- So by far, one of the
most popular commission-free trading apps available
today is called Robinhood. And one of the most
popular forms of investing is purchasing something called an ETF. So in this video today, we're gonna cover what are
the best Robinhood Index Funds or Exchange Traded Funds available today that you may decide to invest in. And essentially, rather than
investing in individual stocks or companies, an index fund or an ETF owns numerous different
companies within one fund. So when you purchase an ETF, you own a small piece
of every single company held within that fund. Now there's a lot of
different ETFs to choose from. In fact, on Robinhood alone, there are around 500 different ones, but in this video, we're
gonna break it down into a couple of categories and share what some of
the best options are that you may want to consider. And lastly guys, if you don't
have a Robinhood account yet and you're interested in opening one, if you use my link down
in the description below, you will get a free
stock when you sign up. And it is an affiliate link so I may earn a small commission as well. Now before we get into what are
the best ETFs or index funds on Robinhood, let's first
talk about what types of ETFs are available to investors
because you may not even know what is currently available to you. First of all, there are
sector-specific ETFs which allow you to invest
in one particular area of the economy. For example, you could find
a semiconductor-specific ETF that solely invests in companies in the semiconductor industry. Then there are dividend
ETFs, which put a priority on companies that pay
high dividend yields. So for people looking for
income from their investments, dividend ETFs may be a good fit for you. Then there are bond ETFs
as well as REIT ETFs, which are going to own assets
outside of just equities. And lastly, there are some
investment-style ETFs out there that follow a specific style of investing. For example, a value-type investing ETF. So just be aware of the
different categories of ETFs available when doing your search, because you might find
something that specifically fits the need you are looking for. For example, earlier this year, I personally decided to
invest in the JETS ETF, which is a sector-specific ETF, which owns a small piece
of all the major airlines, both here in the US and globally. Now since there are literally hundreds of different sector-specific
ETFs and investment-style ETFs, we're not gonna cover them in this video, but just understand they are available. And if you're looking
for something specific, it may already exist. So instead, we're gonna focus
on three categories here. Number one, broad-market
ETFs or index funds, number two, dividend ETFs,
and number three, bond ETFs. And lastly, guys, I just have to say that this
is not financial advice. I am not a financial advisor, and you should always do
your own due diligence before making any investment decisions such as purchasing an index fund or ETF. All right, so first of all, let's talk about broad-market ETFs. And before we get into my picks here, I wanna give you guys
a couple of pointers. First of all, when looking at these funds, there are two things you
want to pay attention to and consider in particular. Number one, the first
thing is the expense ratio or how much money you are paying in fees. And second of all, you wanna look at what
the underlying index is, also known as, what is that fund tracking? Is it US companies, global companies or something different entirely? So that being said, here are my top picks for
broad-market ETFs on Robinhood. So the first index fund
we're going to talk about is coincidentally, the
most popular index fund or ETF available on
Robinhood, and that is VOO. And as you can see here, over
126,000 people on Robinhood have VOO within their
investment portfolio. And if we jump over to the
Vanguard page here, guys, we can get a bit more
information about this ETF, essentially VOO replicates
as closely as possible, the S&P 500 Index, which is the 500 largest
publicly traded companies in the United States. Now as far as this ETF goes,
there is more growth potential because you are 100% invested in stocks. However, share value is going
to go up and down more sharply than more conservative
investments like bonds. So according to this slide here, it is more appropriate for long-term goals where your money's growth is essential, but understand in the short
term, this could go up and down and experience some price
movements that somebody who's more conservative
may not be looking for. As far as the expense ratio
goes, it comes in at 0.03%, which is extremely low, something Vanguard is well known for. And lastly, this fund is a dividend payer with a current yield of around 1.81%. So if you invest your money in this fund, you will earn a quarterly dividend, which you have the option to reinvest back into the issuing stock or fund in order to earn compound interest. So the next ETF I want to discuss is the fourth most
popular ETF on Robinhood, and that is VTI. And as you can see here,
over 65,000 people have VTI within their investment
portfolios on Robinhood. Now the biggest difference
between VOO and VTI is that VOO invests your money in the 500 largest
publicly traded companies. While on the other hand, VTI invests your money in all
publicly traded US companies. And what this does for you is it gives you a mix of both large cap, mid
cap and small-cap exposure. And if you guys aren't
familiar with what that means, essentially, you own large
companies, medium-sized companies and smaller ones, and you're not just
invested in the largest 500, you also own the smaller companies that are not part of the S&P 500. Again, this is another Vanguard ETF. So it has a very reasonable
expense ratio of 0.03%. And it is a dividend payer
with a yield of 1.78%, meaning you will earn
dividends from this fund, which of course as mentioned, you can reinvest if you choose to. Overall, there's really
not much of a difference between VTI and VOO other than the fact that you're investing in a
larger pool of companies. But if we take a look at the chart here, this is VTI over the last year. And then when we click
over here and look at VOO, it's almost an identical chart. So don't drive yourself
crazy between picking between these funds. Most people use VOO since it
is the largest 500 companies and the performance is almost identical. So that is what I would personally do, but it's totally up to you
guys with what you choose to invest in. Okay, so the third broad-market ETF I want to talk about is VT. It's certainly not the most
popular one on Robinhood. As you can see here, about
7,600 people have this fund within their portfolio. The biggest difference between
VT and the other two ETFs we have discussed so far is
that VOO and VTI only invest in US companies. Whereas VT, the Vanguard
Total World Stock ETF, is going to invest your money globally, not just in the United States. So as you can see here, VT tracks a market-cap-weighted
index of global stocks covering 98% of the domestic and emerging market capitalization. So rather than just investing in your own home country stocks, or if you're not from the US and you're just investing in US markets, you are now investing in
global markets as well, including emerging markets, where there may be more
growth opportunity. VT does have a slightly
higher expense ratio at 0.08% versus 0.03. So that is something you should consider when making a decision about this ETF. Also, the dividend yield
is a little bit higher here at 2.08%, which is
something you may want to consider as well. But essentially the idea behind
investing in a fund like VT is rather than investing in
just the US stock market, you are diversified globally. So if you had concerns
about the US stock market or you thought there were
better growth opportunities in global markets, this
fund gives you the best of both worlds, giving
you exposure to both. Now the last broad-market
ETF I wanna talk about is being offered by
PowerShares, and that is QQQ. And it's quite popular with
about 43,000 people having this as part of their investment portfolio. Now this PowerShares QQQ ETF tracks a modified
market-cap-weighted index of 100 NASDAQ-listed stocks. Now if you're not
familiar with that, guys, we have two major stock exchanges, which are the New York
Stock Exchange and NASDAQ. And most tech companies
are listed on the NASDAQ. So essentially, QQQ gives
you a diversified exposure to 100 NASDAQ-listed stocks, most of which are in the tech industry. Now one thing you should
know about this fund as well is it does not own any companies
in the financial industry. So there are no bank stocks or anything like that within this fund. And so based in the companies
held within this fund, 63% of them are tech-related. So if you're somebody who is
bullish about tech companies like Facebook and Amazon
and things like that, but you don't necessarily know which ones you want to choose, or if you're looking for a diversified exposure,
this is a great ETF to consider. And obviously this has been a
big year for tech companies, as you can see over the last
year, this fund is up about 38% because of the massive rally with tech. And the dividend yield is a
little bit lower here at 0.61%. Now, lastly, the expense ratio is 0.2%, which when we compare that to
the Vanguard ETFs at 0.03%, it is significantly more expensive. However, it still falls within the average of what most companies charge as an expense ratio for their ETFs. All right, guys, so now
we're gonna take a look at some dividend ETFs,
and there's three things that you want to keep in mind here. Number one, first of
all, the expense ratio, how much you're paying in fees. Number two, the asset mix to see how well diversified you are. And then of course, number
three, the dividend yield. So that being said, let's take a look at
some dividend ETFs now. The first dividend ETF
I want to talk about is also the third most
popular ETF on Robinhood with over 86,000 people holding this ETF within their portfolio. And this is none other than the PowerShares S&P 500 high
dividend, low volatility ETF. And the name is basically
self explanatory. I like this ETF in particular because it's a great
beginner-friendly investment based on the fact that it is
lower-volatility companies, which essentially means
there is less up and down price movement than you might
see with a riskier company, for example, like a growth stage company. These are more well-established
financially stable companies that experience less price fluctuation with their share price. Now essentially, this
ETF looks at a short list of the 75 highest dividend
yielding stocks on the S&P 500. Then from that list of 75, they pick the 50 least volatile companies and they add them to this fund. So essentially, you are investing in the top 10% of the S&P 500 in terms of high dividend
yield and low volatility. Now the expense ratio for this fund is a little bit higher at 0.3%. So it's roughly 10 times
higher than the expense ratio for some of those Vanguard ETFs. However, if you're looking
for a high-dividend yield, this may be a fund that
you want to consider. And currently it pays a
dividend yield of around 5.48%. Next up we have VYM, which
is another Vanguard ETF, which is quite popular
here on Robinhood as well, being in the top 10
with over 45,000 people currently owning this fund
as part of their portfolio. For those who are looking
to pay less in fees, this is a great option
because Vanguard index funds are almost always the
most inexpensive option when looking for broad-market exposure. The expense ratio for this
fund is just 0.12% versus 0.3% for the SPHD fund we discussed first. Now this fund does own
a lot more companies coming in at 393 high
yielding dividend stocks, excluding REITs, versus the
other fund that owns just 50. So you are more
diversified with this fund, but since you own a much
larger pool of companies, the dividend yield is lower. And that yield comes in at 3.63%. So if you want to be more
diversified across more stocks and you also want to pay less in fees, this may be an option to consider. And the last high dividend
ETF I wanna talk about is another Vanguard fund, which is VNQ. It's still pretty popular on Robinhood with about 22,000 people having this as part of their portfolio. Now this here is a very
different investment than anything we have discussed so far, because everything up until
this point has been related to owning stocks. All of those previous ETFs own stocks. However, the Vanguard VNQ fund
actually owns real estate, not stocks, which is a
great area to earn income from your investments in
the form of dividends. So this fund owns a
portfolio of different REITs or Real Estate Investment Trusts, which is essentially real
estate that is actually owned by companies and it
trades just like a stock on the major exchanges. Now one of the benefits to
investing in real estate is that there is generally
less overall correlation to the overall stock market, and you are diversified into
different asset classes. And in order to be classified as a REIT, 90% or more of the taxable
earnings from the company must be distributed to the shareholders in the form of dividends. So oftentimes, the yields on
these REITs and REIT funds are quite appealing. So the current dividend
yield for this fund is 3.95% and the expense ratio is 0.12. So it's right in line with what
Vanguard generally charges, very reasonable with fees. So if you want to invest and diversify outside of the stock
market with relative ease, this is a great option to consider. All right, guys, so lastly here, we're gonna cover some bond ETFs, which are pretty boring
investments, but they work well for your basic stock and bond
allocation type portfolios. Now there's a few things to look at when purchasing a bond ETF. First of all, what type
of bonds do you own? Is it municipal, corporate
bonds or treasuries? Second of all, what is the
expense ratio associated with that investment? And third of all, is it just the US market or is it global market in terms of where you're
purchasing these bonds? But that being said, guys, let's get into those picks right now. So the first bond ETF
on my list here is BND, and it is also the most
popular bond fund on Robinhood with around 11,800 people holding this within their investment portfolios. Now generally speaking, bonds tend to be more boring investments, but depending on where
you are at in your life, you may want to have some
bonds in your portfolio. So for example, as you can see here, over the last three months, there's been a return here of
just about 2% with this fund. But if we take a look
at the last five years, during that most recent
stock market crash, these bonds held up substantially better during that market correction. So that is why people tend to own bonds. They are less volatile and more certain, and you're exposing yourself
to less potential downside during the event of a stock
market crash or correction. Now BND essentially gives you exposure to the entire US bond market
with 60% of the fund invested in US treasuries and the rest of the money is invested in the corporate bonds. It's a very boring investment,
but it's a great option if you're looking for a basic
stock and bond portfolio. And since it is Vanguard, it comes in with an expense
ratio of just 0.035%. Now many of these bonds
have interest payments, which are passed along to shareholders in the form of dividends. And the dividend yield
of this ETF is 2.44%. The last bond ETF I want
to discuss here is VTEB, which is the Vanguard Tax-Exempt Bond ETF, based on the fact that this
is a very unique investment that a lot of people are unaware of. And the reason is because
this fund holds local and state municipal bonds,
which are tax-exempt on a federal level, as
well as in some states. Now this is essentially some
tax code that was written to encourage people to invest their money back into their local
governments and states. And this is only based
on the current tax laws, but if you're looking to
lower the taxable income paid on your investments, VTEB may be a fund that
you want to consider. However, I will say this, guys, it is a very boring and
conservative investment. And over the last five years, it has had a return of around 9.29%. You do earn a dividend yield,
but for a young person, this is most likely way too conservative. And one thing to mention here, guys, it's only the interest income that is going to be generally tax-exempt, which is what you are
earning in dividends. If you buy this fund for a certain price and sell it for a higher
price down the road, you do pay taxes on that. So it's only the interest income, which is tax-free on a federal
level and within some states. So anyways guys, there you have it. Those are some of the
best ETFs or index funds currently available on the
Robinhood investing app. If you guys enjoyed this video, please go ahead and drop a like, and if you're new to the channel, make sure you subscribe and hit
that bell for notifications. Like I said earlier, if you
wanna support the channel and get a free stock,
that link for Robinhood is down in the description below. But thanks so much for watching guys. I hope you enjoyed this video and I will see you in the next one.
