Reasons to Avoid Index Funds

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I generally assume that most of you watching these videos are already fully on board with the idea that index investing makes sense, while stock picking and actively managed funds should be avoided like the plague. Most Canadians are, apparently, not on board with that idea. As of the end of 2018, only 11.5% of Canadian investment fund assets, that is mutual fund and ETF assets domiciled in Canada, were invested in index funds.
Referenced in this video:
How this familiar stock outperformed Apple, Amazon, Google and Netflix over the past 7 years - www.cnbc.com/2017/12/21/this-...
On Persistence in Mutual Fund Performance - personal.psu.edu/qxc2/fin597/5...
Luck versus Skill in the Cross-Section of Mutual Fund Returns - www.jstor.org/stable/40864991...
Searching for Peter Lynch - www.thestreet.com/personal-fi...
Legg Mason's Bill Miller leaves firm amid faded glory - www.reuters.com/article/us-le...
Can You Beat Warren Buffett? (Better Question: Why Try?) - www.pwlcapital.com/can-you-be...
Read up on more investing advice, insights and white papers here.
www.pwlcapital.com/teams/pass...
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PWL Capital Blog Post: www.pwlcapital.com/index-fund...
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Опубликовано:

26 апр 2019

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Комментарии : 1,3 тыс.

@peterpayne2219 4 года назад

I’m very impressed that a person involved in the finance industry is telling us to invest with index funds instead of trying to make an angle for himself. You have my respect, sir!

@jurbua 2 года назад

Couldn't agree more

@user-nn5tr5ei2c 2 года назад

99.9%should watch this.

@ScipioAfricanus_Chris 2 года назад

Those were my thoughts as well

@Bigben-1989 Год назад

Then why do you need them? Sure maybe for retirement and planning purposes but if you are in index funds then why pay someone when you are 45?

@alext1723 Год назад

A lot of people are not confident, scared, not have time, lack knowledge, don't watch Ben Felix's videos, don't trust the system, don't know what a ETF is, etc. There are a lot of reason why a person would use a "finance professional".

@rybolov 5 лет назад

The only bad thing about index funds is that your broker doesn't get a fat commission. =) =) =)

@jonnes__4657 5 лет назад

And no fund manager gets a fat salary. .

@RawLu. 4 года назад

Exactly.

@aaronramsden1657 4 года назад

100%

@user-fi2fk2ei7o 4 года назад

Do you guys that warren buffet was a fund manager He beat the market and give his investor a lot of money I think it's fair to give them some commission

@rybolov 4 года назад

@@user-fi2fk2ei7o There is only 1 Warren Buffett and thousands of brokers who invest for the commission and not what's best for the customer. They app chainmail that they can beat the market, but half of them can actually do it. They used top make their money because they had access to trade but in the modern world, everybody has this access. So like any career field, technology kills those that are "rent-seeking" and rewards those that are smart.

@lsik231l 5 лет назад

I got clickbaited and am not even angry...thanks for showing different points of views!

@BenFelixCSI 5 лет назад

Apologies. I'm glad that the click bait ended being a positive experience.

@hr6550 4 года назад

Haha ben , i got stumped , as i was unable to understand what u were saying But now i understood you that go for index funds

@MarioBecerraC 4 года назад

Same.

@chrisoman87 4 года назад

haha truely! The title should read *No Good* Reasons To Avoid Index Funds (ETFs)

@InvestorCenter 4 года назад

People were actually happy to get clickbaited

@b_sterner5654 4 года назад

Based on the title, I went into this video like: “WTH is this younger looking Georges St-Pierre wannabe gonna tell me to convince me I should avoid Index Funds.” I left thinking: wow, this Mr. Felix is a decent man, and I very much appreciate his straightforward advice, logic, and use of stats to back up his position. Subscribed - thanks.

@kyrie4451 3 года назад

Put some respek on Johnny Sinn's name

@starmorpheus Год назад

Ahaha, he does look like GSP

@zacharythomas8321 3 месяца назад

GSP is the goat

@hillfortherstudios2757 Месяц назад

I've also heard Ben referred to as "white obama" hahahahaha! Love the guy!

@keerthi3086 5 лет назад

Best clickbait video I ever enjoyed.

@BenFelixCSI 5 лет назад

Sorry for the baiting, but I'm glad everyone left happy.

@karenmazri5800 4 года назад

Agree 😂

@justincueva2294 4 года назад

Exactly

@InvestorCenter 4 года назад

Haha got us

@reinforcer9000 3 года назад

Huh. Well at least he apologized.

@after_alec 4 года назад

Me: Man I should watch this video to see both sides before I start investing in index funds. Me, two minutes later: Oh.

@MrBonified66 4 года назад

That's exactly what I thought :)

@jshearar245 4 года назад

That was exactly what I thought when I clicked on the video 😂😂

@abhishekgiri1706 3 года назад

I also thought same.! 🤐

@Detteermiig 3 года назад

Two seconds later*, but you still watched it 😅

@moniquefrancesca9017 3 года назад

Same 😂😂

@karljo8064 4 года назад

One important lesson here: only a handful of stocks drives up the index. If you miss these stocks, you will fall behind the index.

@alexvec296 3 года назад

Kaiser Buddha that is correct. However for example, although the SnP 500 has 500 companies, majority of the gain comes from a handful of the major companies, of which is where majority of the portfolio is invested. For example. Apple, Microsoft and google are just 3 out of 500 companies, and in theory if you took them out you would only be losing 0.006 of the portolio, however you would see a significant reduction on profits as those 3 companies are a some of the few that actually drive the index. So the index heavily relies upon those major companies doing well, and the other hundreds of companies, although do contribute profit (hopefully) are also there to reduce risk through diversification. Hopefully that answers ur question!

@takedashingjen4402 2 года назад

@@alexvec296 he had no question...

@theyux1 Год назад

His monetization comes from his youtube channel. Gives him a lot of freedom to speak the truth.

@jakemf1 Год назад

It matters the index and many Index funds out perform mutual funds and picking stocks

@afridgetoofar1818 Год назад

If you want to beat the Index, but a 2x leveraged Index fund.

@p.c.h.6721 4 года назад

Every time I tell my bank that I want to invest in an Index fun, they tell me not to do it, and right away the always tell me to invest in their mutual funds..... Now I know why? Bunch of bloodsuckers

@Amir-jn5mo 2 года назад

gotta leech off of society, cause world-wide market crashes and then ask the government to bail you out with tax-payer money.

@markhathaway9456 2 года назад

Isn't that pretty much what all of Wall St. is about?

@ericktwelve11 2 года назад

That happened to me in 2015,I wanted to open a brokerage account with BMO and they refused, instead they wanted me to invest in mutual funds, they looked at me like if it was only people with money.

@tonaaaaay 4 года назад

Wow man. I can't get over how well edited this video is. The visuals and graphics are really well done and keeps the audience engaged. Your examples are well thought out too. Very concise.

@rahulkaushik4194 3 года назад

I genuinely hope more people find your channel, Ben ! Well researched, data backed videos. Love this channel !

@jordanshore838 4 года назад

That moment when a portfolio manager tells us not to hire stock fund managers.

@petermaag9622 3 года назад

You do realize he just throws together passive products for old people while "explaining" it like a particularly articulate robot? A much more appropriate title would be passive allocator, but not so glamorous, is it.

@Elkunas 2 года назад

@@petermaag9622 who said any finance job was glamorous? when did that word even come into this video or comment. You sound kinda butthurt.

@testingmysoup5678 Год назад

@@petermaag9622 who cares it works

@diegocontreras141 5 лет назад

I discover your channel last week and I have watched almost all your videos already. I'm a physicist, and you make me discover how scientific finances could be, sadly not the first approach when you look to learn more about economy.

@MrBonified66 4 года назад

I was an online poker pro for several years and this rings a bell. A lot of players could beat the other players. Not many could beat the rake.

@maximilianwenker916 2 года назад

So true

@irontrader50 4 года назад

Great introduction to long term investment: focus on indexes... with lower fees. Vanguard and some ETFs.

@rafa3685 4 года назад

Your voice and spellings are perfect, Im from Spain and it use to be hard to me to understand economic videos. I like the way you speak English

@itsthat8496 4 года назад

Welcome to Canada

@kotare86 3 года назад

@@itsthat8496 Are all the guys this handsome in Canada?

@thumbliner 5 лет назад

I would share this video with those who can benefit (every average investor), but we know the typical response. By the way, I like Bogle's response to "What about Buffett?" He says "Name another."

@BenFelixCSI 5 лет назад

That’s a great answer!

@claudiocuqui6093 5 лет назад

Warren Buffett agree with Ben Felix ! :) www.cnbc.com/2019/02/26/warren-buffett-wants-90-percent-of-his-estate-invested-in-index-funds.html ! And so do I ! PS: Greate video by the way ! Please keep up with the good job !

@angeloskoulas3988 3 года назад

fast forward to 1 year later: even Buffet makes mistakes

@boneappletee6416 3 года назад

@@angeloskoulas3988 Great point!

@Firstname_Surname 3 года назад

Cathie Wood darling

@MrFootyAce 5 лет назад

Haven't subscribed faster to someone in a very long time

@alexshchet 5 лет назад

Man, you are awesome!!! Simple, easy, rational, straight to the point! The best ever videos should be mandatory at schools!

@BenFelixCSI 5 лет назад

Thank you!

@coreynewcomb685 5 лет назад

White Barack Obama talks investing.

@travg8969 5 лет назад

Can't unhear it now

@BenFelixCSI 5 лет назад

I’ll have to embrace it.

@jrg305 5 лет назад

@@BenFelixCSI it is nice to see good looking guys who shave their head when they don't have to. I have the same haircut but I have a horseshoe so it is the only good look on me.

@musama8771 4 года назад

Obama has a canadian accent?

@coreynewcomb685 4 года назад

@@musama8771 Wasn't he born there?

@alpacino5025 4 года назад

Love those animations and quality content, keep it up!

@AK-ky3ou 4 года назад

Index is the way to go. Doesn’t mean I’m not 50/50 vsmgx/vgstx lol. I believe in index investing but don’t have a problem with active indexy funds. Great vid

@BoundlessKnight 4 года назад

Thank you for your extensive researching and properly citing and referencing from peer reviewed journals.

@r.a.8590 3 года назад

Lately, stock picking has been very challenging. Ben's comment regarding the lack of correlation between a good company and the stock return is absolutely correct. I'm down on my stock picks even though the companies i have invested in have a large backlog and lots of free cash flow to carry them through this downturn in economy, but that seems irrelevant these days when you see people dumping cash into cruiselines again based on very little good news....However, I am ahead on my index ETFs. I've seen consistent and sometimes not-so-modest returns on them over the past 4 months (specifically info tech ETF and emerging markets >10% return over past month). Less headache and less time spent chasing the great stock! Thanks for the accurate and honest insight Ben!!

@osu122975 Год назад

I agree. A company doesn't have to have a strong balance sheet. Speculation drives stock price so much that you really have a hard time using old methods to know what to buy. PE ratio almost seems irrelevant. It just gives more proof being in an index is smarter.

@ArtHoward 3 месяца назад

I think it's because you're comparing your return on one stock, or a handful of stocks, to the performance of 500 stocks. Even Facebook and Google drop sometimes. You can't compare a down month for five stocks to how 500 stocks do in aggregate over the same period.

@Kig_Ama 4 года назад

A great share of my portfolio is invested in index funds, whereas for a small portion of my money I try to pick growth stocks wit using the dcf method in combination with a monte carlo simulation.Developing my valuation model is a continuous process, checking correlations, means, standard deviations assuming distributions for inputs and so on, but it's a hell of a lot of fun.

@DividendDriven 5 лет назад

Solid Advice! I am into my second year of only investing in ETF's. I like both the Returns AND the diversification.

@BenFelixCSI 5 лет назад

Yep. Lots to like about ETFs.

@cici2O 5 лет назад

Ahhhh... I'm always happy when there is new content on your channel. Really appreciate your consistently well-thought out sober content. Always great with my morning weekend coffee. After I finish watching, I always share to an FB FI community, because I agree with others that your channel should be getting much more attention.

@BenFelixCSI 5 лет назад

Thank you! I appreciate you sharing the videos. Thanks also for the kind words.

@USAhealthInsReform 5 лет назад

Excellent video! I happen to do VTSAX and VFIAX for IRA and Roth IRA (admiral shares0.04% expense ratio on both). Curious to know what you think. I think this is similar to what Buffett laid out in his will except he has 10% in short term bonds in addition to 90% s&p index fund such as vanguard

@galvinng1997 4 года назад

Great video Ben! But I was wondering, what do you think about Renn Tech?

@faezmohtar947 4 года назад

I came here after reading Tony Robbins "Unshakable". Really sad & angry at the same time, thinking I'm in mutual fund for years now, and my investment just about to break even. Thanks a lot Ben, u give me an idea how to invest smarter than before.

@badass6656 5 лет назад

Excellent video I did not realize such a small number of stocks are responsible for the real return of equities. Explains why I have not managed to beat the market over my investing lifetime. I don't feel so bad now. I still only have a small holding of index funds but have other reasons for that.

@gustavobvitorino7950 4 года назад

3:50, powerful insight about domino's pizza besting the tech giants

@jerryeisner1 2 года назад

Ben I just discovered your channel today and WOW your research and clearly stated and well illustrated tips are amazing and will hopefully guide me further in my investing future!! I can't wait to watch the rest of your videos, subscribe, and follow your podcasts. Thanks so much for being out there.

@josecillo16 4 года назад

Hi Ben. What about when Peter Lynch said individual investors are more likely to beat the market than large mutual or hedge funds?

@frituurmandje 5 лет назад

You genuinely deserve much more attention than you're already getting. Such a great source of content. I always recommend your RU-vid channel to friends that want to get into investing. Thanks for your effort and great explanations.

@BenFelixCSI 5 лет назад

Thank you! I appreciate you sharing the channel.

@fifh89 5 лет назад

His Podcast "Rational Reminder" will delight you as well.

@frituurmandje 5 лет назад

@@fifh89 Thanks, I'll be listening to all of them :)

@svidoda 4 года назад

I was sceptical at first but you have a pretty logical perspective.

@jpegcoma 3 года назад

No one told me how good are the index funds then I started investing. Thanks to the videos like yours and other people about ETF that provides us, ordinary people, invest smart!

@wayneleafstone9988 5 лет назад

I think active fund managers have spent a lot of time and money investing in themselves to learn how to make a living in investing. Passive index funds jeopardizes their career and to some extend they’re passion.

@BenFelixCSI 5 лет назад

I think you're probably right.

@MrShowtime972 5 лет назад

That is so well written and accurate Wayne

@tazzz69dazzermind35 4 года назад

Wayne Leafstone *extent

@joeyo9846 4 года назад

Tazzz 69 Dazzermind *i hope that makes you feel better about your life

@hellucination9905 4 года назад

How is long time investing in the SP500 jeoperdazing my career?

@joaovitorgerdullitamanini5340 4 года назад

Please. Would you teach your watchers on where we can find all of those papers your frequently quote. I would like to read all of those and more like it. Great work!!

@dimitrioskarkantzos8644 4 года назад

Type in google scholar . Carhart(1997) and Fama(2010)

@elliotts2392 2 года назад

LOVE the channel and share the viewpoints with my employer, a very large asset manager. One question I’ve always had regarding index vs “active” are we including sector funds vs broad funds? As example if we have a large cap growth fund, I’d expect it to underperform spy, but if an asset manager basically breaks apart an index and then rebalances ahead of the index…isn’t that a way to find alpha? I though the whole Idea of factor investing was to overweight certain factors that historically favor growth…is that considered active weighting/investing or does that get included in the “index” fund… Thank you in advance!

@chris319 3 года назад

I've been investing for over 30 years and find myself agreeing with everything he says in the video. I am now 100% in index funds and wish I had done so years ago. No more individual stocks for me. They may as well be lottery tickets. And my recordkeeping is greatly simplified.

@ashwinmenon6088 3 года назад

Do you have any recommendations on ETFs to invest in?

@zooborg 5 лет назад

*TD Bank has left the chat*

@FF2PM 5 лет назад

RBC has left the chat

@metalupyourass9 4 года назад

Actually TD's e series were a huge revolution prior to the emergence of Good (cheap) canadian index funds..especially since they are a Mutual fund and free to purchase

@apracity7672 4 года назад

Can you explain this joke, i dont get it

@jingweicao7284 4 года назад

@@apracity7672 Big 5 banks' mutual funds charge high commission and expense fees. ~2% vs ~ 0.5% in ETFs

@mannyk7100 4 года назад

Hahahahahahahahah faaaacts

@bitcoinhorizon 4 года назад

love this. factual, straight to the point, research-backed. You, sir, should continue with this because this kind of knowledge empowers people like me who know very little about the topic. Liked and subbed. thank you

@alexandercornish4349 3 года назад

You're one hundred percent right when we are talking about large-cap, equities exposure. No active manager can consistently beat the market in a US-large-cap stock-picking strategy. There is a case to be made in smaller markets however (NZ for example etc.) With that said, there is a role for active management when it comes to alternative asset strategies that aren't accessible through normal index funds. These active funds can improve risk-adjusted returns through their diversifying effect (Distressed Credit, Merger Arbitrage, Global Macro etc.). But then again, you don't see any 'financial advisors' getting clients access to the AQR's of the world.... so I agree with your overall premise.

@zzzzzzzzzzz6 5 лет назад

I love the point that the time to reach statistical significance effectively makes it impossible to find skilled active managers even if they do exist.

@BenFelixCSI 5 лет назад

Agreed. Fascinating.

@hellcat320 5 лет назад

great reminder video. I wouldnt say I've been told index funds are riskier directly, mostly because almost anyone I've talked to that claims to be a financial planner hasent even really been able to explain what index ETF's are. Which has so far been reason enough for me to stick to self directed index fund investing.

@BenFelixCSI 5 лет назад

That's a pretty good reason.

@apexscape 5 лет назад

Thanks bro. New to your channel. Great content & production!

@BenFelixCSI 5 лет назад

Thank you!

@jan3195 4 года назад

Really enjoy your information and style in which it is presented, Ben. Thank you and keep up the good work.

@BenFelixCSI 4 года назад

Thanks!

@smartcaja6681 4 года назад

Wow. This was really an interesting point of view. I'm glad it was in my recommendations. New subscriber!

@shantanuiyer6229 4 года назад

Hey Ben, I have a question about markets that are not so mature, like the Indian or other emerging markets. It is often advised that, in emerging economies, it doesn't make sense to invest in index funds since actively managed funds consistently have an alpha > 3-4%. How do you think the index fund investment advice applies to not so mature markets like Europe/USA/other western countries? Have a nice day:)

@alleyrat107 4 года назад

What about the argument (via michael burry) that the growth in index fund investing (in the US) over the years is inflating the value of those stocks in the index. In a negative market event, the rush out of lower volume stocks as a result of index selling could create a lot of negative volatility.

@patrickebert5748 3 года назад

Additional Money is in and deflating the money no matter where it is comming from, no matter how it is allocated and no matter where to it leaves again. Not a tracker problem imho. Tracker are despite their big noise are still a minority in the market. The last number I heard the value for all tracker on MSCI World combined is still within the standard deviation of the MSCI. Since there is more indexes with overlapping positions it would be interesting to see a global study of the total tracker value compared to the market. Maybe an economics undergrad would take the time to put it together. But let's imaging the market is 100% trackers. The market would freeze to it's relative buying power. But as soon as as Tracker would go in high double digits the market would get so inefficient that the mystical "skilled manager" would actually have a good chance to beat the market -> Money gets reallocated to preferable "not so unicorn anymore funds" and the rat race starts over again. With the current distribution of privately held stocks, managed funds and trackers I personally bet on the tracker. Btw. Sorry it took 11 months to find the post and felt triggered enough to answer ;-)

@3dmv 5 лет назад

Hi Ben, Thanks for your awesome videos. Super useful. Would your decision to use index ETF's change if you were able to use a CCPC (e.g. a physician), to focus more on dividend stocks or 'high dividend ETF's' given the tax advantages of these within a CCPC or would you still suggest the index ETF approach? Would you focus on Canadian equity in the CCPC or still take a global approach?

@BenFelixCSI 5 лет назад

I would not focus on Canadian dividends in a CCPC. The Part IV tax is refundable if you’re paying yourself dividends but the full amount of the dividend counts toward passive income. Canadian stocks have high yields too. There are some things to be aware of, like the taxation of foreign dividends in a CCPC, but even then there are no guarantees when it comes to optimizing for tax efficiency (asset location). I generally believe that it makes sense to keep the same mix across all account types.

@alexmoeslein9957 4 года назад

I clicked in hopes of hearing a differing viewpoint just because it’s always good to hear other ideas. But when you revealed what you were really going to talk about I was like “oh thank god”

@murarikaushik33 4 года назад

"Superstar Fund Managers who flamed out hard to finish their careers" - Woodford Investment Management in England is a prime, recent example.

@TeamBiird 4 года назад

One of the co founders lives near me in the uk in a really ugly massive house. The whole neighbourhood knows what he’s done and hates him

@murarikaushik33 4 года назад

@@TeamBiird Yes, Woodford sailed very close to the wind in many respects. If not illegal, certainly - to put it mildly - not enhancing to his reputation.

@SylverWWA 4 года назад

I knew there will be something fishy about this topic as I have just watched your "Index Fund Bubble" video :D And yes, everytime there is an article about how index funds are bad, usually there is an active fund manager who is trying to convince the reader... and I am not surprised by that as index fund investing is getting cheaper and cheaper thus making it easier to achieve gains through easy investing. You Sir have earned a subscriber to the channel ;)

@GG-mr9iz 4 года назад

Thanks for the video. I am looking towards Etf after investing individual stocks for a long time. And also interested options investing. But your video gave more confidence in Etf.

@TheDarkMagician 4 года назад

I know great value-quality youtube chanels when I see them and this is one of them.

@ixflashesixflashes7267 4 года назад

please explain your thoughts on all the recent talk about an index fund bubble

@BenFelixCSI 4 года назад

Bad comparison www.pwlcapital.com/its-wrong-to-compare-etfs-with-cdos/

@samgeschickter454 4 года назад

Ben Felix that article does not explain why an index fund bubble does or does not exist. The idea would be that the rise of index funds makes assets overpriced relative to what they would be priced if they were based on valuation models/ manager discretion. Please explain what you think about the fund flows issue

@tiendoan1333 4 года назад

@@samgeschickter454 We don't have a systematic definition of a bubble, and so the only way to know if something is bubble is gut feelings. Remember, a bubble isn't a bubble until it pops.

@edwardmauer7442 5 лет назад

Hey Ben, what do you think about the low volatility anomaly, and volatility as a factor in general? Could be a topic for another video.

@BenFelixCSI 5 лет назад

It’s coming. Two videos from now. Really interesting topic.

@niteshdulal3455 4 года назад

Love the content. Can you cover investing in IT ETF or Consumer Staples ETF? What are your thoughts on investing in these ETF vs Index

@full__tilt 4 года назад

Just subscribed and loving this videos 👏👏

@LukeDiogo 5 месяцев назад

Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.

@LehmannAlicia 5 месяцев назад

As you plan your retirement, be sure to talk with a financial advisor who can help you make the most of your retirement investing scheme.

@LukeDiogo 5 месяцев назад

@@LehmannAlicia Very true, If you're looking for help building a retirement nest egg, you most likely want a certified financial planner with expertise in retirement planning. With the aid of a coach, I grew my reserve from $160k to almost $600k during this Red season.

@LehmannAlicia 5 месяцев назад

@@LukeDiogo How can one find a verifiable financial Planner, I buy the idea of employing the services of a Financial Advisor because finding that balance between saving and living requires counsel.

@LukeDiogo 5 месяцев назад

@@LehmannAlicia KRISTIN GAIL CUNNINGHAM. On the internet, that’s the financial advisor I use. She’s verified; you could also read more about her and then communicate with her. it’s always good to do your research before putting your money into any investment.

@LehmannAlicia 5 месяцев назад

@@LukeDiogo Thank you so much! Found her webpage and left a message. Hopefully, she responds.

@hngbros8346 5 лет назад

Congrats on the promotion. I can now officially say I've watched your entire backlog of videos and I love the content. I was wondering if you might touch on a subject that is tangentially related to this topic. Potential future video idea? What are your thoughts on entrepreneurship? In theory, it is directly opposed to the idea of indexing since you are investing a large portion (sometimes all) of your portfolio in a single business. Even worse, the startup entrepreneur is usually heavily leveraged in this investment. I ask because I've been approached by multiple business "opportunities" ( I hate that term, sounds like a sales pitch) and wonder if there's any risk adjusted value in diverting some of one's portfolio into a personally owned business. The only value I see in this is that you are *somewhat* protected on the downside if you form an LLC.

@BenFelixCSI 5 лет назад

Wow. Thanks for watching all of the videos. I can't sit through the old ones. I like to think the channel has improved since the early days. Perhaps I will look back on today's content in a few years and feel the same way. I think that entrepreneurship is great but it takes a certain personality type and a decent amount of luck to be successful. I would always be skeptical of people presenting me with business opportunities. Most capitalists would keep an opportunity that great to themselves. I have been pondering a video on human capital which this would fit into.

@anthonygardner400 4 года назад

Yet another excellent video, Ben. Thanks. I’ve had a couple of financial advisors, and neither of them encouraged me to purchase index funds. Hmm, I wonder why! 😉

@AJ-ld5km 2 года назад

cuz they want you pay them for commission fees, and other unnecessary fees and expensive expense ratio by using their mutual fund. on other hand, index funds save a lot of fees and cheap expense ratio .

@mike4962 4 года назад

Hi Ben. Do you think that investors should buy into indexes now even when they are at or near record highs and we are on a 10+ year expansion? In the case of a downturn it may take long to get back to where we once were, e.g. Nikkei index is still not back to all time highs 30 years later. What can we do if we are just getting into investing?

@RobCLynch 3 года назад

Very interesting. In 2005, I started investing each month and used 50% of my money to buy units in an index tracker. The other 50% went toward individual shares. Guess what? By 2010, my tracker had outperformed the individual shares. Since then, I have invested in 5 separate global index funds - to keep costs down - and they are still performing nicely. Having read a few Jim Slater books, I learned early on that 'managed' funds were not only more expensive, they rarely outperformed the index. Here in the UK, the only managed product that I would have considered is the 'FundSmith' Fund, which is managed by Terry Smith.

@sunnyhing91 4 года назад

The reason why I prefer ETF is basically i'm the person who control my money, whereas active fund manager are concerns about their commission fee. So even I screw up my ETF, at least it is my fault and I learn from it, so I will improve my investing strategy in future

@hezekiahdavies5104 4 года назад

Hi Ben, awesome content, thank you! I am looking to start investing in index funds but am a bit confused about the whole "index fund etf "versus "index fund mutual fund" thing. I have been looking cursorily over vanguard's website and see they only mainly offer etf indexes. What is the major difference and am I still able to reap the same rewards of indexing if i put my money in an index etf? I really appreciate your help!

@BenFelixCSI 4 года назад

In terms of the exposure that you are getting an index mutual fund and an index ETF tracking the same index are identical. The differences are mostly in how you trade the units. I will do a video on this eventually.

@edoardoRss 4 года назад

What do you think about single payment or distributed one in buying etf, to cover the overpricing period ?

@georgemanka 5 лет назад

I’m sharing your videos with my Australian clients with the proviso that they are designed for a North American audience.

@BenFelixCSI 5 лет назад

Thank you, George!

@hTyKn1 4 года назад

8:17 Even Warren Buffett has not managed to beat the S&P500 over the last 10 years. The days of finding undervalued stocks the way Buffett used to are long gone now. The market is far more efficient than it was 40 years ago.

@BenFelixCSI 4 года назад

We could have said the same thing about Buffett leading up to the tech crash. Buffett has done poorly relative to the S&P 500, but so have value stocks as a whole. If Buffett comes out beating the market for the next decade he will be more of a legend than he already is. If he doesn't, it will be another big blow to active management.

@hTyKn1 4 года назад

@@BenFelixCSI He should outperform the S&P500 over the next 10 years purely because he's sitting on a cash pile of $128bn and if a recession comes he will be in a position to pick up some bargains. If no recession comes (which is unlikely) he will probably just underperform as he has done lately.

@rafaels.pedrao9706 4 года назад

@renegade_ace HAHAHAHAHA, change game!

@MatheusC1729 3 года назад

@@hTyKn1 but WB didn't bought anything on the crash

@stefanocurletto7912 2 года назад

Thank you for the videos and the impressive work that you are doing Ben. I'm learning a lot. I'm from Italy, I have three ETFs covering US, Europe and EM (Large Cap). Considering your knowledge and experience it's better to own some ETF for the small cap too? I normally find that the small cap ETF have high TER. Thank you!

@johnsmith-ro2tw 5 лет назад

Good video. The reason why we often hear finance professionals complain too much money goes into index funds and complain about index funds overall is because they make a living from the very high fees they charge their "customers". They need more suckers who will pay tremendous fees to "manage their money", not less. It's 2019, it only takes a bit of research online and a few clicks to become an investor. No need to pay some fund managers to do it for you.

@lester7760 5 лет назад

I always come across comments about the Japanese index that tanked but never recovered. Was this a unique scenario? What’s the likelihood of that happening to US or Canada?

@mgoogyi 5 лет назад

No one knows -> diversification.

@mjlyco9752 5 лет назад

Nobody knows so diversify away some of the risk. Global indexes, bonds, paying off debt, cash reserves, etc.

@BenFelixCSI 5 лет назад

I agree with the other comments. No way to know. Here are annualized nominal (before inflation) returns in CAD from 1990 through March 2019: Japan market index: 0.97% All country world index (including Japan): 7.48% It's also worth noting that prior to this prolonged period of poor returns, Japan's stock market had massive growth, peaking out as the largest stock market in the world in the late '80s. You really had to invest at the worst possible time to catch those low returns. Annualized CAD nominal returns for a Japanese large company index from 1970 through March 2019: 9.19% Annualized CAD nominal returns for a Japanese large company index from 1989 through March 2019: 0.65%

@TheWizard856 5 лет назад

I've been reading and watching finance videos for a long time. The simple answer to wealth building is start now and stick to it. Don't worry about the ups and downs of the market that's unavoidable. Keep about 4 months of living expenses plus a few extra grand in an emergency fund. Online savings accounts usually match inflation for you with a 2% yield. Then if your employer offers a 401k with a match do that so you get the maximum employee match(If not skip that step). After that's done open a Roth IRA and buy ETFs. If you can't do a Roth open a traditional IRA and contribute enough to drop a tax bracket if possible( consult an account on that).

@briankaul1201 5 лет назад

Why Roth? Do you think you will withdraw more money per year in retirement than you make now? Do you believe that the tax brackets will change so that you pay more in taxes after you retire even if you don't? I don't get that part, but the rest sounds good.

@TheWizard856 5 лет назад

@@briankaul1201 I'll probably withdraw it all, personally. The best strategy is likely a combination of both a Roth account and a traditional account. Doing that would offer the most flexibility in retirement.

@briankaul1201 5 лет назад

@@TheWizard856 So like, tax diversification? That makes sense. So you go traditional 401k, then Roth IRA? What sort of proportions do you plan to put in each and why? Also, hey man, what are you talking about with inflation protected savings accounts? I thought the only instrument that protected against inflation were TIPS (inflation protected gov't bonds). Thanks

@TheWizard856 5 лет назад

@@briankaul1201 I'd put enough in the 401k to get your maximum employers match. If your not doing that your essentially saying no thanks to a pay increase. Then I max the Roth. That's about $500 a month of after tax money. I recommend a robo advisor such as betterment or wealthfront to start with. Later if you want more control over your investments and lower fees you can roll it over into a Vanguard account. The online savings account does not protect your money from inflation. It does pay you 2% on it though and most years that covers inflation for you.

@briankaul1201 5 лет назад

@@TheWizard856 Gottcha. Ok cool. Well that's some food for thought. Thanks man.

@saurabhjain7672 4 года назад

Ben. Would love to have your insight on real estate investing versus index funds for 20 year long term time line

@josejimenez721 2 года назад

Hi Ben, could you talk either in a video or in the podcast about the differences in the replication methods of the ETFs? Is one replication method preferred? Also, how much tracking error could be considered acceptable? Thanks!

@kirthiroberts645 5 лет назад

Ben, Thank you for your clear and thoughtful insights and arguments! Would you be able to make a video on your views about the Smith Maneuver? If it makes sense for cash damming through a higher interest HELOC to pay for your investment expenses (while getting the interest to be tax deductible) then using the investment income to pay down the principal portion of the mortgage on your primary residence. Does it make financial sense and is it tax efficient in any interest rate environment (i.e. such as the current low-interest-rate environment)? What are the risks to watch out for?

@MrGiggity890 4 года назад

How about building your own index fund and don’t actively trade? :)

@azteroth 3 года назад

Nice question, maybe someone would answer

@freakyfreshwater7680 3 года назад

@@azteroth haha wouldn't that be nice?

@ronwhiteleo3352 4 года назад

good vid.. i am a Dave Ramsey guy and he always recommends actively managed funds,, but i have been looking more into index funds... will continue to watch your vids to gain more knowledge on this matter..

@BenFelixCSI 4 года назад

Great! I find Dave Ramsey's investing advice to be extremely irresponsible. I also have a feeling that there are some misplaced incentives going on. www.investmentnews.com/article/20170407/FREE/170409952/advisers-profit-through-association-with-dave-ramsey-x2014-but-not

@kingdavig 4 года назад

Dave makes money off managed funds that his people are selling to you. Of course he encourages you to buy them.

@WilliamThePayne 4 года назад

Great video mate. I always learn so much from your channel!

@BenFelixCSI 4 года назад

Thanks!

@SoCal209 5 лет назад

Why do industry "experts" attack index funds? They know in their hearts the truth: Indexing over a long time will produce superior results, especially when you consider sales charges and expense ratios. Consider academia. Most support indexing. They draw their conclusions from hard, stubborn data. As a long time indexer now retired, I walk around with a smile on my face. Pick out a broad based fund (I like the Total Stock Market Index), stick with your plan, consistently invest, ride out the periodic storms, and then prepare for a nice retirement. Thank you Ben, for your always informative and excellent videos.

@BenFelixCSI 5 лет назад

Thanks Sam. I think part of the problem is that many industry participants truly believe that indexing is a bad approach to investing. People are very good at rationalizing their world views, especially when those views are tied to their income.

@HamiltonRb 5 лет назад

This doesn't even take into consideration the portfolio manager moving on to another company which means your money is now being invested by someone else whom you may not agree with their style of investing. Call me suspicious, but I am always dubious of fund managers getting compensation from a company to pump & dump their stock to inflate their value. I don't think you have to look any further than VGRO in the accumulation stage & VBAL in retirement with an MER of .25% to rebalance for you and get all the global diversification you need.

@BenFelixCSI 5 лет назад

Great point. A big part of active risk is exactly this. Even if there are skilled managers out there, there is no guarantee they won't be incentivized to move on from your fund/account.

@gunnarkarlpalsson8014 5 лет назад

Ben, What do you think about Greenblatt's "The Little Book That Still Beats the Market" as an alternative to index fund investing? It is rules based, basically a quality filter on value stocks if I understood correctly, but way more concentrated than an index.

@BenFelixCSI 5 лет назад

I think that applying a value tilt with a profitability screen is aligned with an efficient market approach to investing. I do not think that this gives us permission to sensibly use those characteristics as criteria to select stocks. A value index with a profitability screen would be expected to beat the market.

@claudyl9791 4 года назад

Pretty good video Ben! I want to know your thoughts about lump sum investing vs dollar-cost averaging

@BenFelixCSI 4 года назад

Thanks! See the following: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-w_aOERmUWdA.html ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-X1qzuPRvsM0.html ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-apnM-y6sXVA.html

@gabetiri 4 года назад

clicked on this days after buying an etf expecting to see that ive made a horrible mistake.

@jr-pc4do 3 года назад

50%OEF 50% QQQ, invest regularly, reinvest dividends, and forget about...

@IL_Bgentyl 3 года назад

I prefer xlk on a drip. Main positions in Apple and Microsoft.

@IL_Bgentyl 3 года назад

I prefer xlk on a drip. Main positions in Apple and Microsoft.

@roberts8783 4 года назад

Can you explain unfunded swap, full replication and optimized sampling ETFs and how to identify each? I'm thinking sampling etfs might miss out on some returns from smaller cap stocks

@harikrishnanchandramohan4209 Год назад

@Ben Felix. Index funds are fine but you didn't mention which one. S&P 500, total US market or International? Do you think concentrating only on one country is almost as suicidal as individual stocks like happened to Japanese Nikkei when Japan was not so much different from how USA is now.

@quietmind0zero 5 лет назад

And we haven't even dive into the ridiculous high MERs in Canada.

@seanr8809 4 года назад

This is why I think Ramsay is a scammer. He tells people to buy managed funds that beat the S&P... Because he is trying to sell his own managed funds.

@jpaspaspas 3 года назад

wow for real can i get some sort of vid of d. ramsay mentioning this

@wread1982 2 года назад

@@jpaspaspas he refers everyone to his smart Vestor pros and he gets a commission, its been know for years

@user-bq6gl7ci9k 4 года назад

@benfelix does this apply to all indexes ? Or the the case is only strong for the DOW and S&P 500? Thank you

@georgemanka 4 года назад

Hi Ben, at 3:40 (quality of a company does not equal quality of stock returns” - could you please give a reference or references? Thanks, mate!

@KevlarGorilla 3 года назад

-Be me -Watches like dozens of other videos in this channel -Invests mostly in ETFs, some small cap -Reads title of video *Oh, poop* -Watches video *Phew!* Close one!

@southernc4919 5 лет назад

I have been screwed by five different financial advisors. Mr. Felix appears to be the first honest financial advisor I have ever known

@mark.k7206 5 лет назад

F B Screwed by 5 financial advisors ! The definition of stupidity is following the same path & expect a different outcome. I have no idea how anyone can fail so often unless they have dimentia

@BenFelixCSI 5 лет назад

Jeez, shots fired @Concerned Voter. Let’s try to be respectful.

@jvkenshin416 5 лет назад

@@mark.k7206 That is not the proper quote of Alber Einstein's famous assertion. It is insanity, not stupidity!

@jvkenshin416 5 лет назад

@@mark.k7206 Okay...

@sanjayaiyar4351 5 лет назад

@FB. I would make sure you are putting your money with someone who is a fiduciary. They will be legally required to do what’s in your best interest.

@danielmartin3249 3 года назад

Ben, Is there any more risk going with the ETF version of a Vanguard index fund? For example VTI vs VTSAX. Why do I feel like I should go with VTSAX over VTI? Your thoughts please. Thx.

@MrBudpln 4 года назад

Haha! Love how you titled this! So glad you couldn't convince me!

@ChrisM-fk1ef 5 лет назад

I can't thank you enough for your incredibly educational videos. You're videos have helped me feel confident in self directed ETF investing. Your content is pure quality and again, thank you for sharing your knowledge and insights with all of us.

@BenFelixCSI 5 лет назад

That’s great, Chris! Thank you for the kind words.

@grantmaxted1160 5 лет назад

Chris M I agree. Ben, you have the rare gift of being able to condense complex concepts into succinct and easily understood summaries.

@BenFelixCSI 5 лет назад

@@grantmaxted1160 Thank you, Grant. I really appreciate it.

@andytdm 4 года назад

knew it was clickbait right from reading the title yet here we are! :)

@ryangavin8856 3 года назад

Ben, how did you calculate the data at 7:50 regarding statistically significant alpha? Great content.

@gavinwkc 5 лет назад

Is may 2019 a good time to enter to market investing in index funds? Taking into account of the current economics state.. or should average investors do a monthly contribution regardless of the economic state?