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So today's show, as you can see, is going to be about ETFs versus index funds. ETFs versus index funds. ETFs, we're going to talk about what are ETFs. We're going to talk about the, what are index funds. We're going to talk about how they're similar, how they're different, and how I recommend them as well. You know, pros and cons of each, all of the great stuff. So sit back and let's have a great show. So the first thing is what is an ETF? A ETF is it's changed, traded funds, trades much like a stock, right? They pretty much track something, they're hot on the market right now. And the reason why they're hot is, they're hot right now is because they're a passive way of investing versus a mutual fund, which is more of an active way of investing. For prime example, you can purchase an ETF just like this with stock and it can track the retail industry, the oil industry, all these other good things like that. Bees are relatively low. It doesn't try to beat the oil industry, anything like that or whatnot. Sometimes they pay dividends much like a stock. Which a mutual fund does too. But they're like the new hot thing. I think it's great about Vanguard, Jeff Bogan, Joe Bogan. I think he introduced the ETF to the market about 20 years ago, if not even longer. But anyway, that's kind of what a quick gist of what an ETF is, right? Now we're going to talk about what is an index fund. An index fund is something that's been made very famous with most investors due to Warren Buffett. We know the greatest investor of our time. He says, hey, you know, purchase an index fund, put your money into it, you'll be good to go. But an index fund that tracks the S&P 500. If you follow this show, you know Stockton will think his SWPPX is the one that I recommend. No, I'm not sponsored by them or telling you this or whatever. And it's the best one that I know of right now because it tracks the S&P 500. It has the lowest expense ratios. And it's pretty cheap to get into. I think that one is owned by... I can't think of a company right now that's coming to the top of my head. But, you know, it's like 40-something dollars for it. You can buy it every single month. And it's a commission-free ETF as well. It's a commission-free index fund, I'm going to say. It's a commission-free index fund, meaning that when you buy it, you're not paying a commission on it as long as you're keeping it for like 90 days. So one who is purchasing an index fund over and over, following the advice of Warren Buffett and having a dividend for an investor, that's the way you can do it. What's an index fund? What is the S&P 500? NASDAQ, those are the top, the big three dollars. So now we know what an ETF is. Now we know what an index fund is. We're going to compare and contrast them. Now, when you compare them, how they both do the same thing is that both of them just track something. Both of them just tracks the index. Both of them just tracks something, right? Now, with the ETF, for prime example, both of them track. ETF and an index just pretty much tracks what an index fund is tracking. An index, particular index, ETF is tracking a particular sector. Most cases, you know, most times maybe it does the S&P 500, it does petroleum, it does all different things like that. So that's what they're kind of saying. They're both passively managed. What I mean by passively being managed is that they are, no one is back there trying to beat the market or beat the index or the turnover ratio is pretty low. Turnover means that, usually on a mutual fund, this thing is trying to beat the market or beat something so it's trading stocks in and out. It's picking stocks and when you buy and sell stocks, it costs money, right? Transaction fees. So the turnover as the turnover ratio increases so does the expense ratio. So that's something I want you guys to think about. The S&P 500, right? Not the S&P 500, but the turnover ratio and expenses. So both of them are pretty passive. So they kind of track the same. They both do it on a passive level. That's what they are saying. Where they are different is, where the biggest difference between them is the index fund is a, if you get a commission free index fund, every time you buy it, there is no commission to it. So for a prime example, how does TD Ameritrade, E-Trade, Scott-Trade, how do they make their money? In most cases they make their money of the market and stock brokers make their money when you buy and sell. Transaction. Hey, can you buy me four stocks? Can you sell Amazon stock? Hey, can you buy me four of these? And can you sell these? Can you buy me this every single month? Those are transaction fees. Every time you run across the line, I call it run across the line. Those are transaction fees. When you buy stocks, when you buy ETFs. Now you can have a commission free index fund and you do have commission free ETFs as well. You know, let me not caveat that as well, but you do have commission free ETFs as well, just like you have a commission free index. And the thing is, if you're indexing and you're buying the same thing over and over, those transaction fees can add up. For a prime example, let's say if you bought one ETF every single month, say the ETF VU, which is Vanguard's S&P 500 tracker, right? And you buy it every single month. You buy $5 worth, you buy $6 worth, you buy about $5 worth. Every month you buy one share of VU, B.O.O. And you do that every single month. Every time you buy it, it costs you $6 a month, right? And you brought it from E-Trade or TD Ameritrade or whatever, maybe it may be available on a free app like Robin Hood, I'm not sure. But every time you buy this particular thing, and since you did that six times, you did it, let's say you did it for 10 months, right? Or let's say you did it for a whole year, that's $72, if my man is correct, right? Yeah, $72. So you pay $6 every single month, right? Because you just brought the same old ETF over and over that tracks the S&P 500. And you pay $6, $6, $6. Hey, doesn't really matter to me. But in the year, that's $72 that you paid in the fees. The next year, that's a $144. You pay any compounds and compounds and compounds because you just combine it, right? Now, is it good that you're investing that way? Hey, that's good because it's always a good thing that you're investing in the first place. You're investing to the S&P 500, something that has a nice track record. That's a good thing. But if you go to, if you get a commission-free index, you get a commission-free index, that is, you can pretty much skip over those fees and not pay the $6 a month. As long as you hold it for three, I think it's like 90 days. As long as you don't sell it within 90 days, it's commission-free. So you can buy it over and over and over and over and over and over and over and collect no fees along the way, right? That's what it's like to do for you versus your, what you call it. So for now on, for now on, that's a great way to look at things and to do things, right? So that's what a commission, that's what an ETF is, and that's what an index is. That's how they kind of look the same. What it kind of differ is when it comes down to a little fee structure a little bit, but granted, there are commission-free ETFs and there are commission-free index funds that are commission-free. Not all ETFs are charging. I know VLO, for example, does charge. It's not commission-free, but you may be able to go out and search a commission-free ETF. And the ETFs, you can purchase and sell them fast so much like you can do a stock. So for me personally, if I'm going for a long-term, long-term investor, I'm going to use it as WPPX. I think if I'm saying that right, I'm going to use that continuously every single month and forget about it, right? And it attracts and has a dividend to reinvest it. I'm going to add some P500. That's the best thing on the market that I know of right now. But as I learn and search, I learn and search new things every day. So, but in long story short, that's how that's what an ETF is. That's what an index fund is. That's how they're counting the same. That's how they kind of differ so very big time in it, which is pretty good. But VOOP has a 0.04 expense ratio and the index fund that I'm giving you guys has a 0.03 expense ratio. So it's slight lower. And also, the index fund is commission-free. So every time I buy it, every single month for myself and my son, it's commission-free. But every time I buy it for my... Every time I purchase the ETF, I have to pay $6 to see the administrator, each trader, whoever I buy it from. And the expense ratio is a tad bit higher when they both had the same exact performance and had both exact same mission. So why am I paying more for it, right? If you get the exact same gas and do it in different places, but across the street it was $5 and somewhere else it was $4 and it's no different, you're probably going to get the one for $4. But that's just me. And if you are purchasing it, that doesn't mean it should do it bad. Think about it in finance. It's always good, better and best. But anyway, this is going to be a short episode. As always, I'm going to go ahead and close up the show and say thank you. Check you out. Check us out on all of our social media platforms. And don't forget to hit the like, subscribe, comment and share button. Until the next video podcast show that you see us do across the globe, peace, be safe, I'm out and thank you.