What are Index Funds and ETF? | Investing Pros and Con 2021

ETF and Index Funds, how do they work and what are they and can you make your own?

I’ve noticed a lot of YouTubers talk about ETF and index funds, but they never define what it is. Which is just confusing. So in this video I’m going to break down what index fund is, and what the pros and Cons of investing in them are.

What is an Index fund/ ETF or Exchange, Traded Fund:
You get the Ultimate diversification, example sp500 that track the top 500 companies that represent 70% of Americans value of stocks because they are this big. This keeps your portfolio balanced, so if one industry goes up and goes down, one goes down, you have broad enough investment to keep it stable.

Pros To and ETF

1. Time: It takes 4-8 hours of daily studying to be able to research a company, for weeks and sometimes months
2. Interest: You have to have interest in picking stocks to do it, and if you don’t, then why do it in the first place.
3. Expertise: The number one thing is not buying on emotion but data, and to do that, you need data.

Cons

4. To much diversification, you can’t really experience any crazy increases.
5. Management fees
6. Expensive

Build your own ETF:

Imagine trying to buy one share of the top 500 companies
– 100 per share on average let’s say, and you have to 1 of each which 500.
– 50k every month of buying one stock, its too expensive for one person.
– Your better off buying an ETF

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