively. 1% doesn't seem like a big deal, but over a long period of time, that could easily add up to a six figure number (using the scenario from earlier).

Video References:
https://www.nerdwallet.com/article/in...
https://www.fidelity.ca/fidca/en/grow...
https://www.etf.com/etfanalytics/etf-...

*** This video is for entertainment purposes only and should NOT be misconstrued for financial advice. Please engage with a licensed financial advisor before investing your time and money. The links above may include affiliate commission or referrals, which I may generate revenue from.