 Good day, fellow investors. As you know, you can book me for charity where I do one-on-one work to help you with your decisions and the proceeds go to charity. So one question that I recently received and the investor was kind to allow me to make a video for this and we have donated 500 euros to my special charity currently purpose was to analyze index funds, especially the SAP 500 Vanguard VOO index fund, the best investing strategy, where is the bottom, how to invest in index funds, and I created a small PowerPoint presentation for him and he was happy to share that on YouTube too. So let's dig into the content. So the topics on the right, SAP index fund, what it is, what is SAP 500 index investing, the current situation, the earnings, the outlook, the possible returns, where is the bottom and then what is the best investing strategy related to SAP index funds? I usually wasn't that much of a fan of index funds, but now things might be getting different and it might be actually a good investment for many, many out there that are interested in index funds. The charity situation, we have an investor new to investing, started buying index fund, the SAP 500 index fund recently. He also wants to invest in money in individual companies but that's for the private part of the chat and portfolio 16,000 in the SAP 500, 7,000 in stocks and still 40 to 60,000 available cash for investing and he plans to purchase chunks of VOO as close to the bottom as possible. So increase the long-term return average. And now the question is, okay, where will be the bottom? Should he be more aggressive or not? And here it is more about what an index fund is, what is the SAP 500 rather than other and the strategy? So when it comes to the SAP 500, the key is that it is a business. You own 500 of the largest and best businesses traded on American markets. So if you look at the top there, Microsoft, Amazon, Facebook, Berkshire, Google, J&J, all really, really great and wonderful businesses. So when you invest in such businesses, you can't really go that wrong. You will, you're aiming for good. You are aiming for the average market. Perhaps in those 500 businesses, there might be other businesses coming in, coming out, joining like Tesla that will be the next leaders or not perhaps will be something else. So you are exposed to the economy. You are exposed to the good out there and it's actually investing in the SAP 500 is about owning such great businesses. That's the SAP 500 and that's something you have to keep in mind when it comes to investing in the SAP 500. That is the key. It's not about up and down of the index fund. It is more about, okay, are these great businesses that I really want to own? And then when it comes to investing, it's all about owning businesses and when you own a business, it is about earnings. So investing is about earnings and what are the earnings that will be delivered from that business? So if we look at the SAP 500 earnings, those have lately been not adjusted for all the things that people adjust them for, but real, plain earnings have been 133 points, including negative earnings. When you compare the 133 points to the current level of the SAP 500, that is 2,304, you get to an earnings yield of 5.7%. 133 divided by 2,304 is 5.7%. That's an excellent business return. We'll later discuss the current situation, earnings will get hammered, but that's again, something short-term and you see the long-term line of earnings for the last 150 years, those earnings have been with ups and downs constantly have been constantly going up and that is the key when it comes to investing and owning great businesses. A month ago, the SAP 500 was at 3,380 points and the earnings yield was just 3.9%. The two percentage points difference between now and then is extremely important when it comes to investing and makes an index fund again an attractive investment for many of you. So on top of the earnings yield, you also get the dividend yield which was below 2% just a while ago. Now it is at 2.5%, it's still relatively low but it is something and again, owning safe businesses, owning great businesses gives you protection in the long run because when you own quality, you know you get quality over the long-term. So again, if you are happy with 2.5% dividend, if you are happy with the 5.7% business yield which the difference should be reflected in stock prices going up or through buybacks unfortunately or through reinvestment of earnings, then all in all, it should be a good return and you have to see whether this investment vehicle, the SAP 500 index funds will lead you to your goals for a very long time given the risk which is relatively low. The SAP 500 will not go bankrupt no matter what happens. Plus there is another very, very important thing. You can buy and own all these 500 businesses with a yearly cost of 0.03%. It was 0.04, I was surprised, okay, the cost went even lower. So it's practically free ownership of these businesses. This is thanks to Vanguard's scalability of things. So it's really, you put it on automatic drive so autonomous drive in autonomous investment really low, low ridiculous fee, practically no fee and you can buy them, you can add to your accumulative portfolio, you don't have to think about anything else and you get a good return. That's the point of the SAP 500. Now, when it comes to the current situation, of course businesses are in lockdown, everything is in lockdown globally so and that is reflected in the SAP 500 price but also will be reflected in the earnings in a year we'll see what will the earnings be of 2020 and probably that will be the situation like we had in 2009 like it was during the Great Depression, 1937 or perhaps even bigger than it was in 2002. So the key is here, okay, such earnings declines are normal but given that you own great businesses those usually rebound. If they don't rebound you have other things to worry about in life. So it is likely that sooner or later this will rebound and then you can again in the market will again measure things in the way that it measured up till now. So they will rebound, why will they rebound? Well, because those are great businesses as I said, 5.9% plus 2% growth in the long term you can expect a 7, 8% return which is excellent, amazing for many investors 95% of investors current situation I'm looking for higher returns but that's because this is what I do, this is my job I can take more risk and also some say more some say less risk but okay that's a different story for another video. On the question where is the bottom as our investor plans to purchase more the fact here is that nobody knows where the bottom is, the SAP 500 can crash I think it reached 666 points in 2019, 2009 sorry so it was really a disaster back then also similar level in 2002 so when people panic it's all about supply and demand of the panic selling and nobody buying and then the exit door is simply small so we don't know what will happen you cannot time the bottom the key is to have a right strategy when it comes to investing and that's what will lead you to your financial goals not timing the bottom because those that time the bottom will most likely miss the bottom as I said it's about owning and the yield if you like this 5, 6, 7% return then it's time to buy and if we listen to Buffett and his advice about index funds or any general investing you will be well off if you invest constantly through thick and thin especially if you invest through thin like it is this current situation so those that invested through thin 2009 they are still up three times at least those they were up more than five times just a month ago and that is something that leads you to your financial goals those that invested in 2002, 1991, 1987 are up more and even what 10 times not even including the dividends those that invested in 1999 in the exuberant period are up not that much when adjusted for inflation so this is investing this is the SAP 500 investing the key is that you own great businesses long term safe and good return 7% is a good return you can time the bottom the positive thing is that you don't have to think about it it's great for 95% of the population the key is investing constantly always that always wins and you have to be happy when it goes down you buy more, you reinvest the dividend it will probably go up never know when long term it will do well short term who knows it's impossible to know you accumulate through thin and you also invest through thick but better to accumulate through thin like we are now reinvest the dividends could be 0% for 10, 20 years even like it was the case in history but when those 20 years when the panic passes when the negativity passes then you are better off again and then you compare the current 7% to other options to your student loans to the risk reward you can take to the liquidity and you can also keep in mind that 20% yearly returns can also be the case if the SAP 500 bounces back to previous level especially at the current zero interest rates so I hope this helps you in seeing how an SAP 500 investment index fund fits you and your personal investing goals whenever I do this charity discussions one on one with investors it's mostly about their personal situation and reaching their financial goals and what is the right vehicle risk reward to get them there it's not so much okay when to buy the SAP 500 that's impossible to answer and I also said I also thought okay how can I give them value because I don't know where the bottom will be but then I figured out it's the value I give is not by talking about when it's this to buy you can sell it 20% no, it's about having the right strategy long term to reach from point A where you are now to reach your long term financial goals and you have to see how the SAP 500 fits that situation if you can have the right strategy which is investing through thick and especially through thin so thank you for watching check whatever I do in the links on the description below there is my website, the charity, my research and everything like, subscribe, click that notification bell and I'll see you in the next video well where we will be discussing my personal situation my personal history and how I ended up well off despite having a lot of crisis situations in my lifetime so click that notification bell to get notified when the video comes out probably on Tuesday thank you for watching and I'll see you in the next video