What Would Happen if You Bought The Entire STOCK MARKET

What would happen if you bought the entire stock market, every single stock in the US Market, and maybe also the international market? Would be a good idea or a bad idea, and if it is, then how can you do it. ????ACORN FREE $5???? Link: https://acorns.com/invite/38EYSU

1. Why would you want to buy the entire stock market
– The idea is if you don’t know what I diversification is
– In simple terms its mixing risky investments with less risky ones that are unrelated to balance out the portfolio risk level
– So in a way buying the entire stock market, would be the ultimate diversification

But there is one Problem:
– In the US alone there are around 3500 companies that are public with an average price of 15-20 hypothetically ( so it’ll cost around $52,500 just to get started with this plan)
– So if you were to try to build a master portfolio it would take you a lot of money, a lot of time and also managed to make sure you rebalance as needed
– And to be honest it would be a nightmare

The Pros are Simple to these Questions:
– If you own the entire stock market you have ultimate diversification
– You also are guaranteed the market return for the year, because you literally own the entire market

But the Cons are also obvious:
– It would cost a lot of money
– And it would also be super inconvenient

2. How Can you own the Entire Stock Market and get all the pros and non of the Cons
– well its easier than you think and also cheaper than you think
– you can actually buy an ETF ( exchange-traded Fund) or join an Index Fund that offers it

However:
– when you join the average Index fund, they usually might charge you a 1-2% fee to manage your portfolio
– and that seems like its not a big deal but over a 20 year period for a long term investor
– we would be looking at also 30% of your portfolio value would be eating up by these fees
– remember the average return for the market is 8% ( taxes take 2%, inflation 2%, fees 2%, before you know it you’re only left with 2%)

But there is a way to Avoid the Fees: and save 33% of your portfolio value
– vanguard offers an Index fund and they also offer an ETF, that’s called total stock market fund
– which basically provides with the returns of the total stock market
– and they only charge you an expENSE fee of around .14% ( a lot lower than 1-2% in the big scale of things)
– this way you can own the market, without the fees, and without the inconvenience

3. How do you do it and how much does it cost
– Again two ways Index Fund and ETF ( with vanguard to avoid the Fees)

How to ETF
– You can do it directly with vanguard but they don’t allow fractional share buying, so you will have to pay full price for the ETF
– And the ETF ticker Is (VTI) and it cost around 171 per share, very expensive
– But you can also use m1 finance, Robinhood, fidelity to buy this is exact ETF but with Fractional shares ( that way you can invest with 5-10$)

The Second Way: Index Fund
– The fund is called Total Stock market index ( VTSMX)
– It cost around $83 but remember you will be paying full price
– and to invest into one of these funds, usually, they require between $300 to sometimes $3000
– But again you don’t have the money, just buy an ETF that does the same thing, or save up the money to start investing.

Pro:
– Low fee
– Not a lot of trading ( saves you on taxes)

4. Overall
– Remember an index is just tracking the performance of a section of the market, in this case, the entire market
– And you can start investing small and you don’t need a lot of money
– I use Acorns

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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