let's go over the best investment in my opinion that every beginner in the stock
market should have and i do want to save you guys time i'm
not going to save this for the end of the video
the investment that i'm going to be talking about is an etf so it's an index
fund on the s p 500 index by vanguard and
it's called voo and now i'm going to explain exactly why
this is the best investment that you should get into
as a beginner in the stock market or frankly anybody in the stock market now
if you don't know what an etf is it's basically just a basket of
assets just like a mutual fund is except you can actually trade etfs on
the stock market just like a share of apple or facebook
or anything like that so if you've got one share of a specific etf then you can
trade it just like anything else on the stock
market so in a way if you're new to investing and you don't quite know which
companies you want to invest in then you can always start with an etf
because you can start with a group of assets
that way you're more diversified so in this case we're talking about the s p
500 index which is the top 500 us companies and you really can't go wrong
with that because as an average they've averaged about 10 ever
since inception and that's a really good return just as
an average with a diversified portfolio now there's a lot of etfs out there that
you can choose from and there's a lot of brands as well so when it comes to the
selection it's really hard to know who to go with
but in general my personal opinion i feel like
everything that vanguard makes and charles schwab makes is a really good
asset that you can look into so pretty much everything that those
guys sell you really can't go wrong with and that's one of the reasons why i'm
looking at the voo as one of the best assets that you can
have as a beginner or just anyone in the stock market now for starters they've
got almost 166 billion dollars in assets under management which means
that's how much money they have in the pot
so technically if the stock market crashes and a lot of people pull out
their money then that asset is still going to be
intact because they've got so much money funded into it
so that's one of the reasons to look into the voo is because the assets under
management are almost 166 billion and that is a lot of money
now the biggest reason why i'm a huge fan of the voo
is because of what they call the expense ratio which is basically how much it
costs you annually to own the fund and this is only point
zero three percent which competitively is so low for an etf
and it's extremely competitive for mutual funds and other things like that
out in the investing world i'll explain more about expense ratios
in just a minute here but just for an example if you had a
million dollars in the voo you'd only be spending 300 a year to
have it managed and that is extremely cheap
and then another cool thing about the voo is that because it's a giant basket
of assets they do pay out a dividend which is
currently at 1.71 per year which is a pretty good dividend
when you really look at a whole bunch of different companies
so that's something to consider as well now the current share price of the voo
is about 313 bucks as of today so if you guys want to get invested in the top 500
us companies you're going to need about 300 bucks to
do that just to get one share of the voo but it's obviously a lot cheaper than
looking into the 500 companies out there and buying them all individually which
would cost you a lot more than 300 bucks now back to
explaining the expense ratio when you're talking point zero three percent for an
s p 500 index i've actually seen expense
ratios out there on mutual funds for s p 500 indexes which is the exact same
thing at one and a half percent so if you're
looking at that over a lifetime of investing
that's where it kills you because one and a half percent that doesn't sound
like much money but the problem is is that you're losing
that money that has the potential to compound over all of those years of
investing so if you're investing for retirement
and you have a high expense ratio then you can lose hundreds of thousands
of dollars or even millions in potential money that could have been
compounding over all that time so for example if the
s p 500 index averaged a 10 return then you'd be
looking at a 9.97 return with vanguard or you'd be looking
at an 8.5 return with someone else that has a 1.5
percent expense ratio and this is where the math really kills
you and i'll just go over this really quick here
so basically if you invested six thousand dollars per year for 35 years
at a 10 return with a 0.03 percent expense ratio
then in total the money that you lost from compounding potential would cost
you about thirteen thousand dollars in lost money
and that is it for your entire lifetime of investing
but if you run the exact same numbers with a one point five percent expense
ratio so an 8.5 return over all of those years
then in total you're going to lose over 500 000
in potential money that could have been compounding for you
all because of the stupid expense ratio that you had
when you were young and you kept it all the way until the time you retired
so just keep that in mind the expense ratio is huge when it comes to long-term
investing honestly if it's short-term it doesn't
really matter but long-term you are going to lose out on a lot of compound
interest and that is going to cost you a ton of money in the long haul
so honestly i'm a big fan of vanguard because they always have a really low
expense ratios and then obviously they're just
following indexes so you really can't go wrong there
especially with the top 500 us companies because when you're diversified like
that if one two three of the companies don't have a
good year it's really not going to affect you overall
because you're diversified in 500 different companies now obviously
there's a lot of different etfs that you can look into
but voo i've always been a personal fan of
so check them out if you have any interest now if you're new to the
investing world i've got an affiliate link in the description below for weeble
where they'll actually give you a free stock valued up to sixteen hundred bucks
just for depositing a hundred dollars and setting up an account with them
so if you want to get a free stock definitely check out weeble
also if you just found this channel i'm jason with honest finance and i make a
lot of videos on different topics that will give your life
and your finances more value so feel free to subscribe
if you guys are into this type of content but thank you for watching
and have a great day