So after I lost 12k by blindly investing, I listened to ppl on blind and did research on Index funds. I know this is the best option for steady growth, and from researching I’ve seen that investing in the S&P 500 is the way to go. However I’m a bit confused as I learned different brokerages have different S&P 500 index funds. For example like vanguard has VOO priced at $358.68, fidelity has FXAIX at $136.91, and Schwab has SWPPX at $61.07. But when I researched about which brokerage would be best for index funds, many of the results online said all the index funds were basically the same and will give you the same payout over time so it doesn’t really matter…but how does this make sense with the difference in pricing for each index fund? Looking at above examples, wouldn’t Schwab be better bc it has the lowest price to buy in?
SPY, QQQ, IWM
You can buy VOO from any brokerage. I’m in Fidelity and own it. Also, S&P will be crap for the next ten years. DCA it.
Thanks for your reply! I didn’t know you could buy VOO from other brokerages, in that case is there any specific reason you chose VOO as compared to Fidelity’s s&p 500? And by DCA (sorry still need to these concepts), you mean that I should be investing money each month into the index fund?
VOO has lower fees from what I recall, and Vanguard (John Bogle) pioneered it and it’s the gold standard. VTI to get all stocks. DCA, dollar cost averaging. Meaning don’t YOLO with a giant lump sum, but trickle in with a consistent cadence to capture the dips. Try to keep your Cost Basis Per Share as low as you can…basically the total average of all of your buys.
QQQ
Voo or vti
VT. Price of shares in index funds are meaningless now that you can buy fractional shares (before, it was just a barrier to entry unless you did mutual funds and met the minimum).
I’ve heard the term fractional shares thrown out a bit during my research, but I never understood the real benefit of it, other than being helpful when share prices are too high for an investor to afford, are there any other benefits for fractional shares?
VT and chill
That's because if market raises by 1%, all these indices are going to roughly increase by 1% as well. So it doesn't matter if the price is 60 or 140 or 350, your portfolio will increase by 1% period. Price doesn't matter, ever.
Hmm I see, So even if I bought like 8 shares from Schwab vs 1 share of Vanguard…when the market raises theyre both going to increase the same amount altogether? As long as I spent the same amount of money for the shares, the number of shares I have
Yep, it's similar to what happens when a stock split. The number of shares is not going to effect your returns.
The prices of each share don't affect how much money you'll make. Do the math: Let's round the prices a bit: VOO: $300 FXAIX: $150 SWPPX: $50 And let's say you were going to invest $3k. So what you buy determines how many shares you get: VOO: $3000 / $300 per share = 10 shares FXAIX: $3000 / $150 per share = 20 shares SWPPX: $3000 / $50 per share = 60 shares Now let's say the S&P500 goes up 10%. Because all 3 funds track the S&P500, all 3 funds go up 10%. So their new prices are: VOO: $330 FXAIX: $165 SWPPX: $55 So how much would your shares in each case be worth now: VOO: 10 shares * $330 per share = $3300 FXAIX: 20 shares * $165 per share = $3300 SWPPX: 60 shares * $55 per share = $3300 You end up with $3300 no matter which fund you picked. In all cases you made a 10% gain, exactly how much the S&P500 gained
You brought up a good consideration about how the lower price might make it easier to invest all your money with none leftover. However, like others said, buying fractional shares is usually possible these days. Assuming that's possible with your brokerage, this is a non-issue and doesn't affect which fund to buy at all.
You brought up another good point with the expense ratios. Expense ratios are definitely something you want to keep an eye on as you're looking at index funds to invest in. However, those are all pretty good ratios. Generally speaking, I'd say anything <= 0.03% is pretty good. The difference between the ratios you mentioned is tiny and not really worth sweating. E.g. if you're investing $10k, the difference between a 0.03% ER and a 0.015% ER is $1.50/year.
One very important point that I did not see get addressed in previous comments is the expense ratio. When comparing similar S&P tracking funds from different brokerage, you will find the expense ratio is different. It is the amount the brokerage charges you to provide you services and other fees associated with the fund. Ylu should find the fund that has the lowest expense ratio. Also, don't get fooled by a number like 0.5% or 1%. Those compund very quickly to 100s of thousands of dollars. So choose something very close to 0%, you can find something like 0.1% etc.
@amazon, how in the world are you at Amazon when you don’t understand such a basic concept?! Ridiculous
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Number doesn’t matter
They are all proxy for sandp500. Just invest in VOO you should be fine.
Why does it not though? Bc if Schwab price is lower, doesn’t this mean I can buy more shares of it as compared to Vanguard’s for example?