Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

<ul class="summary-list"><li>Reed Hastings kept losing money as an investor so he sticks to owning Netflix stock and index funds.</li><li>"The few times that I've done investing, I've lost my shirt," Netflix's ex-CEO told "The Tim Ferriss Show."</li></ul><a target="_blank" href="https://www.businessinsider.com/reed-hastings-netflix-bio-2015-8">Reed Hastings</a> is a technology pioneer who built one of the world's biggest internet companies and transformed the entertainment industry. But he sucks at investing.The Netflix cofounder, who stepped down as the video-streaming platform's joint CEO early last year, revealed his terrible track record on the <a target="_blank" href="https://tim.blog/2024/04/03/reed-hastings/">latest episode</a> of "The Tim Ferriss Show" podcast."The few times that I've done investing, I've lost my shirt," Hastings said, explaining that he's overly optimistic and says yes to every good idea pitched to him.In contrast, skilled investors have "different DNA" that enables them to be more discerning and turn down all but the very best opportunities, Netflix's executive chairman continued."So I'm a pure index-fund investor, I'm Netflix plus index funds," he said.Hastings might be taking notes from Warren Buffett. The investing icon and Berkshire Hathaway CEO has <a target="_blank" href="https://www.businessinsider.com/millionaires-investment-strategy-low-cost-stock-index-funds-building-wealth-2018-12">long championed</a> a low-cost index fund as the best option for a "know-nothing investor," and <a target="_blank" href="https://markets.businessinsider.com/news/stocks/tim-ferriss-show-podcast-buffett-munger-investing-stocks-index-fund-2023-2">gave that advice to Ferriss himself</a> in 2008.Buffett has repeatedly said that almost everyone would be better off if they settled for a market return instead of trying to beat the average — and they would outperform most of Wall Street in the long run.Unlike Hastings, Buffett is picky about what he invests in, priding himself on <a target="_blank" href="https://markets.businessinsider.com/news/stocks/steve-jobs-warren-buffett-apple-berkshire-focus-iphone-tech-stocks-2023-7">saying no to almost everything</a>. He even dubbed his late business partner Charlie Munger the "Abominable No-Man" for relentlessly shooting down ideas.Yet Hastings — who took Netflix from nothing in 1997 to $32 billion of revenue and $4.5 billion of net income in 2022, and a $300 billion market capitalization at its peak — has found other ways to put his money to work.In late January, he <a target="_blank" href="https://www.businessinsider.com/netflix-reed-hastings-donated-stock-billion-silicon-valley-community-foundation-2024-1">gifted 2 million Netflix shares</a> worth $1.1 billion to the Silicon Valley Community Foundation. The donation slashed his direct stake in Netflix by about 40% to just under 3 million shares — a position valued at about $1.9 billion.The tech veteran's net worth is still around $6 billion, as he holds 3 million Netflix stock options and has sold about $2 billion worth over the years, per the <a target="_blank" href="https://www.bloomberg.com/billionaires/profiles/wilmot-r-hastings/">Bloomberg Billionaires Index</a>.Hastings has also donated <a target="_blank" href="https://www.businessinsider.com/netflix-ceo-reed-hastings-creates-100-million-education-fund-2016-1">vast amounts of money</a> to education providers like charter schools and historically Black colleges and universities (HBCUs).Netflix's executive chair might balk at buying individual stocks or backing startups, but he's not afraid of striking big deals.He <a target="_blank" href="https://www.businessinsider.com/netflix-co-founder-reed-hastings-creates-luxury-ski-club-2024-3">reportedly plowed</a> more than $100 million into Utah's Powder Mountain last year to secure majority ownership of the nation's largest ski resort, and has started upgrading its facilities and refocusing its business model.It may be the case that Hastings is better suited to calling the shots than backing the right horse.

Reed Hastings says he kept losing money as an investor so he sticks to owning Netflix stock and index funds

<ul class="summary-list"><li>Brennan and Erin Schlagbaum paid off more than $300,000 of debt and hit a seven-figure net worth.</li><li>Once they were debt-free, they got serious about investing and went all-in on index funds.</li></ul>Brennan and Erin Schlagbaum like to keep things simple when it comes to stock-market investing — and their approach has worked for them so far.The couple spent five years <a href="https://www.businessinsider.com/pay-off-debt-strategies-advice-mortgage-student-loans-investing-savings-2022-1">paying off more than $300,000 worth of debt</a>, including a $234,000 mortgage, before they could focus on actually building wealth. But once they were debt-free and able to start investing, they went all-in on index funds. That was back in August 2021.Their net worth crossed $1 million in October last year — which Insider verified by looking at account screenshots — and is closer to $2 million today. A good chunk of their wealth is tied up in their new home in Arlington, Texas, which they bought for $495,000 this year in cash so that they could continue living without a mortgage payment.However, more than 50% of their net worth is invested in the market.Insider spoke with Brennan, who has his CPA and runs his own financial-literacy company, <a href="https://budgetdog.com/" target="_blank" rel="noopener">Budgetdog</a>, about his investing strategy, exactly what investments he holds in his stock portfolio, and how he's diversifying outside the stock market.<h2>Their stock portfolio: Index funds and Meta stock</h2>The couple use a variety of investment vehicles — including four retirement-specific accounts, a health-savings account, and a brokerage account — but the investments in each account look very similar. "Within every one of those accounts, it's pretty much the same mix," Brennan said.When you open an investment account, you can choose how to invest your money. You can buy and sell various investments, including stocks, bonds, mutual funds, and ETFs.Brennan said he liked index funds, a type of mutual fund that track a diversified range of stocks, often with a specific theme. They tend to have low management fees because they're passively managed.He selected three specific index funds to invest in: the <a href="https://markets.businessinsider.com/funds/vanguard-total-stock-market-index-fund-admiral-shares-us9229087286">Vanguard Total Stock Market Index Fund</a>, <a href="https://markets.businessinsider.com/funds/vanguard-total-international-stock-index-fund-admiral-shares-us9219098186?_gl=1*pwsqt8*_ga*MTc2Nzk4Mjc3Ni4xNjg4OTExNjUw*_ga_E21CV80ZCZ*MTY4OTE4NjYyOS4xMS4xLjE2ODkxODkwMzUuNTQuMC4w">the Vanguard Total International Stock Index Fund</a>, and the <a href="https://markets.businessinsider.com/funds/vanguard-emerging-markets-stock-index-fund-admiral-shares-us9220428414">Vanguard Emerging Markets Stock Index Fund</a>. He said he liked the broad market indexes because they were inherently diverse. For example, VTSAX is built to give investors exposure to the entire US equity market.<div type="image" title="Brennan and Erin Schlagbaum sitting on a picnic blanket while watching their young daughter crawl across a grassy lawn." height="4000" width="5333" msid="105481420" hostid="261" sizebytes="471774"></div>More than 95% of their stock-market money is in one of these three funds.As for the remaining small percentage, that's in one stock: <a href="https://markets.businessinsider.com/stocks/meta-stock">Meta Platforms</a>."I don't typically buy individual stocks," Brennan, who bought META at $97 in October, said. "However, I'm very bullish on them long-term, and when I saw them dip to $97, I thought it was a no-brainer."He didn't pick this particular stock simply off of a gut feeling."I did a lot of deep research. I read the 10-K inside and out," he said, referring to the document the SEC requires public companies to file annually that provides a financial overview of the company. "I figured it was a great time to buy based on the technical analysis and positioned it as 2.5% of my portfolio. That's a great place to be — it's not too risky, but you get that upside potential."Turns out, it was a good investment. He said: "Meta stock today is almost at $300, and I bought it at $97. That return is exactly what I wanted to happen. It doesn't always work out like that. I don't have a crystal ball."He's not planning on selling it anytime soon. The 31-year-old thinks long-term, even when it comes to individual stocks. "I'm holding this for a decade plus," he said.<div type="image" title="Brennan Schlagbaum walking along a brick road in an urban area while carrying a backpack." height="4640" width="6186" msid="105481421" hostid="261" sizebytes="2558622"></div>In general, "if you're an investor and you're just starting, individual stocks should not be on your radar," Brennan said. "That gets people into so much trouble, and it's not necessary to build wealth. The best investors have the bulk of their portfolio in ETFs and index funds."Brennan said he was comfortable taking on a bit of risk because his company has taken off and his income has increased significantly."The bulk of my portfolio is the three index funds, but as we hit higher numbers from a financial freedom perspective, we wanted to bring in a little bit of extra risk," he said. "It's asymmetric reward to risk. So I wanted to bring in individual stocks, as well as crypto. I have bitcoin and ethereum."Crypto also represents a sliver of his overall portfolio. He said his philosophy about risky investments like crypto was to buy a small enough amount so that "if you lose 100% of it, it's not going to hurt you."<h2>Diversifying their overall portfolio with real estate</h2>Until recently, the couple's net worth was mostly tied up in the stock market and their primary home, which they own outright.After researching how the wealthiest people invest their money, Brennan concluded that "there are three things that wealthy people invest in: the stock market, business, and real estate.""We have the stock market investment; I own my own business and eventually want to get into buying businesses down the road; the only thing we really were lacking was real estate, outside of our personal residence," he said.This year, Brennan invested in his first real-estate syndication, which is when investors pool money to purchase a property. Once they contribute capital, their role in the deal becomes completely passive. The real-estate syndicator is responsible for finding the deal, executing the transaction, and, ultimately, delivering returns to the investors.Brennan, who runs his business full-time and is expecting a second kid in the fall, liked the idea of being a hands-off investor."It's a totally passive way of investing in real estate," he said. "I don't have to do anything. And that's the approach I really wanted to take with real estate. As much as I wanted to get into rentals, it was just too much for our family to commit to."Besides the addition of the syndication deal, "a lot of the investment strategies I do stay the same," he said. He believes that if you want to build wealth, at the end of the day, "you don't have to get complicated. You don't have to continue to switch it up."

A couple in their 30s who hit a net worth of $1 million have more than 95% of their stock portfolio invested in 3 index funds and the rest in one individual stock. Take a look at their portfolio.

<ul class="summary-list"><li>Passively managed <keyword id="11900043" type="UNKNOWN" weightage="60" keywordseo="index-funds" source="Orion">index funds</keyword> have hit a milestone by overtaking actively managed funds in US stock ownership.</li><li><keyword id="12783290" type="UNKNOWN" weightage="60" keywordseo="passive-funds" source="Orion">Passive funds</keyword> held 16% of <keyword id="12002458" type="UNKNOWN" weightage="60" keywordseo="us-stock-market" source="Orion">US stock market</keyword> cap, compared with 14% for <keyword id="14130466" type="UNKNOWN" weightage="60" keywordseo="active-funds" source="Orion">active funds</keyword>, at the end of 2021.</li></ul>Passively managed index funds now own a bigger share of the US stock <keyword id="11893875" type="UNKNOWN" weightage="100" keywordseo="markets" source="Orion">markets</keyword> than actively managed funds for the first time, according to new <a href="https://www.icifactbook.org/pdf/2022_factbook.pdf">data</a> from the <keyword id="14130467" type="UNKNOWN" weightage="60" keywordseo="investment-company-institute" source="Orion">Investment Company Institute</keyword>.At the end of 2021, <a href="https://www.businessinsider.com/personal-finance/passive-investing">passive index funds</a> that focus on shares in US corporations accounted for 16% of <keyword id="11895527" type="UNKNOWN" weightage="60" keywordseo="us-stocks" source="Orion">US stocks</keyword> by market capitalization, ICI's research found. At the same time, actively managed funds held 14% by market value, meaning the typically lower-cost passive products have overtaken that segment for the first time.Both types of funds still lag the big investors — such as hedge funds, pension funds, life insurance companies, and individuals — which held 70% of US equities by value.The unflagging rise of passive index funds — which track a particular index by holding all the assets in it or a sample of them — has seen them amass trillions of dollars in assets ever since Vanguard's Jack Bogle began offering the buy-and-hold investment strategy in the 1970s.Those gains have been at the expense of actively managed mutual funds. In the last decade, more than $2 trillion has flowed from active to passive funds, mainly to index <a href="https://www.businessinsider.com/personal-finance/what-is-an-etf?r=US&amp;IR=T">exchange-traded funds</a> (ETFs), according to ICI. The situation was reversed 10 years ago, when 20% of <keyword id="11893878" type="UNKNOWN" weightage="60" keywordseo="stocks" source="Orion">stocks</keyword> were held by active funds and 8% by passive ones.But Cathie Wood — who runs active investment management firm Ark Invest — and Tesla CEO Elon Musk are among those who <a href="https://markets.businessinsider.com/news/stocks/elon-musk-cathie-wood-hit-passive-investing-missing-big-gains-2022-5">agree the rise of passive investment has gone too far</a>. Wood has described the shift to passive investment as a "massive misallocation of capital."Wood argued that investors in passive funds are primed to miss out on massive returns on particular stocks, such as a 400-fold gain in Tesla shares logged before the stock was added to the S&amp;P 500.Despite this, demand for index funds in all assets is rising, and this has helped put a bigger share of these assets in the hands of the five largest US fund companies, ICI found. These accounted for 54% of the industry's total assets last year, while the 10 largest oversaw 83% of all assets."The increased concentration reflects the growing popularity of index funds — the 10 largest fund complexes manage most of the assets in index mutual funds," ICI said in its 2022 fact book.

Passive index funds now own a bigger chunk of US stocks than active funds for the 1st time

<ul class="summary-list"><li>Tim Ferriss asked Warren Buffett and Charlie Munger for advice in 2008, a resurfaced video shows.</li><li>The author and podcaster asked how they would invest $1 million as 30-year-old amateurs.</li></ul>Tim Ferriss once asked Warren Buffett and Charlie Munger how they would invest $1 million as 30-year-old amateurs, a <a href="https://twitter.com/compound248/status/1626937279502594048" target="_blank" rel="noopener">newly resurfaced video</a> shows."I can't believe someone found this video!" the host of "The Tim Ferriss Show" podcast and author of "The 4-Hour Work Week" <a href="https://twitter.com/tferriss/status/1627061906136784897" target="_blank" rel="noopener">tweeted</a> on Saturday. A Twitter user who goes by Compound248 <a href="https://twitter.com/compound248/status/1626937279502594048" target="_blank" rel="noopener">posted the clip</a>."My one and only time interacting with Buffett and Munger, and I was *intensely* nervous," Ferriss said. "2008 was also the first year I began seriously angel investing, as I felt I had no advantage in public equities."Ferriss put his question to Buffett, the CEO of Berkshire Hathaway, and Munger, Berkshire's vice-chairman, during the company's shareholder meeting in 2008."If you were 30 years old again and had your first million in the bank, how would you invest it?" he asked. Ferriss told the pair to assume they were amateur investors with full-time jobs and enough savings to cover 18 months of expenses."Under the conditions you name, I'd probably have it all in a very low-cost index fund," Buffett replied, adding that he would expect it to outperform bonds in the long term. "Then I'd forget it and go back to work."Munger agreed that parking the money in a fund tracking the S&amp;P 500 or another stock index was the best option."If you don't have any rational prospects of being a very skilled professional investor, of course you should compromise on some simple thing like an index fund," he said.Both of the billionaire investors underlined the rarity of their honest guidance in the finance industry."You will not get that advice from anybody because nobody gets paid to give you that advice," Buffett said. "You will have all kinds of people telling you how much better they can do for you than that, and how if you just give them a wrap fee, or give them commissions, or whatever it may be, that they will do better — but they won't do better."The Berkshire chief added that amateurs shouldn't feel entitled to beat the market, as they're not putting in the time to become skilled investors or identify winning assets."You've got a very perfectly decent return over a 30- or 40-year period by doing what I suggest," he said. "Why should you expect more than that when you don't bring anything to the party?"Ferriss told Insider in an email that he's kept Buffett's answer in mind over the past 15 years, and underscored its value to most investors."I have paid close attention to Buffett's advice — consider low-cost index funds and avoid high-cost salespeople — ever since," Ferriss said."I've made some exceptions for a handful of venture capital funds, as I know that world quite well, but I think he's right on the mark for the vast majority of cases and the vast majority of people."

Tim Ferriss asked Warren Buffett how to invest $1 million. Park it in an index fund, 'forget it and get back to work' was his advice.

<ul class="summary-list"><li>An exchange traded fund, or <keyword id="11996288" type="UNKNOWN" weightage="60" keywordseo="etf" source="Orion">ETF</keyword>, is a type of security that tracks an underlying asset.</li><li>An <keyword id="12069540" type="UNKNOWN" weightage="60" keywordseo="index-fund" source="Orion">index fund</keyword> is a type of mutual fund or ETF that tracks the performance of a target index.</li><li>Both can offer strong long-term returns, diversification, and cost savings.</li></ul>When you're investing, one thing to consider is diversification - basically, owning a mix of investments within and across asset classes.Index funds and exchange-traded funds, or ETFs, offer easy ways to diversify. These funds bundle several securities into one investment, giving you broader exposure to different companies.For instance, "stock <keyword id="11995361" type="UNKNOWN" weightage="60" keywordseo="market" source="Orion">market</keyword> indexes - like the S&amp;P 500, <a href="https://www.businessinsider.com/what-is-nasdaq" target="_blank" rel="noopener">Nasdaq</a>, and Dow Jones Industrial Average - are not directly investable," says Chris Berkel, an investment adviser and founder of <a href="https://axisfinancialgp.com/" target="_blank" rel="noopener">AXIS Financial</a> in Edmond, Oklahoma. "Meaning, there is no way to buy the S&amp;P 500 index (for example). However, you can invest in a fund that tracks it."Here's what to know about ETFs and index funds, and how they differ.<h2>ETFs vs. index funds: At a glance</h2>Exchange-traded funds and index funds both combine many individual securities, such as <a href="https://www.businessinsider.com/what-is-stock" target="_blank" rel="noopener">stocks</a> or <a href="https://www.businessinsider.com/what-is-a-bond" target="_blank" rel="noopener">bonds</a>, into a single investment. That gives you a ton of diversification from the get-go. Both types of funds are also usually passively managed, which provides cost savings and strong long-term returns. <ul><li>An <a href="https://www.businessinsider.com/what-is-an-etf" target="_blank" rel="noopener">ETF</a> is a type of security that tracks an underlying asset like an index, individual commodity, or a mixture of assets.</li><li>An <a href="https://www.businessinsider.com/what-is-an-index-fund" target="_blank" rel="noopener">index fund</a> is a type of mutual fund or exchange-traded fund that typically tracks the performance of a target index. </li></ul>One major difference between ETFs and index funds is how they're traded. ETFs can be bought and sold throughout the day, while index funds can only be traded at the price point set at the end of the <a href="https://www.businessinsider.com/stock-market-hours" target="_blank" rel="noopener">trading day</a>. Additionally, ETFs may require a lower upfront investment and may offer tax savings when compared to index funds. Quick tip: <a href="https://www.businessinsider.com/passive-investing" target="_blank" rel="noopener">Passive investing</a> uses a "buy-and-hold" strategy, a long-term approach in which investors purchase and hang onto a diversified portfolio of assets. With active investing, investors buy and sell frequently or they allow a portfolio manager to decide on trades. But up to 90% of actively managed funds underperform <a href="https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-year-end-2016.pdf" target="_blank" rel="noopener">compared to their benchmark index</a>.<h2>What is an ETF?</h2>An ETF is an investment vehicle you can buy and sell on the market like you would with a stock. But instead of representing a share within one company, "an ETF is typically a basket of securities like stocks, bonds, commodities, options, or a combination," Berkel says. "ETF issuers can choose to track an index or do something more custom to tackle a specific market anomaly." For instance, ETFs can be structured to track a market-weighted index, like the <a href="https://www.businessinsider.com/what-is-the-sp-500" target="_blank" rel="noopener">S&amp;P 500</a>, or other assets like an individual commodity, a collection of securities, or a specific investment strategy. When that index or asset performs well, so does your ETF. The aim of ETFs is to follow the market, whereas other investments like mutual funds aim to beat the market.Quick tip: The different types of index-based ETFs often refer to the type of index the ETF tracks. Some examples: equity ETFs, bond or fixed-income ETFs, international ETFs, sector or industry ETFs, socially responsible ETFs, commodity ETFs, and currency ETFs.Here's how it works: A fund provider creates an ETF and sets it up to track a particular index or asset. Then, the provider buys the underlying assets and sells shares in the fund to investors. When you buy a share in an ETF, you own a portion of the fund, but not the underlying assets. As an ETF's shares are bought and sold throughout the day, the price of an ETF can go up or down. This is different from mutual funds and index funds, which only trade once a day after the market closes.One primary advantage to ETFs is diversification; owning an ETF allows you to invest in many different stocks, bonds, commodities, and even industries. ETFs are also passively managed - because they track the performance of another asset - so they're cheaper to run. "By reducing operational expenses, investors benefit by saving money on <a href="https://www.businessinsider.com/what-is-expense-ratio" target="_blank" rel="noopener">expense ratios</a> and other investment costs," Berkel says.Plus, passively managed funds tend to outperform actively managed funds over the long term. And because ETF investors are taxed only when they sell the investment, they may realize tax savings compared to a mutual fund.<table style="border-collapse: collapse; width: 100%;" border="1"><tbody><tr><td style="width: 50%;">Pros</td><td style="width: 50%;">Cons</td></tr><tr><td style="width: 50%;"><ul><li>Typically lower costs compared to actively managed funds</li><li>Usually has fewer taxable capital gains</li><li>Minimum buy-in of one share</li><li>Offers portfolio diversification</li></ul></td><td style="width: 50%;"><ul><li>Investors might be limited to <a href="https://www.businessinsider.com/what-is-a-large-cap-stock" target="_blank" rel="noopener">large-cap stocks</a></li><li>ETFs may be subject to commission fees</li></ul></td></tr></tbody></table><h2>Example of an ETF</h2>Take a look at one example of an exchange-traded fund. The MJ tracks the <a href="https://markets.businessinsider.com/etfs/etfmg-alternative-harvest-etf-us26924g5080" target="_blank" rel="noopener">Prime Alternative Harvest Index</a>, which measures the performance of companies within the <a href="https://www.businessinsider.com/cannabis-investments" target="_blank" rel="noopener">cannabis industry</a>. So when you buy shares in this ETF, the money is invested in many types of companies associated with that industry, such as pharmaceuticals, production and distribution, and research and product development.Rather than concentrating your investment in a single stock, the ETF spreads your risk across multiple companies and segments of the industry. This diversification can be especially important in a sector as new and volatile as the cannabis industry.<h2>What is an index fund?</h2>An index fund is a type of mutual fund or ETF that tracks a particular market index. "They do this by typically replicating the underlying constituents in the index," Berkel says. Here's how this type of fund works: An index fund manager pools money from many investors and builds a portfolio of individual stocks, bonds, or securities. The portfolio mimics the composition of a target index, so the fund's value will mirror the gains and losses of the index being tracked. Some index funds track stock market indexes, like the <a href="https://www.businessinsider.com/what-is-dow-jones" target="_blank" rel="noopener">Dow Jones Industrial Average</a>, while others track indexes in other <keyword id="11893875" type="UNKNOWN" weightage="100" keywordseo="markets" source="Orion">markets</keyword> like bonds, commodities, or real estate."Index funds are great for providing broad exposure to a specific segment of the market, like large-cap stocks or the total bond market," Berkel says. "ETFs make more sense for investors trying to get exposure to a specific part of the market or who are trying to integrate risk management techniques into the portfolio. Examples of this might be accessing the highest quality stocks from undervalued countries around the world or managers using options to mitigate downside portfolio risk."The manager will either buy shares from every company listed on the index or buy shares from a representative sample. When deciding the number of shares to buy, the manager can use a weighting strategy. <ul><li>Most index funds are market-cap weighted, which means the fund purchases more of the largest companies (by capitalization) in the index than of the smallest companies. </li><li>Other index funds might be price-weighted, which means higher-priced assets have a bigger share in the index than lower-priced assets. </li><li>And with equal-weighted index funds, every asset receives equal weight.</li></ul>The fund manager then sells shares of the index fund to investors, regularly adjusts the share of assets in the portfolio, and then gives dividends, interest, and capital gains to the fund's investors. An index fund could be a good way to minimize risk because the price of individual stocks may rise and fall, but indexes tend to rise over time. They also come with all the benefits of a hands-off approach, including lower fees compared to mutual funds and typically stronger returns in the long term.<table style="border-collapse: collapse; width: 100%;" border="1"><tbody><tr><td style="width: 50%;">Pros</td><td style="width: 50%;">Cons</td></tr><tr><td style="width: 50%;"><ul><li>Lower risk because of broad diversification</li><li>Strong performance in the long-term</li><li>Lower fees compared to some other investments</li></ul></td><td style="width: 50%;"><ul><li>Not great for short-term gains</li><li>Vulnerable to market losses</li><li>Can only be traded at the end of the trading day</li><li>Potentially higher buy-in costs than ETFs</li></ul></td></tr></tbody></table><h2>Example of an index fund</h2>Take a look at one example of an index fund. The <a href="https://markets.businessinsider.com/funds/schwab-sp-500-index-fund-us8085098551" target="_blank" rel="noopener">Schwab S&amp;P 500 Index Fund</a> tracks the S&amp;P 500, which is a stock market index that measures the performance of the 500 largest U.S. companies. The S&amp;P 500 is one of the most popular market indexes to track, so you have lots of options if you want to invest here.In Schwab's index fund, the largest holdings are the same as those of the index: Microsoft Corp., Apple Inc., Johnson &amp; Johnson, Exxon Mobil Corp., and JPMorgan Chase &amp; Co.Investors can buy shares of the index fund, which in this example will mirror the gains and losses of the S&amp;P 500.<h2>The financial takeaway</h2>Index funds and ETFs are both low-risk, low-maintenance, and low-cost ways to see steady returns over time. But these investments aren't one size fits all. When choosing an ETF or index fund, you'll need to check which asset the fund follows and whether you're comfortable with the diversification within the fund. Then, compare each fund's expense ratio and other fees you might pay, such as commissions to buy or sell the investment.<a data-type="6026ccec06adf86232034a58">Bonds can be taxable or tax-free - here's your guide to the different types and calculating what's due on them</a><a data-type="5f8f5577851d5a52d53dd6a5">How to buy treasury bonds, one of the safest ways to invest for income</a><a data-type="5f52714cce3d6947b55a3bf1">REITs are a way to own real estate without becoming a landlord - here's how they work and ways to invest</a><a data-type="603d0928507cd77b043e1cac">How many stocks should you own in your portfolio? Why there's no single 'right' answer</a>

What's the difference between ETFs and index funds?

Table of Contents: Masthead Sticky<ul class="summary-list"><li><keyword id="11900043" type="UNKNOWN" weightage="60" keywordseo="index-funds" source="Orion">Index funds</keyword> are a type of investment vehicle that strive to match the returns of a particular market index.</li><li>Investing in index funds can help investors diversify their portfolio and be a low-cost way to build wealth.</li><li>There are many different indexes to choose from that reach a wide variety of sectors and markets.</li></ul><a href="https://www.businessinsider.com/what-is-an-index-fund" target="_blank" rel="noopener">Index funds</a> are <a href="https://www.businessinsider.com/personal-finance/warren-buffett-recommends-index-funds-for-most-investors" target="_blank" rel="noopener">recommended by billionaire Warren Buffett</a> and are often touted as one of the most popular ways to reach FIRE (Financial Independence, Retire Early). Index funds are a type of investment vehicle such as a <a href="https://www.businessinsider.com/mutual-funds" target="_blank" rel="noopener">mutual fund</a> or <a href="https://www.businessinsider.com/what-is-an-etf" target="_blank" rel="noopener">exchange-traded fund</a> (ETF) that works to achieve similar results as those on specific indexes (hence, the name) such as the <a href="https://www.businessinsider.com/what-is-the-sp-500" target="_blank" rel="noopener">S&amp;P 500</a>.If you want to follow suit, here's how to invest in index funds. <h2>Step 1: Review your finances and goals </h2>Before investing, it's important to get clear on your personal situation and life goals. When do you want to retire and how far away are you from that milestone? And what does your risk tolerance and budget look like? Understanding all of this will help you understand the role index funds will play in your life and how to invest in them. Knowing how much to invest requires you to take inventory of just how much money you can afford to invest. Review your finances and answer these questions to help you assess how much you can afford to invest: <ul><li>What is your current after-tax income - in other words, your <a href="https://www.businessinsider.com/net-income" target="_blank" rel="noopener">take-home pay</a>? </li><li>What are your current expenses? </li><li>How much debt do you have and what are your monthly payments?</li><li>What is your net worth? (This is your assets minus liabilities.)</li></ul>Answering these questions will give you a big picture view of your finances and give you insight into how much you can invest. Knowing your goals will help give your money a job and keep you motivated. It's important to note that <a href="https://www.businessinsider.com/what-is-volatility" target="_blank" rel="noopener">risk</a> is part of investing and can't be completely avoided. But there are ways to invest within your comfort levels, by first identifying your risk tolerance. Risk tolerance refers to your comfort level and how much you're willing to lose with your investments. You can take this <a href="https://njaes.rutgers.edu/money/assessment-tools/investment-risk-tolerance-quiz.pdf" target="_blank" rel="noopener nofollow sponsored">risk tolerance quiz from Rutgers</a> to see where you're at. <h2>Step 2: Choose an index </h2>Index funds are a class of ETFs or mutual funds that are designed to emulate the performance of a particular market index. "Index funds generally benefit an investor by providing diversification and relatively low fees compared to actively managed funds. Index funds are designed to track and follow a broad sector such as large caps, emerging markets, broad indexes like the S&amp;P 500, or it can even be as specific as tracking large technology companies, for instance," explains <a href="https://www.julianschubach.com/" target="_blank" rel="noopener nofollow sponsored">Julian Schubach</a>, an independent investment advisor and vice president of wealth management at ODI Financial. There are many different types of indexes, all of which serve different purposes. Because of the nature of index funds, they are inherently diversified. For example, the S&amp;P 500 (which refers to Standard and Poor's 500) is just one of many major indexes which tracks the top 500 publicly traded companies. Some other major indexes include:<ul><li><a href="https://www.businessinsider.com/what-is-nasdaq" target="_blank" rel="noopener">Nasdaq-100 Index</a>, which tracks the top 100 securities traded on The Nasdaq Stock Market</li><li><a href="https://www.businessinsider.com/what-is-dow-jones" target="_blank" rel="noopener">Dow Jones Industrial Average</a> (DJIA), which is an index that contains 30 <a href="https://www.businessinsider.com/what-are-blue-chip-stocks" target="_blank" rel="noopener">blue chip stocks</a> from various US companies</li><li><a href="https://www.businessinsider.com/new-york-stock-exchange" target="_blank" rel="noopener">NYSE Composite Exchange</a>, which tracks price fluctuations among stocks listed on the New York Stock Exchange</li><li>Wilshire 5000 Total Market Index, which tracks the performance of the entire stock market with U.S.-based securities</li><li>Russell 2000 Index, which tracks the performance of the 2,000 smallest publicly-traded companies in the US</li></ul>When thinking about what index to invest in, consider the following:<ul><li>Type of industry. Every dollar you spend or invest can be used as a vote to support something <a href="https://www.businessinsider.com/esg-investing" target="_blank" rel="noopener">based on your values</a>. For example, if you want to support the environment, you might focus on clean-energy index funds. If you're interested in tech or even supporting women-led companies, there are index funds for that. </li></ul><ul><li>Risk tolerance. You can review past performance and assess your risk tolerance before choosing a specific index - although, as noted above, index funds can be considered less risky as they're diversified. For example, large cap indexes may have higher levels of risk, and if you want lower levels of risk, you can look at specific bond indexes. </li><li>Opportunities for growth. Are there up-and-coming investment sectors where you might want to put your money? </li><li>Funds that trade based on a specific location. For example, index funds that trade on the foreign exchange. </li><li>The company size and market capitalization. For example, <a href="https://www.businessinsider.com/what-is-a-small-cap-stock" target="_blank" rel="noopener">small cap</a>, <a href="https://www.businessinsider.com/what-is-a-mid-cap-stock" target="_blank" rel="noopener">mid cap</a>, and <a href="https://www.businessinsider.com/what-is-a-large-cap-stock" target="_blank" rel="noopener">large cap</a> all refer to the size of a company as well as the company's <a href="https://www.businessinsider.com/what-is-market-cap" target="_blank" rel="noopener">market capitalization</a>. </li><li>Types of assets the index funds track. The index fund can track certain commodities, <a href="https://www.businessinsider.com/what-is-stock" target="_blank" rel="noopener">stocks</a>, or <a href="https://www.businessinsider.com/what-is-a-bond" target="_blank" rel="noopener">bonds</a>. </li></ul>Taking all of this into consideration can help you identify which index can best match your goals. Quick tip: You can review other indexes and get additional information from the <a href="https://fred.stlouisfed.org/categories/32255" target="_blank" rel="noopener nofollow sponsored">Federal Reserve Bank of St. Louis</a>.<h2>Step 3: Decide which index funds to invest in </h2>Now it's time to decide which index funds you want to invest in. "Each fund and fund company may have different fees and portfolio construction, though, so it is important to research the differences between each offering within a broad index," explains Schubach. "A good way to start is to research the assets under management (AUM) of a given index fund, the fee structure, the ease of trading and access to the fund, and the background of the managers in charge of the given fund."Index funds at different companies can have similar goals but have different short- and long-term costs to consider. Review any opening account minimums or investment minimums in a certain index fund. For example, the popular Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) has an investment minimum of $3,000. Two other major costs to consider when investing in index funds are the tax-cost ratio, which refers to the amount of taxes you pay based on distributions compared to your returns, as well as the expense ratio, which includes all fees related to managing the fund. These costs and related fees can take a chunk of your wealth without you realizing it. You want to look for low <a href="https://www.businessinsider.com/what-is-expense-ratio" target="_blank" rel="noopener">expense ratios</a>, typically below 1% as a benchmark. <h2>Step 4: Open a brokerage account and buy index fund shares </h2>If you want to learn how to invest in index funds, you'll want to choose an investing strategy and go from there. For example, do you want to DIY it or have professional help? Your answer will determine what type of investment account you'll need to purchase index fund shares. "Investors first must decide if they want to pick the index funds themselves and manage the allocations directly. If the investor feels this is the best route for them, they can establish an investment account at any of the numerous brokerage platforms such as Fidelity, TD Ameritrade, Charles Schwab, or even app-based platforms such as <a href="https://www.businessinsider.com/robinhood-fees" target="_blank" rel="noopener">Robinhood</a>," notes Schubach. "In this scenario, the investor would research the universe of index funds available and purchase the funds they'd like to own."You can do this by: <ul><li>Opening an online <a href="https://www.businessinsider.com/what-is-a-brokerage-account" target="_blank" rel="noopener">brokerage account</a>. You could open an account with brokerages such as Fidelity or Vanguard to manually invest in funds yourself. </li><li>Using a robo-advisor. You could also use a robo-advisor such as <a href="https://www.businessinsider.com/betterment-review" target="_blank" rel="noopener">Betterment</a> and <a href="https://www.businessinsider.com/wealthfront-review" target="_blank" rel="noopener">Wealthfront</a> which do much of the heavy lifting for you, by investing and rebalancing automatically.</li></ul>"For those who wish to invest in index funds, but prefer some help, they can work with a financial advisor who can help guide them to the funds which best match their risk tolerance, and they would subsequently manage those funds for the investor," says Schubach.In this scenario, you can work with an investment professional who can help guide you through the process. This option may be more costly. Regardless of your investment options, here are some things you want to keep in mind when choosing a brokerage.<ul><li>What type of fund selection do they offer?</li><li>How convenient is it to use the platform? Do they have a mobile app and is the user experience good? </li><li>How much does it cost to trade? You can review the <a href="https://www.businessinsider.com/what-is-expense-ratio" target="_blank" rel="noopener">expense ratios</a> in the <a href="https://www.businessinsider.com/prospectus" target="_blank" rel="noopener">prospectus</a> and see if there are commission-free trading options. </li></ul>The key is to have a strategy that works for you, while also minimizing costs.Quick tip: If you have an employer-sponsored retirement plan like a <a href="https://www.businessinsider.com/what-is-401k" target="_blank" rel="noopener">401(k)</a>, you may also be able to invest in index funds through there as well.<h2>Step 5: Continue to manage your investments </h2>Once you've started investing in index funds you want to do two things:1. Continue to invest regularly. This may mean setting up automatic monthly contributions or setting a schedule when you add more money to your portfolio. 2. Check in regularly with your investments. Consider checking in on your investments at least once a year. You can also consider checking in quarterly. Many index funds rebalance on their own, but it's a good idea to check that your funds are still in alignment with your portfolio's goals. <h2>The financial takeaway</h2>Investing in index funds can be a great way to diversify your portfolio without taking on so much risk. It's also a way to tap various markets across different sectors and support certain industries with your investments. To get started, follow these steps to invest in index funds and be aware of your short- and long-term goals while keeping an eye on total costs.<a data-type="612d02a809e0356cf20175aa">What's the difference between ETFs and index funds?</a><a data-type="6112d5a1e278c61be35359e8">Index funds vs. mutual funds: What's the difference?</a><a data-type="61410b58e278c63e7610dcbb">Understanding what financial advisors do and how they help clients better manage their money</a><a data-type="60ef608ffdabbb2601190383">What is a broker? What to know about the intermediary that helps investors buy stocks</a>

5-step beginner's guide to investing in index funds

<ul class="summary-list"><li>Index funds and <keyword id="6357979" type="UNKNOWN" weightage="60" keywordseo="mutual-funds">mutual funds</keyword> let you invest in a variety of stocks, bonds and assets without having to cherry-pick your investments.</li><li>While mutual funds are actively managed by an investment professional, index funds are more passive, making them good for hands-off investors wanting steady returns.</li><li>Mutual funds come with much higher fees than index funds, which can cut into your potential gains.</li></ul>For many beginning investors, the idea of hand-picking stocks can probably seem quite daunting. Fortunately, with tools like <a href="https://www.businessinsider.com/what-is-an-index-fund" target="_blank" rel="noopener">index funds</a> and <a href="https://www.businessinsider.com/mutual-funds" target="_blank" rel="noopener">mutual funds</a>, that type of legwork isn't actually necessary to start your investing journey. Here's what you need to know about these investment vehicles - and when you might want to invest in them.<h2>Index fund vs. mutual fund: at a glance</h2>Both index funds and mutual funds allow you to invest in a variety of assets without having to cherry-pick those investments one by one. The major differences are how those funds are managed and their earning potential.Here are the basics of both types of funds:<ul><li>An index fund is a pool of investments that aims to mimic the performance of a certain market index - often the <a href="https://www.businessinsider.com/what-is-the-sp-500" target="_blank" rel="noopener">S&amp;P 500</a>, the <a href="https://www.businessinsider.com/what-is-dow-jones" target="_blank" rel="noopener">Dow Jones Industrial Average</a> or the <a href="https://www.businessinsider.com/what-is-nasdaq" target="_blank" rel="noopener">Nasdaq</a> Composite (though there are many more.) Investors buy shares in the fund and see gains when stocks within the fund grow in value.</li><li>A mutual fund is a company or fund that invests in a variety of assets, including <a href="https://www.businessinsider.com/what-is-stock" target="_blank" rel="noopener">stocks</a> and <a href="https://www.businessinsider.com/what-is-a-bond" target="_blank" rel="noopener">bonds</a>. Investors can then purchase shares of the fund, thereby purchasing a stake in all companies within that portfolio. Unlike index funds, mutual funds are actively managed, meaning a professional monitors the portfolio's performance and regularly makes buys and trades within it.</li></ul>According to Matthew Willett, an investment advisor at WealthPlan Advisors in Scottsdale, Ariz., both funds offer baskets of securities, which investors can then buy shares of. "Instead of buying shares of many individual companies, investors can purchase shares of a fund made up of hundreds or thousands of companies," Willett says. "As the companies within the fund either increase in share price or decrease, the value of investors' shares in the fund will change in conjunction."<h2>Index fund</h2>An index is a type of mutual fund or <a href="https://www.businessinsider.com/what-is-an-etf" target="_blank" rel="noopener">ETF</a> that aims to match the returns of a certain index. The S&amp;P 500 is one of the most commonly used indices, but there are many others, too, including the Wilshire 5000 Total Market Index, the Russell 2000 Index, and the Dow Jones Industrial Average.With an index fund, money is invested into securities within the aligned index - sometimes all of them, sometimes just a sampling. The ultimate goal is to mirror the performance of the overall index and deliver similar returns to the fund's investors.Investors usually gain a small percentage annually. According to <a href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/s-p-500-returns-to-halve-in-coming-decade-8211-goldman-sachs-59439981" target="_blank" rel="noopener">2020 data</a>, the S&amp;P 500 returned 13.6% annually over the last 10 years. Historically, annual returns have averaged 9.2%.Because index funds don't require regular trading or selling, they're considered passive investments, and they aren't actively managed by a professional. This means fees are smaller on these funds than on other investment vehicles - particularly when compared to actively managed mutual funds. "An index fund would be best for someone who did not have a lot of money and was just starting to invest," says Josh Simpson, vice president of operations and investment advisor with Lake Advisory Group. "This would allow them to achieve diversification with their investment without having to spend hours learning how to invest."<table style="border-collapse: collapse; width: 100%;" border="1"><tbody><tr><td style="width: 50%;">Pros</td><td style="width: 50%;">Cons</td></tr><tr><td style="width: 50%;"><ul><li>Lower fees than mutual funds</li><li>Allows you to diversify across many companies and sectors </li><li>Slow but dependable returns over time</li><li>Requires minimal research or investing know-how</li></ul></td><td style="width: 50%;"><ul><li>Not actively managed by a professional</li><li>No choice in who you invest in, which could be challenging if you take issue with a company's business practices</li><li>Short-term gains are limited because you're only invested in very small shares of each stock</li></ul></td></tr></tbody></table><h3>Example of how an index fund works</h3>The <a href="https://investor.vanguard.com/mutual-funds/profile/overview/vfiax" target="_blank" rel="noopener">Vanguard 500 Index Fund</a> is a good example - and is actually the first index fund to ever exist. The fund tracks the S&amp;P 500 Index and contains shares of all 500 companies within it. It has delivered an average annual return of 7.84% since 2000, just under the Index's average in that timeframe.<h2>Mutual funds</h2>Mutual funds, like index funds, invest in a variety of stocks, bonds, and other assets, only they're not trying to track the market - they're trying to beat it. Mutual funds come in several types, including <a href="https://www.businessinsider.com/what-is-the-money-market" target="_blank" rel="noopener">money market</a> funds, bond funds, target date funds, and stock funds (index funds fall into this category.) The majority of these funds (aside from index funds) are actively managed, which means an investment professional will sell and purchase shares within the portfolio regularly in an effort to maximize returns. While this does open the door for higher potential gains than index funds, it also means returns are unpredictable. "The reason someone would choose an actively managed mutual fund is that if one can identify a fund manager that can consistently beat the market, one can accrue tremendous wealth," says Robert Johnson, chairman and CEO of Economic Index Associates and a professor of <keyword id="25455" type="ORGANIZATION" weightage="100" keywordseo="finance">finance</keyword> at Creighton University. "For instance, investors who invested in the Fidelity Magellan fund during the time period Peter Lynch managed it earned an average of 29.2% during his time running it - more than twice what the S&amp;P 500 earned during that time."Those kinds of gains aren't guaranteed, though. And in many cases, actively managed funds actually underperform the market. According to data from the <a href="https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-year-end-2020.pdf" target="_blank" rel="noopener">S&amp;P Dow Jones Indices</a>, 82% of large-cap funds underperform the S&amp;P 500 over a 10-year period. Quick tip: Actively managed funds come with higher fees than passive ones (like index funds). According to the <a href="https://www.ici.org/system/files/private/2021-04/per27-03.pdf" target="_blank" rel="noopener">Investment Company Institute</a> (ICI), the average fee for equity mutual funds is 1.16%. On index funds, it's just 0.58%.<table style="border-collapse: collapse; width: 100%;" border="1"><tbody><tr><td style="width: 50%;">Pros</td><td style="width: 50%;">Cons</td></tr><tr><td style="width: 50%;"><ul><li>Allows you to diversify across many companies and sectors </li><li>Could allow for higher gains, but only if managed well</li><li>Several types of mutual funds to choose from</li></ul></td><td style="width: 50%;"><ul><li>Higher fees than index funds</li><li>Requires more research to find the right fund (and fund manager)</li><li>Riskier than index funds, as managers often try to beat the market</li></ul></td></tr></tbody></table><h3>Example of mutual funds</h3>Say you plan on retiring in 2045. If you want to maximize your available cash by that time, you might consider a 2045 target date fund - an actively managed mutual fund with an established end date. To participate, you'd purchase shares of the fund - along with other investors looking to retire around the same time - and your fund manager would buy and sell assets to help you reach your goal by the target date. Quick tip: If you opt for a mutual fund, make sure you choose your fund carefully. Your fund manager will play a critical role in reaching your financial goals.<h2>The financial takeaway</h2>Both index funds and mutual funds can help you achieve your financial goals, but through very different approaches. With one, you'll enjoy passive, hands-off investing that offers steady returns. With the other, you'll get an actively managed fund that could, in some cases, beat the market.If you're not sure which is best for your goals, speak to a financial planner. In many cases, both investment vehicles may be the right choice for your long-term wealth.<a data-type="602bff0506adf848107b0559">What are the safest investments? 7 low-risk places to put your money - and what makes them so</a><a data-type="5c9108c901df722d966ff305">A comprehensive guide to investing in stocks for beginners</a><a data-type="60d60d694dde6162896da014">How to buy a stock: A step-by-step guide to help you get started investing</a><a data-type="5f8f5577851d5a52d53dd6a5">How to buy treasury bonds, one of the safest ways to invest for income</a>

Index funds vs. mutual funds: What's the difference?

<ul class="summary-list"><li><keyword id="357709" type="PERSON" weightage="60" keywordseo="Marc-Andreessen">Marc Andreessen</keyword>'s best piece of investing advice is to "put all your eggs in one basket."</li><li>The venture capitalist attributed the quote to <keyword id="6358963" type="DEFINITION" weightage="60" keywordseo="Warren-Buffett">Warren Buffett</keyword> despite their <keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">bitcoin</keyword> clash in 2014.</li><li>Buffett doesn't see <keyword id="6362665" type="ORGANIZATION" weightage="60" keywordseo="berkshire-hathaway">Berkshire Hathaway</keyword> as a single basket, given its varied businesses.</li></ul>Marc Andreessen revealed in a <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-marc-andreessen-investing-philosophy-eggs-basket-investing-advice-2021-8">recent Bloomberg interview</a> that his favorite piece of investing advice is: "Put all of your eggs in one basket and watch that basket closely." The legendary venture capitalist attributed that quote to Warren Buffett (it appears to <a href="https://quoteinvestigator.com/2017/02/16/eggs/">date back</a> to Andrew Carnegie in 1885), which is striking as Andreessen has blasted the Berkshire Hathaway CEO in the past, and Buffett doesn't exactly follow that mantra.Buffett <a href="https://markets.businessinsider.com/news/currencies/warren-buffett-best-quotes-bitcoin-cryptocurrencies-investing-rat-poison-squared-2021-1">warned investors to avoid bitcoin</a> in 2014, labeling it a "mirage" and describing the idea that it's inherently valuable as "just a joke." He compared the cryptocurrency to a check or money order, dismissing it as just another method of transmitting money.Andreessen, the cofounder of <keyword id="508487" type="PERSON" weightage="60" keywordseo="Andreessen-Horowitz">Andreessen Horowitz</keyword>, shrugged off Buffett's bitcoin critique as ignorant at a CoinSummit event that year. "The historical track record of old white men who don't understand technology crapping on new technology is at 100%," he said, <a href="https://www.forbes.com/sites/kashmirhill/2014/03/26/warren-buffett-says-bitcoin-is-a-mirage-why-marc-andreessen-thinks-hes-wrong/?sh=64f1505b7f3c">according to his interviewer</a>.The venture capitalist elaborated on Twitter shortly afterward. He described Buffett as a "personal hero" of his and a "world-class expert in many areas," <a href="https://www.cnbc.com/2014/03/26/andreessen-vs-buffett-is-bitcoin-a-miracle-or-mirage.html">CNBC reported</a>, but he didn't value the Berkshire chief's uninformed opinion of bitcoin. "I know nothing about <keyword id="1473612" type="PERSON" weightage="60" keywordseo="railroads">railroads</keyword>," he added, likely referring to Berkshire's ownership of the BNSF Railway. "Correspondingly have no view."Andreessen and Buffett both make concentrated wagers on businesses they like, whether it's a high-flying technology company like Facebook or Airbnb in the VC's case, or the likes of Geico and Bank of America for Buffett.Although Buffett keeps more than 99% of his fortune in Berkshire stock, and <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-stock-portfolio-concentration-apple-amex-coke-2021-5">5 stocks make up 75%</a> of his portfolio's value, he rejected the idea that he bets the farm on a single company during Berkshire's shareholder meeting in 2005."When we own Berkshire, we don't think of all our eggs being in one basket, because we have a lot of good businesses," Buffett said, underscoring the fact that Berkshire has scores of subsidiaries including See's Candies and PacifiCorp.Still, Buffett would undoubtedly agree with Andreessen's recent recommendation of a S&amp;P 500 index fund over something "fancy." Buffett has encouraged the vast majority of people to invest in tracker funds for years, and instructed that 90% of his estate be invested in a S&amp;P 500 index fund for his wife upon his death.

Marc Andreessen quoted Warren Buffett this week. The legendary venture capitalist blasted the investor's bitcoin views in 2014.

<ul><li><keyword id="5027658" type="PERSON" weightage="60" keywordseo="ted-seides">Ted Seides</keyword> made a $1 million, decade-long bet with <keyword id="6358963" type="DEFINITION" weightage="60" keywordseo="Warren-Buffett">Warren Buffett</keyword> that he lost in 2017.</li><li>The investor wagered that <keyword id="116445" type="COMPANY" weightage="60" keywordseo="Hedge-funds">hedge funds</keyword> would outperform a <keyword id="123873" type="PERSON" weightage="60" keywordseo="SP-500">S&amp;P 500</keyword> index fund.</li><li>Seides probably wouldn't make the same bet today as the odds of winning are lower.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">See more stories on Insider's business page</a>.</li></ul>Ted Seides famously lost a <a href="https://www.businessinsider.in/Warren-Buffett-has-won-his-1-million-bet-against-the-hedge-fund-industry/articleshow/62342782.cms">$1 million bet with Warren Buffett</a> that a basket of hedge funds would outperform the S&amp;P 500 index over the course of a decade. The former hedge fund investor doubts he would place the same wager now."I probably wouldn't today for the next 10 years, not because I necessarily think it's a losing bet, as much as I don't think the odds are as tilted in favor of hedge funds as they were at the beginning of 2008," Seides said in a recent <a href="https://www.realvision.com/shows/the-interview/videos/thinking-like-a-capital-allocator">RealVision interview</a>."You make a bet like that in public with a guy like Warren, I think it's incumbent on you to think that your odds are awfully good to win," he continued. "My guess is it's probably a 50/50 bet today, so I wouldn't do it as a 50/50 bet."Seides, who hosts "The Capital Allocators Podcast," previously invested in hedge funds at <keyword id="4245048" type="PERSON" weightage="60" keywordseo="Protg-Partners">Protégé Partners</keyword>, a so-called fund of funds. For his bet with Buffett, he selected and tracked the performance of five funds invested in more than 100 hedge funds in total, while the <keyword id="6362665" type="ORGANIZATION" weightage="60" keywordseo="berkshire-hathaway">Berkshire Hathaway</keyword> chief backed the Vanguard S&amp;P 500 index fund. They agreed the winner would be whoever posted the higher return net of fees, costs, and expenses.Read more: <a href="https://www.businessinsider.com/warren-buffett-hoards-cash-sells-stocks-bash-bitcoin-thomas-russo-2021-5">Warren Buffett is hoarding $80 billion of cash, cleaning up his stock portfolio, and declining to bash bitcoin. Veteran investor Thomas Russo says why that strategy will ultimately pay off.</a>Buffett proposed the bet because he wanted to underscore the value of owning an index fund for passive investors, and highlight the hefty fees that hedge funds charge. He emerged the victor and donated his $2.2 million of winnings to charity.Seides told RealVision that his wager with Buffett compared apples to oranges, and it would have been fairer to adjust their returns for market exposure, geographical focus, tax rates, and other differences. However, he acknowledged that complicating the bet "takes all the fun out of it."The podcast host also bemoaned that his dad, a doctor and neophyte investor who he described as a "hoarder," missed out on buying a piece of Buffett's company over 60 years ago."He loves owning things and does not like selling them," Seides said, pointing to his dad purchasing IBM stock in 1959 and still holding it today. "It is a shame he didn't come across Berkshire Hathaway back then, because it would be worth a lot more."

The hedge fund investor who lost a $1 million bet with Warren Buffett doubts he would make the same wager today

<ul><li><keyword id="219358" type="PERSON" weightage="60" keywordseo="Mark-Cuban">Mark Cuban</keyword> is betting $1 million that <keyword id="128682" type="COMPANY" weightage="60" keywordseo="Netflix">Netflix</keyword> and <keyword id="18635" type="CITY" weightage="60" keywordseo="Amazon">Amazon</keyword> will outperform the S&amp;P 500.</li><li>He's also wagering $1 million that <keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">bitcoin</keyword> or ether will beat the index over 10 years.</li><li>Warren Buffett bet on the benchmark to beat hedge funds over a decade and won.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">See more stories on Insider's business page</a>.</li></ul>The billionaire Mark Cuban is so confident that his two favorite <keyword id="6354298" type="DEFINITION" weightage="60" keywordseo="Stocks">stocks</keyword> and the top <keyword id="2420795" type="PERSON" weightage="60" keywordseo="cryptocurrencies">cryptocurrencies</keyword> will outperform the S&amp;P 500 index over the next decade that he's willing to bet $2 million on that outcome.The "<keyword id="1417364" type="COMPANY" weightage="60" keywordseo="Shark-Tank">Shark Tank</keyword>" investor and Dallas Mavericks owner <a href="https://twitter.com/mcuban/status/1387867086580498436">agreed to a pair of wagers</a> with Peter Mallouk, the CEO of Creative Planning, a wealth-management firm.Cuban tweeted on Thursday that he would <a href="https://twitter.com/mcuban/status/1387863203196153861">stake $1 million</a> on a 50-50 split of Netflix and Amazon stock beating the benchmark over the next 10 years. He said he'd bet another $1 million on Mallouk's choice of either bitcoin or ether <a href="https://twitter.com/mcuban/status/1387861184976760834">doing the same</a>. Mallouk would bet on the S&amp;P 500 in both cases.The men agreed to make the two bets after butting heads over the value of a diversified portfolio and the long-term viability of cryptocurrencies. The argument was sparked by Mallouk <a href="https://twitter.com/PeterMallouk/status/1387391603006922755">criticizing</a> Cuban's <a href="https://markets.businessinsider.com/currencies/news/mark-cuban-praises-dogecoin-defi-nfts-bitcoin-not-inflation-hedge-2021-3-1030172586">promotion of Dogecoin</a>, <a href="https://twitter.com/PeterMallouk/status/1387451974245920768">predicting</a> that 99% of cryptocurrencies would end up worthless, and touting stocks as superior to crypto."If you buy a hundred stocks, odds are most go up," Mallouk <a href="https://twitter.com/PeterMallouk/status/1387456203228319750">tweeted</a> on Wednesday. "If you buy a hundred cryptocurrencies, most will go to zero. Big difference.""Only a fool would buy 100 stocks or 100 crypto assets," Cuban <a href="https://twitter.com/mcuban/status/1387458297213571073">replied</a>.To settle their dispute, Cuban and Mallouk agreed to convert $4 million into crypto, set up <a href="https://www.businessinsider.com/how-smart-contracts-can-work-2018-10">smart contracts</a> that would automatically pay the victors in 10 years, and donate the proceeds to charity.Their bet echoes a famous wager between the billionaire investor Warren Buffett and the hedge-fund manager Ted Seides in 2007. Buffett staked $1 million on the S&amp;P 500 besting a basket of hedge funds over a decade <a href="https://www.businessinsider.com/warren-buffett-wins-million-dollar-bet-against-hedge-funds-2018-1">and won</a>.Read more: <a href="https://www.businessinsider.com/stocks-exposed-nft-boom-opportunity-after-price-slump-jefferies-2021-4" target="_blank" rel="noopener">Jefferies unveils 14 stocks with exposure to the booming NFT opportunity as digital collectibles continue to become more mainstream despite the recent price slump</a>

You Searched For "index funds" and got 10 results

Reed Hastings says he kept losing money as an investor so he sticks to owning Netflix stock and index funds

Theron Mohamed

A couple in their 30s who hit a net worth of $1 million have more than 95% of their stock portfolio invested in 3 index funds and the rest in one individual stock. Take a look at their portfolio.

Kathleen Elkins

Passive index funds now own a bigger chunk of US stocks than active funds for the 1st time

Hamza Fareed Malik

Tim Ferriss asked Warren Buffett how to invest $1 million. Park it in an index fund, 'forget it and get back to work' was his advice.

Theron Mohamed

What's the difference between ETFs and index funds?

Kim Porter

5-step beginner's guide to investing in index funds

Melanie Lockert

Index funds vs. mutual funds: What's the difference?

Aly J. Yale

Marc Andreessen quoted Warren Buffett this week. The legendary venture capitalist blasted the investor's bitcoin views in 2014.

Theron Mohamed

The hedge fund investor who lost a $1 million bet with Warren Buffett doubts he would make the same wager today

Theron Mohamed

Mark Cuban is betting $1 million that Amazon and Netflix will best the S&P 500 over 10 years - and another $1 million on crypto to do the same

Theron Mohamed

Popular Keywords

Buying Guides