This video is going to explain how to invest in the sp 500. The sp 500 is the 505
biggest companies in america. A lot of times it's used to compare how the stock market is doing
because those 505 companies make up 80% of the stock market cap.
Hey guys! It's Tim, if you are new to the channel go ahead SUBSCRIBE so you can keep learning all
about personal finance here on this channel. Reasons why you should invest in the sp 500:
if it was up to Warren Buffett he said if there's only one thing that you can invest
in he would choose the sp 500 and he chose that over his own company berkshire hathaway.
The reason being 92% of traders fail to beat the sp 500. And the great benefit to the sp 500 is
when you do invest in an index fund version of the sp 500 it typically has very very low fees-
very low to no transaction fees, very low to no minimum investment fees and it has a long-term
track record of doing really really well and getting you solid returns over 10%. So how
do you actually invest in the sp 500? Well the simplest answer I can give you is just google
whatever broker you use, whether it be e-trade, charles schwab, fidelity, vanguard, robin hood...
just google that plus sp 500 fund and it'll give you the exact index fund that your broker offers.
So if you have fidelity just google fidelity 500 fund or if you have charles schwab just google
schwab sp 500 fund. And every single broker, every single major broker has their own version of the
sp 500. And what it's designed to be is an exact replica to mirror the actual sp 500 index that
you hear about all the time on the news. Here's a quick list of the most popular brokers and their
versions of the sp 500 fund or popular sp 500 index funds that are offered by most brokers.
You can see that they're all named similar things and they're all meant to do the exact same thing
and they all track usually within about 0.1% of each other as far as returns on investment. So you
need to open up some sort of investment account in order to buy shares of these funds. So you either
need to open up a robinhood account or a fidelity account. If you're doing long-term investing I
recommend you open up an ira either a roth ira or traditional ira. If you're looking to do more
short-term investing then you can open up just a regular brokerage account. Or you can open
up both, you can open a roth ira and a brokerage account. Pick whatever one you want, I don't care
I'm not sponsored, I'm not going to recommend you do one. Personally I have a fidelity one,
but you do whatever, they're all the same. There used to be certain ones with lower fees that's
not the case anymore. You can pick vanguard, schwab, fidelity... whatever you're comfortable
with. All the major ones it's completely free and there's no cost to have $0 in the account.
So go ahead and open one up today, as soon as possible, so that you at least get the ball
rolling. Typically it takes less than 10 minutes. I have an account with fidelity so I did make a
video which I'll link here and in the description down below on how to open an account with fidelity
in less than 10 minutes. And once you have the account open you just search for whatever
sp 500 index fund that company offers. Whether it's the fidelity 500 or the vanguard 500
and you buy shares of that. Whether it be a hundred dollars, a thousand dollars,
ten thousand dollars... whatever the requirements are and whatever you have to invest.
So you may be asking to yourself though why can't I invest directly into the real sp 500?
Like I don't want a mirror one, I want the real thing. Well think of it like this the sp 500
that you hear about on the news isn't actually an investment fund that you can invest directly into.
Think of it more as a measurement, it's measuring how the 505 largest companies in America
are doing. Essentially how the stock market's doing or how the economy is doing. It's not a
fund that you buy, it's just a measurement that we judge a lot of other investments off of. Now
hypothetically speaking within your roth ira or within your brokerage account you can go in there
and buy those 505 different stocks: an apple stock, a tesla stock, a google stock... all those companies
that are in the sp 500 you can go yourself and buy single stocks, 505 of them. And you would have
created your own sp 500 version. But that's really tedious and things are always adjusting within the
sp 500. Some companies get bumped out, obviously it used to be just 500 companies that's why it's
called the sp 500 now it's 505 companies . Some companies get brought into the sp 500.
As well as it's not equally distributed among the 505 different companies. Some companies carry more
weight than other companies. For example here's a list of the top 10 holdings that the sp 500 has:
Right now apple is the biggest one with about 5.5% and remember this is current, this
is always changing, sometimes it's 5.8% sometimes it's 5.3%. They're always adjusting it. Which is why
it's not really smart for you to go and try to do this yourself. The second biggest microsoft, amazon,
all these companies that you heard of are very very large companies and they hold a lot more
standing within the sp 500 compared to smaller companies such as american airlines or whirlpool.
Now I want to leave you guys with this... a big reason why the s p 500 can be so great is because
you get great returns and you get those very very low fees. For example the vanguard sp 500 version
and the charles schwab sp 500 version at this current time charges .03% fees
annually for investing in their fund. That means for every $10,000 that you have
invested in that fund you get charged an annual fee of $3. Now an index fund is actually
a type of mutual fund, it's not really something different. However, other mutual funds have a lot
higher fees because they're more actively managed. There's more people working day-to-day to decide
what companies they should be invested in within that mutual fund. Whereas an index fund has a lot
lower fees because it's just tracking an index measurement like the sp 500. So a lot of the work
is already done for them and you can benefit by that by paying really really low fees and knowing
that you're going to get good historical rates of return. Thanks for watching guys, if you have
any questions always comment them down below and if you liked anything in this video or got value
out of it, I appreciate it if you hit the LIKE button and I'll see you next week for another
video