What’s the difference between an index fund and a mutual fund? In a lot of ways, they’re both very similar in that their overall goal is to diversify your portfolio across hundreds of stocks, but the differences may make you want to choose one over the other. http://bit.ly/1OK0h05

In this video, I discuss the differences between index funds (also known as exchange-traded funds) and mutual funds, and whether or not they can be a helpful addition to your financial portfolio.

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23 COMMENTS

  1. Right. Let's ignore the fact that Warren buffet strongly encourages people to invest in mutual index funds. Especially if you're a beginner.

    This guy is only telling you not to so you continue watching his content.
    Oh let me guess… he quit his job to continue educating people on YouTube.

  2. FUCK YOU AND YOUR RODOMONTADING SWAG.

    YOU ARE THIRD GRADE INSECURE MISER ROTTING IN OBNOXIOUS LITTLE OFFICE THAT NEEDS TO BE TAMED WITH BRUTE FORCE AND FURY.

    JOHN BOGEL IS THE FATHER OF INDEX FUNDS AND YOU ARE A TROGLODYTE THAT'S TRYING TO EARN COMMISSION BY SELLING MUTUAL FUNDS…. FUCK YOU, YOUR EMPLOYEES ARE COMMISSION EXTRACTION STOOGE FOR MUTUAL FUND DISTRIBUTORS AND BOTCH UP THING FOR A INVESTOR.

    WHY DON'T YOU SELL DIRECT PLAN'S IN MUTUAL FUNDS??… MOTORMOUTHED TRANNY

  3. Main difference I'd say is that ETF's are traded like stocks – you can buy/sell during market hours like a regular stocks, and have lower fees than Mutual Funds. Mutual Funds can only be traded at the end of the day (it executes after market close), and need a few days to settle/go through. Also typically have higher fees.

    -Nicholas J. Paris – Stock Market videos weekly!

  4. While most people should promptly ignore Phil's advice and just buy an index fund for their retirement, Phil is correct about the drawbacks of index funds. Said drawbacks are mostly with how the underlying indices are weighted, but also with certain index funds' tax liabilities if a major selloff were to occur. However, considering that the tax liability part is a non-issue in a IRA or 401k, most people should probably just buy a low cost index fund because they have low turnover and very low fees compared to even the most conservative active funds out there, and also considering that most ordinary people do not have the time or temperament to actively select stocks on their own.

  5. So I'm doing something else and just have this on in the background, but I had to stop and comment because of what he said at 2:55, implying that passive investors don't know how to invest. What the fuck are you talking about? That is such a load of shit. Passive investment strategies have CONSISTENTLY been proven to out perform active strategies over the long term. Very few funds manage to out perform the S&P over a long period of time. Sure, short term, you might get a better return with active investment, but over the course of decades, you're almost guaranteed to make less than an index ETF unless you're a particular savvy or lucky investor. This is advice you can get straight from Warren Buffet. This guy is obviously trying to sell something if he says passive investment is bad and only he can teach you how to invest correctly. What scum. Go die you sack of shit. If you look in the description there's a link to some sketchy website that probably tries to convince you to invest in something that he gets a commission on. FUCK YOU. I hate people who take advantage of other people's lack of understanding in such complex subjects.

  6. The difference. The distinction between active and passive funds is fairly simple. Active funds employ analysts and managers to hunt for hot stocks and bonds. Index funds merely buy and hold the stocks or bonds in an underlying market gauge like the Standard & Poor's 500 index or Dow Jones industrial average.
    Last year, a Morningstar study found that "actively managed funds have generally underperformed their passive counterparts especially over longer time horizons, and experienced higher mortality rates – that is many were merged or closed." Higher fees were the chief drag on active fund performance, Morningstar concluded, echoing many previous studies.

  7. All these fucking finance guys need to get a real job other than speculating about the stock market and investing other people's money. Passive investing is suitable for the average person..unless I have millions of dollars and investing is my full time job. I don't want to get bogged down by all the details of the financial markets

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