hey bobby do you think VTI is good to invest in? well do you think the stock market was good to
invest in well obviously well then i'd say vti is pretty good wow that was totally unhelpful
today we're talking about two of my favorite funds vti and vo and how investing in these can
be a nice autopilot into a pretty nice future well i i want to invest enough that i could
just retire early hmm how early like before the age of 65 okay so like in your 30s and your 40s
like before the age of 65 well if you look into funds such as vti and voo you could grow your
investments and at some point live off of your investments for the rest of your life hashtag
team no job uh more like hashtag freedom nice nice so i'm gonna stack up in this video vti and vo
we're gonna see which one is best for you or are they both a good investment for your portfolio i'm
going to also explore a hot vanguard fund you don't want to miss and at the end of the video
make sure you stick with me i'm going to go over a tax advantage strategy you could use between vti
and vo so if you're ready to get started don't be dumb tap the thumb and let's get right to it
so if you would have invested ten thousand dollars into either vti or vo ten years ago
and that's all you put in ten thousand dollars you did not invest any more for the next ten
years your portfolio today would have grown to about forty three to forty four thousand dollars
that represents an annualized return of sixteen percent with dividends reinvested so just imagine
if you would invest consistently what that could potentially grow to yeah let's actually calculate
this so if you start with ten thousand dollars you invest that and then every month you invest
an additional five hundred dollars let's say instead of a car payment you're going to invest
that money instead 500 a month for the next 30 years on an average rate of only 10 will grow
to an incredible 1 million dollar portfolio exactly 1.3 million so let's stack up vti and vo
and let's see what the big differences are okay so over here we're going to do vti over here
we're going to do vo let's first talk about what these funds actually do now this one over here vti
is actually the entire total stock market so what it's doing is it's tracking the index of the crsp
u.s total market index kind of think of it like you own all of the winners and all of the losers
of the stock market total market and that's what vti stands for vanguard total index over here we
have vo and what they do is they track the s p 500 now what the s p 500 is 500 largest companies in
the stock market these have an incredible market cap these are the nice solid trustworthy companies
that a lot of you know and love now as far as overall holdings the beautiful thing about either
one of these because it's an etf you're not just buying one single stock you're not just buying
into apple you're not just buying into tesla you're buying into the etf which holds hundreds
if not thousands of stocks over here vti get ready for this has a total of 3935 total holdings as
of the recording of this video that is a ton so anytime you buy one share of vti your money gets
spread across all the different holdings that they have in the etf over here on voo side they
have right now because it is the s p 500 507 total holdings next up is a similarity between both of
these expense ratio 0.03 0.03 percent that means for every ten thousand dollars invested you're
gonna be paying thirty dollars what a low expense ratio guys when you look at etfs they all come
with an expense ratio because there's management fees there's certain fees as related to managing
the etf with these passive funds i always like to look at something that's less than .30 percent
so this is much lower than that at only a 0.03 so really the expense is almost not even worth
talking about but it's important to know they've both been around for quite a long
period of time vti takes the crown as far as the longest it started up on may 24th 2001. vo
kicked off in 2010 specifically on september 7th 2010. so it is celebrating its 11th birthday
this month and this is probably the biggest difference i see between the two this next one
over here on vti now because you're investing in the total stock market index one thing you
got to keep in mind you not only have holdings in the large cap companies but you're going to get
the small and mid cap companies now what that means especially if you're a beginner is that
you have a lot of small companies maybe they're just emerging they're starting off they're growing
then you have the mid caps maybe they're they've been around for a little bit but they're still
not as large as your apples and teslas and things like that and then of course the large cap are the
apples and teslas and things like that so the cool thing about owning that whole entire stock
market is that you have an opportunity to maybe have a breakout company so let's say within bti
there's this small company that really rises up to fame it starts really growing its market cap
it starts really going up in value and because you're part of that via vti you get to take that
ride kind of cool over here though on the vo side because you're specifically invested in the s p
500 these are typically all large cap stocks both of these really grew at almost the same rate over
the last 10 years check this out so on vti they have a growth over the last 10 years of a 14.7
percent return vo over the last 10 years as of the recording of this video has a 14.8 talking
about a 0.1 difference these two are very similar now there's going to be a lot of similarities
between what these etfs actually hold and let's take a look at that i'm going to pull up on my
imac so you can follow along with me so we'll start with vti again you can find this directly
on the vanguard website here it is and you can see i actually sorted this by the percentage
of what they own now when you buy one share a vti vo whatever that doesn't mean that your money is
evenly split among all 3 900 holdings in the case of vti or all 507 holdings in the case of voo no
it's based on the percentage of what they invest in so you can see here for example we have 5.07
of the funds within vti is invested in apple coming up next is microsoft and after that is
amazon facebook and the two different classes of google stock and then tesla and so on and so on
in fact what's really cool about the vanguard website it just makes it easy you can actually
look through their entire holdings list if you wish to do so but you're always going to probably
find at least right now apple microsoft and a lot of the big tech companies are going to be
near the top because they have a lot of growth factors and of course what they want to do
in these type of funds is give you growth that's a good way to do it so that's vti
let's take a look at voo and i think we'll see a little bit of a difference here so here we are
500 holdings but look at the percentage difference you now have 6.12 into apple you have a little bit
more into microsoft there's our amazon there's facebook there's google so very similar but you
can see the percentages are much higher than vti because again unlike the vti fund which holds a
lot of small companies and mid-range companies this is specific to the top 500 companies in the
united states that honestly guys is the biggest difference between both of these and you might
ask yourself well wait a minute okay which one should i just get should i get both of them
do i need both of them if they both kind of do the same type of thing well let's take a look at
the price performance in my favorite website the portfolio visualizer now you can do this yourself
absolutely free that's what i love about this website i love things that are free because
i'd rather be investing my money than spending my money so let's check it out so just kind of
explain what i have going on here we're talking year over year from 2011 to 2021 would put in 10
years because i think that's a great way to start with it we're gonna invest ten thousand dollars
and not a penny more throughout the next ten years but we are going to reinvest the dividends
in portfolio one i'm going to have vti in portfolio 2 i'm gonna have vo now check this out
i'm going to scroll down here look at this you might only see like one line but there's actually
two i promise there's two lines in here and the blue is the total stock market blue is basically
vti the red is vo but look at this just like i said earlier we're talking about a 14.7 return
against a 14.8 percent return it's very similar so these two are kind of brother and sister in
a sense just there's an opportunity to own a little bit more with vti a lot of you guys ask
well what about v-u-g now this is a vanguard fund specifically focused on growth companies in fact
if you look right here on vanguard's website we're talking about growth where they seek to track the
performance of the u.s large cap growth index vti has small mid and large this is specifically only
large not s p 500 we're only talking about large companies but check this out i come down here
and we can see there's going to be only a total of 287 holdings i'm going to do the same thing i did
earlier and i'm going to sort this by their top holdings now this one did kind of sort a little
bit funny but look at this remember what we saw with vti and vo look at vug holding 10 of apple
within this etf that's quite high compared to the other two but then we see over 9 from microsoft
we see six percent for amazon these percentages are higher because this is all kind of right now
based on the industry trend that we're in it's all about that big tech company so this is where
you're going to see a little bit more of an opportunity but let's stack that up in the
portfolio visualizer we're going to invest our 10 000 over the 10 years between 2011 and 2021
and this time in portfolio number three we are going to select v u g
and there it is vanguard growth and in portfolio of three we're going to do 100 okay so portfolio
one is vti portfolio two is vo and portfolio three is bug let's say you have like three buddies and
each of them decide we're gonna throw ten thousand dollars in let's see who becomes rich over
the next 10 years and he made this bet in 2011. well let's see who wins the game keeping in mind
we got vug which is that growth fund so here's what we got do you see the difference here you
see where things get serious earlier we talked about vti we talked about vol and how those things
were neck and neck but check out the ug around this time now you can see look at this all this
time it's kind of like hanging out with its uh brother and sister there on vti and vo but then it
gets serious right here and of course what we're seeing especially in 2021 is a significant focus
on those growth stocks i mean think about what you hear on youtube a lot of people talking about
tesla apple they're talking about all these big tech companies and a lot of people are flooding
their money into these companies because a lot of different reasons why well obviously that's going
to help skyrocket something like vug now one thing you got to keep in mind though is making sure that
you're diversified even when it comes down to etfs so back to your main question what do i do vti vo
or now you're going to throw in this vug what should i do here's what i always look at i
like to ensure that i'm diversified across a growth portfolio across a total portfolio
like a vti or a vo some international and then some bonds so you got growth
you got your total you got your international and you got your bonds and the reason you want that
bonds being kind of the more boring stuff is that you kind of hedge against different trends in the
market for example you could have a little bit of a dip on bonds right now especially with inflation
but now growth companies are taking off at any moment maybe the market turns a little bit start
going down but then the international market takes off it's kind of a little bit of a way to balance
yourself out but remember i'm just some dude here on youtube that looks a little bit like woody do
your own financial research especially with this next tip that might get you pretty excited now if
you hold vti vo or any of these funds in a tax advantaged account which would be like a 401k
an ira or a roth ira this tip won't really necessarily apply but let's say you have a
weibo account and in weibull you said you know what every month i'm going to invest 500 into
one of these funds that's what i'm going to do but it's only going to be one of these funds it's not
going to be both vti and vo i'm only going to do vti that's what i'm going to stick with well
here's what's a little bit interesting that you could do if you're afraid the market might drop
if the market would go down by 30 like it did in march of 2020 you could essentially lock in a loss
on one of the funds let's say it's vti and then just jump right into the other one so you would
sell on a vti you would buy into vo and what this does is it allows you to apply the realized loss
against any future realized gains and then at the same time you're losing no time in
the market along the way because you're basically buying at the dip again check with your cpa check
with your tax person do your own financial research but this is another interesting
way to play vti and vo together especially with market returns that are almost exactly similar
now here's the next video you should check out and here's a video youtube thinks you're gonna like if
you enjoy personal finance content make sure you subscribe and we'll see you on the next video nice