Be A Millionaire Index Fund Investor (Index Funds vs. ETFs vs. Mutual Funds)

"VFIAX is the Vanguard index fund that gives the exposure to the General stock market. so Vanguard is the company that created this Index Fund. there's a bunch of Banks and a bunch of companies that create these type of things Vanguard is just one of those companies the first to create Index Fund. so Vanguard has this Index Fund which is a group of stocks that gives the exposure to the top 500 companies. if you want to know how much fees these index funds cost all you got to do is search it on Google. so like with this VFX you can see it says in the title that this is the Vanguard 500 Index Fund Admiral shares. it has the word Index Fund in the title so you know it's an index fund and over here you can see something called the expense ratio. this expense ratio is how much money you're going to be paying in fees. that's what you want to pay attention to. 0.04% in fees means that for every $100 you invest you're going to be paying four pennies in fees."

"And then you have QQQ this is the investco ETF that gives the exposure to the NASDAQ and this is giving exposure to the 100 companies 100 biggest companies that are not financial. and so what that means technically is for most of these companies they are tech companies because the biggest 100 companies on the stock market that are not Financial tend to be Tech they don't have to be Tech but most of them tend to be Tech because besides Financial the next biggest industry of companies are typically in the tech space and so QQQ gives the exposure to the biggest 100 companies that are not Financial. QQQ's expense ratio is 0.2%."

"so here if you invest $100 you're going to be paying 3 cents a year in fees so almost nothing but unlike an index fund you can buy and sell shares of VO every single day whenever you want when the market is open remember with the vangard index fund you had a $3,000 minimum investment and those transactions only happen once a day with VO you don't have a minimum investment all you have to do is buy one share of this ticker symbol and then you can buy or sell VO whenever you want throughout the day so between this Vanguard ETF that gives the exposure to the S&P 500 and the Vanguard index fund that gives the exposure to the S&P 500 they both charge you essentially the same fees they both invest in the same companies the difference is vo you can see the real-time price throughout the day versus the index fund you cannot vo does not have a minimum amount of money you have to invest versus the index fund you do however the index fund allows you to automatically invest or withdraw your money versus this ETF does not"

"and spy is an ETF made by spider spdr they're pronounced spider but these are two different companies both investment companies that create ETFs which allow you to now buy ETFs both Vanguard and spider are both very reputable companies and so when it comes time for you to actually research ETFs you want to look at how credible is the company that created the ETF because you're going to have a whole bunch of newer no-name companies releasing ETFs and index funds all the time but if they have no credibility they have no history you don't want to just dump your money into them because what if they go bust so you want to look at who made this ETF Vanguard and the spider and also along with that how many people are actually investing their money into these ETFs how big are these ETFs the easiest way to find that information is just to go onto the Vanguard website or the spider website and actually look at these ETFs they'll have a fact sheet that will give you a bunch of information everything you need to know about the ETF itself so if you go to the Vanguard website here I'm on the vo page and you see it says the fund total net assets which is $829 billion for vo and then if I come on to the spider website under index statistics it says the weighted average market cap which is currently 668 million million which is $668 billion if you search online the general rule of thumb is if you're investing in an ETF you want to look for an ETF that has at least $10 million in market cap of actually assets that are being managed in order for it to be an actual worthwhile investment to protect your money but I like to look at something a little bit safer especially if it's an ETF because I want my money to be safe so I'm looking at at least $100 million on the low end of assets under management and both of these and the hundreds of billions are way past that so we know that one they're made by a company that's credible and second that they have enough assets under management for it to be an okay investment The second question you want to ask yourself is what companies do these two ETFs invest in so we know that both of these ETFs give the exposure to the S&P 500 meaning they both invest in the same 500 companies but they don't invest in the same 500 companies with the same ratios let me show you what I mean so I'm going back onto the Vanguard website and right now I can see that the 10 largest Holdings are number one Microsoft number two apple number three alphabet which is Google for Amazon Tesla and on and on and on but if I go to spy I'm going to see here at the top Holdings number one is Apple number two is Microsoft number three is Amazon number four is Tesla number five is alphabet so you can see it's very similar companies but what you see is that the percentages are different because in spy apple is the number one holding versus in Vanguard Microsoft is the number one holding. The gross expense ratio for SPDR's SPY ETF is 0.0945%."

"VB is the Vanguard small cap ETF. So this is an ETF that gives the exposure to small cap, small little C, smaller companies and you're trying to get more growth here because you're investing in smaller companies that are trying to go bigger. VB's expense ratio is 0.05%."

"arkk is going to be the only actively managed ETF. So this is an ETF that gives you exposure to innovation and it's actively managed not passively managed by a computer like the other ETFs that I just talked about is managed by someone named Kathy Wood and her team. She's kind of like a celebrity Trader SL investor. Now and this is an ETF that gives the exposure to more innovation and innovation type of companies. Arc's expense ratio is 0.75%."

"VUG is another Vanguard ETF. This is an ETF that gives exposure to growth. This is the Vanguard Growth ETF and this is investing in companies that are trying to grow bigger faster. The VUG's expense ratio is 0.04%."

"QQQ this is the investco ETF that gives the exposure to the NASDAQ and this is giving exposure to the 100 companies 100 biggest companies that are not financial. and so what that means technically is for most of these companies they are tech companies because the biggest 100 companies on the stock market that are not Financial tend to be Tech they don't have to be Tech but most of them tend to be Tech because besides Financial the next biggest industry of companies are typically in the tech space and so QQQ gives the exposure to the biggest 100 companies that are not Financial. QQQ's expense ratio is 0.2%."

"VWO this is a Vanguard emerging Market ETF. ... vwo has investments in over 5,000 companies and they can compare that to em which has Investments to about 800 or so companies and these are companies which are large or midcap companies in Emerging Markets. ... vwo's expense ratio is 0.1%."

"em this is an ey shares Emerging Market ETF. ... em which has Investments to about 800 or so companies and these are companies which are large or midcap companies in Emerging Markets. ... the I shares eem ETF the expense ratio is 0.7%."

"and S this is a Schwab Emerging Market ETF. ... the Schwab ETF it says that the total net assets are $9 billion. ... the Schwab s ETF which has an expense ratio of 0.11%."

"Some companies on the stock market not all of them but some companies on the stock market pay what's called a dividend. A dividend is a cash payment that you get as an investor for doing nothing except owning the stock. Now again not every company pays out a dividend and the reason why is because for a company to pay out this dividend they have to have a big profit."

"The rent has to be enough to cover your property taxes, your insurance, your maintenance, your management fees, any vacancy costs and then if you have any debt cover that as well and then put some money in your pocket each and every month. That's the right way to invest in real estate. You have some people especially when you're in a very hot sellers market like we've been seeing when you're in a very hot sellers market you will see investors go out who have a lot of cash just go out and buy properties and say you know what I'm okay losing money every single month because I think this property is going to be more valuable next year so I'll be able to flip it for a profit. That's not the game that I play that's too risky, that's too speculative because I have no idea where housing prices or real estate prices are going to be in a year. I don't like to play that game. What I like to do is I want to make sure I can make a profit in my cash flow every single month and just keep working to accumulate the cash flow."

"The first thing you got to do is not just throw your money in the stock market is to build some savings cushion. The second thing that you have to do before you put money in the stock market is you got to pay down your high interest debts because you're going to get a better return here. The third thing that you need to do is you got to prepare to invest your money. Well, go over what that means. The fourth thing that you got to do is you got to build your investing strategy. This is a mistake that so many people make is that they start investing their money with no idea of how they're actually going to make money. We'll go over how to build your strategy and then the fifth thing that you want to do is execute on your strategy and actually stick with your strategy."

"The average credit card interest rate is right around 27%. And then according to Investopedia, the average historical stock market return over the last century is about 10% a year. So now if we do a little bit of math, what you'll see is that the average stock market return is a whole lot lower than the average credit card debt, which means from a math perspective, you're going to get a better return by paying this down before you start putting your money here."

"The alternative to investing into an individual company is to invest in something like a fund maybe a dividend paying ETF, a dividend paying index fund, a dividend paying mutual fund. Now instead of investing in one company like let's just say Apple, now you can invest into a basket of companies that have say 500 different companies in here and Apple is just one of the companies and there's 499 other dividend paying companies in here. So now we can go and find these dividend pink funds again, you have ETFs, mutual funds, index funds, you go and find one of these dividend paying funds that invest in companies that are paying a dividend. Now you invest in one thing that's investing in 500 different companies. Now you can lower your risk because if Apple were to go bankrupt, well now you have 499 companies to balance it out. This way you can lower your risk and keep getting those dividends that now you can just keep throwing your money into one of these funds."

"In general for the majority of people I mean there's always going to be going to be outliers and exceptions to the rule but for the majority of people in general index funds and ETFs are going to be the better way to go because now you're going to meet the stock market returns and you don't have to pay the super high fees"

"if you believe in the American economy then you're going to believe in the American Stock Market which means over the long run the stock market will continue to go up"

"between an ETF and an index fund this is really personal preference I mean do you want to have the automatic reinvestment into an index fund or do you want to just invest your money into a brokerage that can automatically invest your money for you personally I like ETFs because I like the freedom that comes with them"

"History has showed us that the stock market in the economy always goes up that doesn't mean it will always go straight up sometimes it will come down sometimes it will crash and sometimes it will correct but over the long run it will continue to go up as long as the economy keeps growing"

"the first kind of ETF that you want to consider investing your money in is an ETF that gives the exposure to the S&P 500 a couple examples of this would be vo and spy"

"in general ETFs have much lower fees than something like a mutual fund because these ETFs are passively managed so a mutual fund which is something that a lot of people are familiar with is when you're investing money into this fund but it's managed by a person this money manager and because it's actively managed by a person their goal is now trying to beat the market and they're also going to charge you a lot higher fees"

"the Vo expense ratio is 0.03% and on the spdr spider website you'll see that the gross expense ratio is 0.945 per. so the expense ratio or fees for vo and spy are both extremely low but the Spy fees or expense ratio is about three times higher than vo but relatively they're both very very very little"

"the second type of ETF that you may want to consider investing your money in is a growth ETF especially if you have more time on your side because this is a way for you to get exposure into faster growing companies"

"our economy is not projected to grow as fast over the next decade and couple decades as it has in the previous decades in the previous generation just because our economy is so much larger now back in the day and our parents and our grandparents generation we saw our economy grow by five six seven eight even 9% a year but nowadays we're just trying to see our economy grow by 2% a year"

"the Third Kind of ETF that I want you to consider investing your money in to grow and compound your wealth are Emerging Market ETFs these are ETFs that invest in companies overseas and outside of the United States that will now you can get exposure not just different companies but different countries around the world"

"a lot of these countries especially the Emerging Markets might not have as much stability as the United States but the whole idea here is you're investing in a growing country so if this country can grow a whole lot bigger their economy can grow a whole lot bigger and you're invested in a strong company but now this company can see a whole lot more upside because the whole country and the whole economy there is starting to grow"

"the number one holding is the Taiwan semiconductor Manufacturing Company number two is 10cent number three is Alibaba and on and on and on but you also want to take a look at the countries that is invested in so if you come back up and click on the portfolio and management tab and then you scroll down you'll see the market allocation of the top countries that it invests in so the top five countries that this ETF invests in are China followed by Taiwan followed by India Brazil and South Africa"

"its top Holdings are actually similar to the Vanguard fund the number one in this is the Taiwan Semiconductor Company then you have 10 cent then you have Samsung then you have Alibaba and then if you scroll down a little bit further you'll see the exposure breakdowns and then if you click the geography tab you'll see the top countries that this ETF invests in so the top countries for this ETF are number one China then Taiwan then South Korea then India then Brazil"

"vwo the Vanguard emerging Market ETF the expense ratio is 0.1% then the I shares eem ETF the expense ratio is 0.7% and then you have the Schwab s ETF which has an expense ratio of 0.11%"

"the way that I outlined it is there are seven steps if you follow these steps one by one by one you can break out of this system and become wealthy regardless of where you are today in your finances even if you're living paycheck to paycheck"

"it's not going to happen overnight it's not going to happen tomorrow it's not going to happen next month it's probably not going to happen in one year either this is a long-term wealth game but if you stick with these strategies you will be able to completely turn your life around in the next few years"

"this means you have to start taking responsibility and this is hard because that means you can no longer blame your boss you can no longer blame the government you can no longer blame the banks you can no longer blame your landlord you can no longer blame everybody else the only person you can blame from now on is you for the situation that you're in"

"the reality is this is an emotional part you have to care about money you're already in financial crap right now and if you're in financial crap right now why would you want to stop in the middle of the crap keep going until you get out"

"money does matter as much as people want to talk about how it doesn't matter the reality is money does matter and the reason why it matters is because it costs money to eat and it also costs money to feed other people you need need money in order to be able to not just survive but also to be able to thrive"

"the fastest way the most accessible way for you to have more money is just to not let your money leave your bank account and that means you got to start safeguarding this money that's in your account which means you got to stop spending your money"

"the way that you put your money to work is going to depend on where you are if you have credit card debt you shouldn't be worried about investing your money into the stock market right the stock market is going to get you a five six seven eight maybe 10% return on your money that is the goal but you're going to also lose your money in the stock market right it's not guaranteed your credit card is costing you 15 16 17 20 25% a year in interest"

"maybe you got to invest this money in your own education maybe that means buying books maybe that means buying classes maybe that means buying coaching"

"there's no limit to the different ways that you can earn more money but you got to actually put in the work"

"the reason why you're earning more money is not so you can go out and have a nicer car a bigger home better vacations more fancy stuff the reason I want you to earn more money now is so you have more money to put to work whether that's paying down your credit card debt whether it's building your savings or investing your money because now the goal is to build your wealth"

"if every night you're spending two hours just chilling well you're going to be able to grow a whole lot slower than if you use that time to learn"

"I call it a decade of sacrifice and the reason why I call it a decade of sacrifices because if you put in the work for 10 years which is a long time you were going to be in a completely different financial situation"

"the first thing you got to do is not just throw your money in the stock market is to build some savings cushion the second thing that you have to do before you put money in the stock market is you got to pay down your high interest debts because you're going to get a better return here"

"if you do not have $2,000 saved up right now in a bank account that's there to protect you against an emergency that's not cash that you want to use to go out and buy a TV buy a home buy a car this's a $2,000 saved up just to protect you against an emergency before you think about investing your money in the stock market"

"wealth goes to those who are disciplined and to those who are patient Warren Buffett likes to say that the stock market is a device to transfers money from the impatient to the patient"

"we're not talking about trading stocks we're not talking about buying something and holding it for 6 months we're talking about buying something and holding it for the long term maybe even forever depending on what your strategy is right now you're looking to buy Investments that you believe in for the longterm that way we can build long-term wealth"

"this means you have to understand that there's booms and busts in the market market crashes happen they have happened and they will continue to happen and in fact probably get more severe in the future because of the amount of debt out there this doesn't mean that you shouldn't invest your money but this means you have to understand this because when you go through those bust periods those down periods there's a lot of negative sentiment a lot of negative emotion of people thinking that the world's going to end and when you go through the boom periods there a lot of excitement and exuberance and just people thinking that nothing could ever go wrong"

"this passive system is what I believe most of America 90 to 98% of America should be doing to build wealth because this active strategy takes a lot more work and a lot more financial education that I don't think most people are actually interested in doing"

"instead of investing in just one company you're going to invest in hundreds of companies or thousands of companies depending on what the fund is that way now you're protected if one of the companies in this fund goes bankrupt well you have dozens or hundreds or maybe even thousands of other companies to protect you so what these funds do is the lower some of the risk"

"there are funds that give you exposure to the total stock market like bti this is an ETF meaning it's a fund that if you bought one share of this fund vti you'll buy a little bit of every stock on the American Stock Market"

"there are funds that give you exposure to the S&P 500 like spy Spy is an ETF that if you buy one share of SP py you're buying a piece of the S&P 500 which is a group of the largest 500 companies in our stock market"

"there are funds like Dia which give you exposure to the Dow Jones the Dow Jones is a group of 30 selected companies in our stock market"

"and there are funds like QQQ that give you exposure to the NASDAQ the NASDAQ 100 is a group of the 100 largest companies that are not Financial that are listed on the NASDAQ"

"I personally use a platform called M1 who is also a sponsor of the minority mindset and the sponsor of today's video so if you want to invest your money passively into the stock market the reason why I like M1 is because the way the M1 works is number one it's free to use but then you can go and create something called a pi a pi is your portfolio of different types of funds or stocks that you want to invest in and then you can decide how often you want to invest your money into these funds every week every two weeks every month and then you turn on your system you automate it and then you just kind of forget about it"

"this takes much more work and it takes work what you want to understand is that a cash flow statement shows you how the cash mov moved through the company an income statement shows you the profit and loss of a company this way now you can see are the profits growing or are they shrinking why are the profits shrinking if they're shrinking if the profits are growing is it sustainable what they're doing and then the balance sheet shows you the assets minus liabilities of the company and this is where you want to take a look at are the liabilities feasible are the liabilities too much for a company this size is this a good and healthy run company then in addition to that you want to look at the executives of a company you want to look at the company structure you want to look at how they're innovating you want to look at the general pulse of do people actually like these products and will they want these products in the future and how is this company going to stay competitive in 5 years and 10 years from now"

"if you just go in and throw your money into something that you think is the next Tesla or the next Amazon or the next meta but you really have no strategy or goals because you just just throwing the money in because you hear people talking about it well how do you know when to sell how do you know how long you should hold it how do you know if something's so wrong with the company that you shouldn't keep owning it anymore"

"the way that you build wealth is by consistently investing your money you don't just invest your money once or invest your money for a few months or invest your money for a year this is something now that you want to be consistently investing your money month after month after month year after year after year if you really want to build wealth because wealth is built over the long term"

"the way real cash FL investing works for investors and helping people become extremely wealthy with cash flow is like this I'm going to draw you right here for my male followers I'm going to draw you a mustache and for our female followers I'm going to draw you a braid in my native language Punjabi we call a mustache a much and a braid a so now you go to work every single day at this job maybe this job is your business and then this job is going to pay you a salary now you're going to take a piece of the income that you did not spend at Gucci and chipotle and you're going to take this money and you're going to invest it into this asset"

"if you invested ,000 into this asset you're going to generate $100 after one year of cash flow $100 from $11,000 is not going to really pay you much I mean it's not going to fund really anything in your life even if you invested $100,000 then you're only generating $10,000 a year now $10,000 a year is a lot but it's not even $1,000 a month it's not lifechanging money for you to go out and start driving a Rolls-Royce you need the money to invest to generate the cash flow"

"some companies on the stock market not all of them but some companies on the stock market pay what's called a dividend a dividend is a cash payment that you get as an investor for doing nothing except owning the stock"

"when a company makes a profit at the end of the year there's three things that they can do with this cash number one is they can save this money in case of an emergency number two is they can reinvest this money back into the company or number three is they can just give it away to you one of the shareholders one of the owners"

"instead of investing in one company like let's just say apple now you can invest into a basket of companies that have say 500 different companies in here and apple is just one of the companies and there's 499 other dividend paying companies in here so now we can go and find these dividend pink funds again you have ETFs mutual funds index funds you go and find one of these dividend paying funds that invest in companies that are paying a dividend now you invest in one thing that's investing in 500 different companies now you can lower your risk"

"you're going to go out and buy a property maybe it's a house maybe it's an apartment complex maybe it's an office building if that's something you're into maybe it's a retail building maybe it's a mixed use building maybe it's a storage building you're going out and you're buying this property but you're not buying it to live in or use yourself you're buying it to rent out to somebody else so now you buy this property you rent it out to somebody else maybe they live in or use this property and then in exchange for them living in and using your property they pay you rent"

"the key here is this rent has to be enough to cover your property taxes your insurance your maintenance your management fees any vacancy costs and then if you have any debt cover that as well and then put some money in your pocket each and every month"

"there's some people on the internet that say that the only way to build wealth is to invest in real estate well there's a lot of people that have become extremely wealthy without ever touching real estate you have some people that say you have to go out and invest in the stock market if you want to be wealthy well there are some investors that only invest in real estate that have never touched the stock market that have become extremely wealthy"

"for me I like cash flow because cash flow is something that I can predict and when I got got the cash flow coming in well now I know I can go out and spend my money at least the cash flow that I'm generating not really have to worry about it because even next month I'm going to get another cash flow check"

"building long-term sustainable wealth and growing it in the stock market is not easy yeah it looks easy when you're in a bull market because everybody's making money then it's easy you can just throw your money anywhere and you're going to make money but when things go bad and times get rough which will happen you have to anticipate this this is where you have"