Author Topic: Complete noob here.. Diference from Index and Etf  (Read 1984 times)

MexMustachian

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Complete noob here.. Diference from Index and Etf
« on: April 06, 2015, 04:58:58 PM »
Ok so been reading and seems best long run option for investment is Indexing.. what is the diference between:

Vanguard Total Stock Market ETF
Vanguard Total International Stock ETF
Vanguard Total Bond Market ETF

VS

Vanguard Total Stock Market Index
Vanguard Total International Stock Index
Vanguard Total Bond Market Index


No god damned clue what im doing -.-

velocistar237

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Re: Complete noob here.. Diference from Index and Etf
« Reply #1 on: April 06, 2015, 05:13:54 PM »
They both buy the same underlying thing, but the packaging is different.

https://investor.vanguard.com/etf/etf-vs-mutual-fund

seattlecyclone

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Re: Complete noob here.. Diference from Index and Etf
« Reply #2 on: April 06, 2015, 05:59:19 PM »
A mutual fund is a collection of different stocks chosen by some management company that get packaged together and sold as a unit. Traditionally, orders for mutual funds go through at the end of a trading day, and the price is based on the closing price of the underlying assets.
An index fund is a mutual fund that tracks a particular index (the S&P 500, for example) as opposed to selecting stocks based on the manager's choice.
An exchange traded fund (ETF) is a mutual fund that trades throughout the day on a stock exchange, as opposed to only at the end of the day.

Many of Vanguard's funds are available as both a traditional mutual fund and an ETF. The underlying assets are identical. Whether you prefer to buy the traditional fund or the ETF is up to you.

velocistar237

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MexMustachian

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Re: Complete noob here.. Diference from Index and Etf
« Reply #4 on: April 07, 2015, 07:49:42 AM »
Thank you guys... in your opinion for a 5-10 year save as you go method what would the best option be.. for example im in mexico, and i would be buying as soon as i get enough to buy more so on and so on.. what would be the best approach in your opinion?

nereo

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Re: Complete noob here.. Diference from Index and Etf
« Reply #5 on: April 07, 2015, 08:14:45 AM »
Thank you guys... in your opinion for a 5-10 year save as you go method what would the best option be.. for example im in mexico, and i would be buying as soon as i get enough to buy more so on and so on.. what would be the best approach in your opinion?
I could be wrong, but I do not believe that someone who is not a resident of the US can from Mexico can invest their money in Vanguard unless they can show they have a residency inside the US.  There should be other options available to you though...

But to answer your question, with an ETF you pay a fee when you buy and again when you sell, but there's no annual expense (for comparison, Vanguard's admiral shares cost 0.05% per year, every year).  So expense-wise, ETFs can be a good strategy if you are buying (and later selling) in fairly large chunks.  Some ETF accounts allow you to make a certain number of transactions per year for a flat fee - others charge a fee every transaction (so you need larger transactions for it to be worthwhile). 

I always recommend J Collin's stock series for those that are beginning:
http://jlcollinsnh.com/stock-series/

MexMustachian

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Re: Complete noob here.. Diference from Index and Etf
« Reply #6 on: April 07, 2015, 08:48:01 AM »
Thanks actually there is Vangaurd Mexico but Index doesnt come up.. only ETF.