THE ONLY INDEX FUNDS YOU WILL EVER NEED to become rich | Vanguard and Fidelity

so in a world where we're constantly trying to make the right decisions that will benefit us financially it becomes a little bit difficult to choose the correct investments so that is the question what are the correct investments that we should all be investing in for the long term that's exactly what we're going to be covering today so get yourself prepared because it starts right now [Music] what is up everyone welcome to let's talk finances my name is trey and on this channel we like to dedicate our time in helping you get out of debt stay out of debt reach financial independence so that you can begin building wealth if that's something that you are interested in let's go ahead and start right now by hitting that subscribe button and also the notification bell so that you don't miss any other content just like this one the first funds that we're going to be covering and that is vanguard's total stock market index fund or etf ticker symbols vtsax for the index fund and vti for its exchange traded fund it comprises of 3791 stocks the expense ratio for vtsa x is 0.04 percent to whereas vti is 0.03 percent both very very low expense ratios let's jump into the 1-5 and 10-year returns for both of these funds the one-year return is 62.73 the five-year return is 16.65 and the 10-year return is 13.79 the second fund for vanguard that you'll need to go ahead and complete that portfolio is vanguard's total international stock market index fund as well as exchange traded fund the ticker symbols vtia x for the index fund and v x u s for the exchange traded fund let's go into the breakdown now this one comprises of 7576 stocks the expense ratio for vtia vtiax is 0.11 to whereas vxus is 0.08 percent the 1-5 and 10-year return one-year return 52.80 five-year return 9.97 percent and its ten year return is five point twenty two percent in terms of minimum investment and more of a specific breakdown for each fund i'm going to link it down in the descriptions below for those of you who are die hard vanguard investors put down in the comments below if these are some of the funds that you have in your portfolio and if not which ones do you have now for those of you who want a little bit more of a breakdown in terms of the best index funds for vanguard i actually went over it in this video so be sure to check that video out after this one moving right on along to fidelity's index funds the only ones that you need to invest for the long term now this one's going to be a little bit different from vanguards all right so i'm actually going to add some of fidelity's zero funds as well as some of their other funds we're gonna have a total of four now these particular funds do not carry exchange traded funds but it will not stop you the fidelity investor for making those long-term gains so index fund number one fidelities zero total market index fund ticker symbol f-z-r-o-x now this one comprises of about 2 300 stocks its expense ratio is you guessed it zero and its one year return is 43.79 now obviously there's no five or ten year breakdown for the fidelity zero funds being that they're so new but their first year they actually did very well it's one that i've been recommending to a lot of the new investors the second fund to match this one is going to be fidelity's zero total international fund ticker symbol f-z-i-l-x here's the breakdown it comprises of 6932 stocks its expense ratio again is zero and its one-year return is 10.02 so the next fidelity fund is actually going to be fidelity's total market index fund ticker symbol fska x this one has 3 658 stocks now if you do the comparison between this one as well as its zero counterpart there's almost a difference of two thousand terms of its holdings its expense ratio was point zero one percent its one year return is 41.25 five-year return is 14.40 and we currently do not have a 10-year return now the second fund to match with this one is going to be fidelity's total international index fund ticker symbol f t i h x this one comprises of 4 754 stocks its current expense ratio is .06 and its one year return is 36.49 so all of these are relatively newer index funds but it should not stop you the fidelity investor from choosing from one of these four funds for those of you who want to know which funds are best on fidelities and in this video i went over that so be sure to check that one out after this so now let's go into why these are the only funds that you'll need for the long-term investor the difficulties that new investors will have some time is would be that they don't really know what to invest in what i've seen oftentimes are new investors they'll have seven eight nine sometimes ten different funds in their portfolio when it's not necessary so for those of you who've never heard of the lazy portfolio it's actually one of my favorite portfolios and the reason that is is because it makes it very very simple all right so the objective for investing is always going to be to minimize the amount of risk while maximizing your return on investment so you want to ensure that you are investing in a low fee index fund that invests across the broad market and you can do just that by investing in two particular funds a total stock market index fund as well as a total international index fund there are two questions that are going to be raised at least that i had with these funds the first thing is okay do i really need to invest in an international fund when john vogel has stated that he doesn't like international funds which is true he did state that but i will counter that by saying the market is a little bit different now as opposed to let's say 20 years ago the returns between domestic and international is always going to fluctuate so right now obviously the domestic market is doing a lot better than the international market however if you go back about 20 to 25 years it was actually the international market that was doing better than the domestic market so what exactly does this mean it means don't and stop trying to time the market just let the market do its thing there's no better way to diversify your portfolio than to invest in a total international as well as a total domestic stock market index fund and that's exactly what you would be doing by choosing these funds the second question that i would run into is do i need to invest in bonds so obviously the lazy portfolio generally is a three fund portfolio a domestic fund an international fund and then a bond but here is my take on bonds and j l collins would also agree now if you don't know who j.l collins is he is the author of one of the best-selling book which is entitled the simple path to wealth and if you've never read that book i highly encourage you to do so what exactly is the intent of a bond a bond is there or its intent is to smooth out the right being that investing in the stock market can be very very volatile so in order to negate the volatility you would invest in some bonds that has extremely low volatility while being able to cushion your investments however my thought process on this is if you're handling your finances the proper way i would allow my emergency fund and or savings to be my cushion so if the stock market takes a blow i can rely on my cash and liquid assets to be able to cushion that blow so for me i'm a hundred percent in stocks and i don't invest in any bonds and i don't intend to until i become a little bit closer to retirement now obviously you don't have to do that and if you do decide to invest in some bonds then i would also highly recommend a domestic and international bond as well and there's one more question would be well what should my allocation be what percentage of my funds should be allocated to domestic and what percentage should be allocated to international well currently on vanguard's website it states that you should be 20 and 40 percent invested internationally and i concur with that so the sweet spot i would say is between 20 and 30 internationally invested don't make this more complicated than it needs to be as a matter of fact it's not complicated at all invest in these two funds for the long haul and you'll set yourself up for a very comfortable nest egg should i even say millionaire status by the time you retire and so there you have it guys the only two funds that you need for the long-term investment strategy that will get you where you need to be so if you found this video to be helpful in any way don't forget to subscribe and also smash the like button for the youtube algorithm i would greatly appreciate it so with that being said i want to thank the men and women of this country who have served and who continue to serve we all greatly appreciate you until the next video guys let's talk finances then [Music] you

Channel: Let's Talk Finances with Tray Truitt

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Id: aHa0c9WIgz0

Length: 10min 30sec (630 seconds)

Published: Sun Jun 20 2021