how's it going guys so today I'm going
to be showing you how to actually invest
in index funds I'm gonna be giving you
guys an overview of the Vanguard
platform of ETFs that are available and
showing you guys how you can invest both
through an ETF and exchange-traded fund
or through the actual Vanguard website
now when I invest in index funds I do
this through ETFs so I can't actually
show you the process of doing this on
the Vanguard website because that's not
how I invest in index funds I prefer to
do it as the ETF that way you can trade
the individual shares so that's just the
way I do it it's you know up to your
preference and also how much you're
planning to invest initially but I'm
gonna show you guys how you go about you
know navigating the website I did this
in another video previously too but I'm
gonna show you guys some new stuff we're
gonna go over an actual strategy of a
plan that you could follow if you wanted
to to invest in them a bond etf as well
as a stock ETF and then at the end of
the video I'm gonna be switching my
camera over and showing you guys the
process on the Robin Hood app of how to
actually go about finding the ETF on
purchase it so I know I've mentioned
this in a couple of videos previously
but for those of you that have not seen
those and ETF is what we call an
exchange-traded fund it basically allows
you to invest in an index fund through
individual share ownership so one of the
main problems previously with funds in
fact whether it be an index fund or a
mutual fund is there are high barriers
to entry because you need to fulfill a
minimum account balance in order to open
an account so I'm gonna show you guys
what that is for Vanguard and these
funds but the good news is that with
ETFs you can start investing in these
funds for the price of one share of
ownership so let's go ahead and start by
just navigating this page here and I'm
gonna link all this up in the
description if you guys want to look
more into this but these are the ETFs
that Vanguard has available they're
currently have 56 different ETFs they
have bond ETFs they have investment
grade bonds tax-exempt bonds they have
stock ETFs that are both large-cap
mid-cap and small-cap they have some
international ETFs and then they also
have some sector and speche
the ETF's they have a real estate
investment trust ETF as well so I did a
whole video talking about what are the
best index funds to invest in I will go
ahead and link that up at the end if you
guys want to see that video it would be
a good one that would complement the
information and this one as well but
what we're gonna do is we're gonna focus
on two ETFs in this video first of all
we're gonna look at BLB which is the
long-term bond etf available through
Vanguard and also vo o which is going to
be once I find it here where is okay vo
o is the S&P 500 ETF so this fund tracks
the performance of the S&P 500 and a lot
and it basically allows you to have you
know good exposure to a number of US
stocks and it basically gives you
diversification within that fund because
you're gonna have both large-cap mid-cap
and small-cap stocks because it is a
combination of the 500 largest companies
on the US markets so when you go ahead
and click on the etf we're gonna start
with blv it brings you over to this page
right here it says Vanguard long-term
bond etf symbol BLV so basically guys
this is where you can learn about this
fund learn more about what's within this
fund this is a great one that I
recommend to people because due to the
fact that it is a long-term ETF you're
gonna have a slightly higher risk there
so the returns gonna be better you have
to remember that with bonds the higher
the risk is the higher the return is
going to be so for especially young
people you can afford to be a little bit
more aggressive especially with bonds so
I recommend a well diversified long-term
bond fund for young people and if you're
maybe an older person or you're not as
risk tolerant maybe go back over here on
the etf list and look at a you know a
shorter term bond ETF or even a Treasury
bond etf that'll be a lower return but
significantly lower risk and you know
less volatility so that's always an
option available to you but so when you
go to the website here you see a message
here that says also available as
investor shares mutual fund so those are
basically the two options when it comes
to investing in this particular fund you
can buy individual shares through an ETF
where you buy them on an exchange just
like this
dock or you can open up an account
through Vanguard now if you decide to do
that you I clicked on this page here
which all I did is click on the link
here as investor shares and now we have
the Vanguard long-term bond index fund
which is going to be under the symbol VB
LTX so this is an index fund you can
invest in but you're gonna invest in it
through the Vanguard website and the
main reason that people oftentimes will
not do this is this right here as you
guys can see the minimum investment for
this is three thousand dollars so you
need at least three thousand dollars
just to open up an account with Vanguard
and open up the the fund to buy the
Vanguard long-term bond index fund
through their mutual fund rather than
buying it through individual shares and
there's no real difference as far as the
expense ratio or anything and if you
guys are using Robin Hood which is what
I use you're not paying any fees to your
broker for trading so there's not really
an advantage here to to having a fund
through Vanguard versus using your
broker and doing an ETF so it's really
up to you guys what route you want to go
like I said I always go through the ETFs
it's just easier for me to keep track of
having stuff in one place and then if we
go over here and look at the S&P 500 ETF
vo oh it's a very popular fund it's one
that I recommend again this is the where
you would go for the individual shares
they're under the symbol vo o and then
if you click here and go to investor
shares then as you can see again it's a
three thousand dollar minimum investment
to buy into this fund if you wanted to
invest through the Vanguard website so
I'm going to be under the assumption
that most of you guys are interested in
investing through the ETF option so
that's going to be the focus for the
rest of this video the other thing is
you also do have the option of investing
through admiral shares admiral shares
allow you to have a lower expense ratio
because there is a much higher minimum
investment they're basically letting you
take advantage of having a large account
so because the account is larger the
expense ratio is lower and as you guys
can see for the admiral shares the
minimum investment for this is ten
thousand dollars instead of three
thousand so but the expense ratio is
lower over here it's point zero four
percent and we'll go back and see what
was on the other one for the for the one
with the lower minimum balance it's a
point one four percent so actually it's
a much lower expense ratio to go through
the admiral shares but you would have to
have you know ten thousand dollars
minimum to get started with admiral
shares through vein guards so that's
probably not something that's going to
be an option that makes sense for most
of us so going forward we're gonna look
at the stock symbols okay so as we said
V oo the Vanguard 500 index fund you
would just type in V oo and your stock
broker app whatever you're using or in
Google all I typed in was vo o stock and
as you can see right now it's trading at
two forty five seventy five per share so
what that means guys is you would need
two forty five seventy five right now to
invest in one share of Bo o but that is
a lot less than three thousand which
would be your minimum amount for the
other option and then for blv that
long-term bond fund the symbol again BLB
I just typed in dlv stock and as you can
see it is ninety four fifty nine per
share so for less than a hundred dollars
you can get started with that long-term
bond fund now one of the strategies I
talk about often is dollar cost
averaging that is the best strategy when
it comes to investing in index funds
because what you are doing is you're
accumulating shares over time and as a
result you're buying the same time and
the same amount every single month so
what happens is you buy shares up high
you also buy shares down low and over a
long period of time you're paying the
market average return for that ownership
before that's fund now I know this is
probably something you guys I've heard
of before if you're familiar with my
videos so I'm not gonna go into it at
length I talked about this more in my
other video that I'll link up at the end
but I want to give you guys an actual
real-world example of how you would do
this because I know it's good to talk
theory and the concepts but it's better
to actually see a real-world example so
I'm gonna use an example of somebody who
is looking to invest four hundred
dollars a month following dollar cost
averaging so let's say every month on
the 1st of the month or whatever the
first trading day is of that month
they're going to invest their four
hundred dollars and that's going to be
their dollar cost averaging strategy so
let's say this person is in their 30s
they're looking to have you know a
pretty aggressive portfolio but they
also want to have
bond exposure so they're looking to have
80% stock ownership and 20 percent bond
ownership so they're gonna look at our
two funds we talked about they're the
Vanguard 500 fund B oh oh and then that
long-term bond to ETF BLV so how would
you go about getting 80% 20% diversity
here where 80% to stocks and 20%
disbands when you have to buy individual
shares it's gonna be a little bit tricky
you guys are gonna have to do some math
here to kind of figure this out and it's
never gonna be perfect you're never
gonna have exactly 80 percent ownership
or 20 percent bonds because of the fact
that the prices are always changing and
when you're buying individual shares
it's gonna be hard to get that ratio
perfect now as you accumulate more
shares over time you're going to be able
to do what is called rebalancing which
is going to be selling one thing to buy
another just to keep your just to keep
your diversification about the same so
let's say you had invested and you had
an 80/20 split and then over the next
six months your stocks went up more than
your bonds did and you found that you
had at that point ninety percent stocks
and ten percent bonds well at that point
what you would do is sell some of your
shares of your stocks or in this case
your vo o your stock fund the Vanguard
500 fund you would sell a couple of
shares of that and buy your bond fund
that way you were back to an 80/20 split
as far as rebalancing goes most people
do it twice a year but the rule of thumb
that I follow is anytime your portfolio
is about 10% out of whack that is what I
rebalance so if you're looking for an
80/20 split if you were ninety ten or
70/30 that is when I would rebalance and
get back to 80/20 but you can also
rebalance as you are adding to your
portfolio just by adding the right
number of shares and trying to keep your
numbers about where they should be but
if you're looking to get started with an
80/20 split here what you would do is
the first month you would buy one share
of vo o and we're assuming that vo o is
250 or share and BLV is 100 shares just
for easy numbers sake so as we said you
have $400 each month to invest so the
first month you're only investing 250 or
the cost of one share of the OO and
you're going to hold the other 150 as
cash
your account so now you have a cash
balance of 550 that following month
after you make your contribution now
you're going to be investing in one
share of vo o and one share of BL via
the following month which is going to
give you again a cash surplus at this
point of two hundred dollars because
it's only going to cost you
350 roughly for one share of vo o and
one share of BLV now the following month
you're going to do the exact same thing
by one share of vo o and one share of BL
B and at this point you'll have a cash
surplus of about 250 now month number
four you're gonna buy two shares of vo o
and one share of blv which is going to
burn up a lot of the cash surplus giving
you a $50 cash surplus month number five
you're gonna buy just one share of vo o
giving you a $200 cash balance and then
the sixth month you're going to
basically drain all of the cash value of
your account and your contribution by
investing in two shares of vo o and one
share of BLV so over the course of six
months that is 2400 dollars invested
following a dollar cost averaging type
strategy and as a result you would have
accumulated eight shares of vo o the
Vanguard 500 fund and four shares of BLV
that long-term bond etf so if we're
looking and we're assuming about 250 is
share four vo o that'll be about a two
thousand dollar investment in the
Vanguard 500 ETF and a 400 dollar
investment in the long-term bond ETF
which is going to give you that 20
percent bond eighty percent stock split
there and again this is in a perfect
scenario like I said guys these prices
are going to change but your goal is
just to stay within about 10 percent of
your ideal portfolio diversification so
this is what you're actually going to be
doing number one you're gonna need to
figure out how much you want to invest
each month number two you're gonna
figure out what funds you want to be
involved with and then you're gonna try
to come up with a strategy to meet your
diversification needs in the best way
possible so it's gonna take a little bit
of math here this took me about ten
minutes to figure out it wasn't too bad
but you guys have to understand you're
never going to get these numbers to be
perfect so now we are going to jump over
to my camera and I'm going to
show you guys how to look up these funds
on the Robin Hood app alright guys so as
you can see I now have my Robin Hood app
open and I use Robin Hood right now as
my primary account but I also still have
the majority of my money over in
Scottrade so basically what you guys are
going to do is obviously login type in
your passcode which I'm not going to
share with you guys for obvious reasons
and then you go over here to the search
bar where you're going to search for
this and we're going to first search for
vo o so obviously just type in B oo
on the keyboard and as we can see the
Vanguard S&P 500 ETF comes up we go
ahead and click on that and as we can
see it's now 242 90s share if you or I'm
sorry 245 83 after it updated and what
you want to do is you're gonna hit bye
and this is where you would enter how
many shares of the oo you would want to
buy obviously I'm not going to be buying
this right now and then you would just
enter like let's say you were gonna do
two shares the estimated cost would be
490 168 when you hit review and then all
you would have to do at this point is
swipe up in order to purchase that which
I'm not going to do and then I'll just
show you the same exact thing for the
bond etf BLV so again we just go to our
search bar here type in b lv and here we
have the Vanguard long-term bond etf and
this is currently trading at once it
refreshes here I guess that one did its
94-68 per share and same thing you would
just hit buy at the bottom type in the
number of shares you were looking to buy
and then swipe up and your order will be
filled in a matter of seconds at that
point but uh yeah so that's pretty much
it guys that is how you would go about
buying ETFs on Robin Hood you can use
many different brokers out there I
recommend Robin Hood for people in the
US because it is a zero dollar
commission cost zero dollar minimum
account balance but I know a lot of
people don't have the option to use
Robin Hood but if you do I would
certainly recommend using that anyways
guys that's all I got for this video
thanks for taking the time to watch it
and I will see you in the next one
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