The BIGGEST Downside Of Index Fund Investing

We've all been told that index fund investing is the gold standard when it comes to growing your money. But what if I told you that there are downsides to investing in index funds. In this video, we explore some of the downsides to using index funds to grow your wealth.
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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money. If you need help then contact a Certified Financial Fiduciary before trying anything that is mentioned in this video. I prefer a Fiduciary financial advisor that charges an hourly fee as opposed to an ongoing fee based on a % of your portfolio. Always remember that incentives determine the type of advice they give you so one that charges an hourly fee is less likely to be problematic.
#indexfunds #investing

[@JarradMorrow]

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[@phaj0k]

Back again with the fire, another great vid, keep it up bro.

[@JarradMorrow]

Appreciate it!

[@CC-bx7bh]

Need more videos like this, Thank You 👏🏾

[@JarradMorrow]

Glad you enjoyed!

[@andrewpagonis5099]

Great video Jarrad! It's always good to hear about the downsides - a lot of people (including myself) are always first to recommend them to others. Great perspective.

[@JarradMorrow]

Very true!

[@kelvinchuttur1127]

Great insightful video, thanks!

[@JarradMorrow]

Thank you for the feedback. Glad it was helpful!

[@trevorhassel8296]

Very good points Jarrad. I have a mix, mostly individual stocks, but also hold index funds. I like your point on lack of control, I like to be in control (somewhat) of my investments, but I also want the security of holding an index fund. Great video idea!

[@JarradMorrow]

Well said!

[@AlanaBertozzi]

I really enjoy your content. You have a really nice personality

[@JarradMorrow]

I appreciate that!

[@Nepthu]

Index Funds seem perfect for me, as I'm using them as the third leg of my retirement plan. I like the idea of passive investing. Another great video and nice shirt color.

[@JarradMorrow]

Good stuff! I decided to bring a little color into this video instead of wearing my regular blue and black.

[@luka3174]

They're great for long time investments, but the done side is they're rather slow

[@JarradMorrow]

Agreed. Slow growth isn’t always a bad thing though.

[@shams2397]

Good advice

[@ShawnsImagination]

Great information thank you 🙏

[@JarradMorrow]

Glad it was helpful!

[@tankberserkererer]

7:05, you gotta respect the man for keeping the "receive nudes" slip in there. Love it lol.

[@makesaveinvest1401]

The buttom companies on the S&P500 are a small fraction, while Apple and the other companies on top are the biggest portion of the fund!! Great video!!🤑🙌

[@JarradMorrow]

Good point. Thanks!

[@joekerr392]

“Average returns” are actually above average compared to most investors who fail to consistently beat the market long term. Average is failing to match the index.

[@JarradMorrow]

Very good point.

[@littleturtle5818]

Every point seems valid, but none shakes my confidence, I am an index investor, I think it's the best, the most cost-effective approach for the vast majority of the individual market participants. BTW, I think the biggest issue is the low risk-adjusted return, as long as one figures out how to deal with it, it sure is great.

[@JarradMorrow]

👍

[@juniorstockinvestor6356]

Awesome video! Im glad you pointed these things out as far as the negative in index funds. When people ask me is it better to invest in index or individual stocks i tell them if you dont care about looking at the market daily than go with an index but if you wanna make more money, do research and read balance sheets and have fun doing it than def individual stocks is the way to go. Keep up the great work!

[@JarradMorrow]

Thanks. It's a lot more difficult to stock pick over the long run, but it's possible to make money in the short term.

[@SS-qr5qk]

Great information… your humor made me laugh too!

[@JarradMorrow]

Thanks! Glad you liked it!

[@moneybee]

Lack of control certainly can be seen as a downside, but I see the risk adverse benefits greatly outweighing the negatives. Great breakdown and some insightful opinions! Nice video!

[@JarradMorrow]

Well said!

[@patrickg7569]

I love index funds but also dabble in some individual stocks within my M1 Roth. I have seen 100% returns over a few months but I’m only playing with a few hundred dollars.

[@JarradMorrow]

I hold a few individual stocks as well, but it's an extremely small amount.

[@DigitalDezinesCEO]

I'm new to investing and have been scouting videos to find out more about where to start. I dont have much money to invest and want to start with index funds. I think im going to go with M1 Finance. Should I also invest in individual stocks?

[@JarradMorrow]

Index funds are where most of your money should be for longer term investing. Here's my video on index fund investing: kzbin.info/www/bejne/oovXmax7otBprqc Here's a video where I break down my M1 Finance portfolio: kzbin.info/www/bejne/noGldqmMaamAqbc

[@donaldstanfield3486]

4-29-2022 S&P 500 index was down -155.57 in one day investors in that index saw their money 💰 go down the drain.

[@JarradMorrow]

If those individuals didn't sell then nothing was lost.

[@EricMcDowellegm]

They're telling you kick rocks because they know better than you lolol love it

[@PointsInbound]

how do we spell that, 80-ohs? Yea everybody should be in etf's, my favorite is qqq for growth and nobl for divs.

[@JarradMorrow]

Nice!

[@shadesocks3357]

7:05 Received Noods

[@JarradMorrow]

Haha

[@nicelookash]

Can you do a video on your funrise account and how its held up during the pandemic?

[@JarradMorrow]

Absolutely

[@roryjamieson8439]

I'm just wondering what happens when a company drops off the bottom of the index? does the algorithm automatically pick up and invest in the company that replaces it in the list ?

[@JarradMorrow]

The index fund will handle that adjustment for you when those things happen.

[@withwilk7473]

I invest in Vanguard funds, but I have two points... 1. Buyers of index funds focus on price and not value of underlying assets, so the price will be inflated and expect corrections, it's a popularity race. 2. They aren't as diverse as they seem, most are weighted in tech and ofcourse the largest companies.

[@JarradMorrow]

Thanks for sharing

[@arcaneknight9799]

Great video. How many years of experience would you say is adequate before switching jobs?

[@JarradMorrow]

There isn't a hard and fast rule on that. It's going to be up to you based on how you'd like your career to play out. If you're interested in climbing the ladder to upper management then most companies will want you to be with them for a little bit (not always, but usually). If your goal is to make as much money as possible as quickly as possible then one of the fastest ways to do that is to switch companies every few years.

[@arcaneknight9799]

@@JarradMorrow I'm aiming for the second one. Would you say 1.5 to 2 years is too short?

[@JarradMorrow]

Yes, that sounds good. But honestly, if an other company is willing to pay you a lot more then it would make sense to go work for them. I was at my first job out of college for 9 months before moving onto the next because they offered me more money than I was going to get at the first job.

[@arcaneknight9799]

@@JarradMorrow Thanks, Uncle Jarrad! I'm hoping to get a salary increase of 20%+, a better 401k plan (my company only matches $0.25 for every dollar I invest), and solid health, vision, dental insurance. Also, I hope the job gives me fulfillment and great experience.

[@Tomas-tx6lq]

Yes index funds will give you the “average” return of that market. However, that is better than 90% of all active investors. It’s a bit misleading to say you will get average return. Average return is not average regarding stocks. You could also say it gives you a return that’s better than 90% of all investors over time. If you know what I mean 👍

[@cindyvidt7198]

You uploaded a video yesterday and six ways to reach financial independence on any income… But it is marked as private? I was really wanting to see that.

[@JarradMorrow]

I was playing around with some things on the back end and accidentally posted that video when I didn't mean to. It'll be out at some point here in the future.

[@cindyvidt7198]

Jarrad Morrow thank you!!!

[@wackzingo]

Great video but I feel like saying they only get average returns is a bit misleading and needed more explanation. It's the average of the market not average investor returns. The overwhelming majority of investors and actively managed funds fail to get anywhere close to the market average day in this case getting the market average is generating above average returns.

[@ConnorRianHickey]

I love indexes of course but Tesla gave me a soft spot for individuals with a 3900 return so far on a single stock lol

[@JarradMorrow]

Haha that soft spot is secretly a bruise because what's happening with Tesla stock is an outlier.

[@big0514]

Musk came out and said his company was overvalued so just be careful

[@ConnorRianHickey]

@@big0514 *currently*

[@big0514]

@@ConnorRianHickey as late as September last year it was talked about. Right after that came the election. Remember this new president is very very glorified I don’t think things will be peachy forever. Then again you can never call the market, but Tesla is in a weird place to me personally .

[@zackmichaels8749]

Just dumped 6 figures in vtsax @ $96 and it’s been going down ever since. With all this talk about 10-20% corrections and index fund bubbles and crashes of 40-80% would u recommend selling them and waiting for the dip?

[@JarradMorrow]

What's this invested money supposed to be used for? When are you going to need it?

[@zackmichaels8749]

It’s supposed to be for long term hold and ultimately I want dividend income

[@JarradMorrow]

If it’s for the long term then why worry about what the price is doing in the short term? It’s irrelevant, ya know? No one can predict these “bubbles” and “crashes” you hear about in the news and on KZbin videos. Everyone is just guessing. I didn’t get to the point of having hundreds of thousands of dollars invested in the stock market by reacting to what my stocks and index funds were doing in the short term. If you’re a buy and hold investor then buy and hold VTSAX.

[@femio3617]

I got hit more buying individual stock you will be good in a long run with index now am loading up on vtsav vti and voo and i can see alot of different

[@jononfirebudgetinginvestin3897]

I was pummeling VTI and VOO this entire year and it’s been paying off! I’m totally all about the average returns 😂 if I ever get that FOMO itch, I invest in something more actively managed like ARKK but the majority of my investments are VTI and VOO haha

[@JarradMorrow]

VTI and VOO are my favorite.

[@meatball4409]

Why VTI and VOO? VTI contains VOO plus small and mid caps...

[@cAwLeY2K9]

I'm thinking of starting an index fund with vanguard. I have the 3k to get stared and will add to it every time I get payed.. Thinking of holding for 10 years... Is this is a good idea? Any advice welcome 🚀🚀

[@JarradMorrow]

Absolutely. 10+ years is the time frame you should be shooting for.

[@danwilliams6206]

The second item that someone is Actively trading is NOT an advantage. Active funds almost all under perform indexes. Who gives a shit about reacting to markets and trading if the performance is worse? Plus you are just paying fees for buying/selling.

[@JarradMorrow]

I agree

[@rereAL205]

Your eyes are gorgeous!!! 😍

[@phaj0k]

😂👍🤙

[@JarradMorrow]

Oh thank you!

[@QuesttoFIRE]

Jarrad Morrow I was totally coming to the comments to tell you that that purple is YOUR color! Definitely makes your eyes stand out! 😉👍🏻

[@JarradMorrow]

Thanks 😃

[@MezPT]

What about my man's shoulders. Broham is shredded.

[@_Luket]

7:05 "recieve nudes" tf

[@JarradMorrow]

👍

[@moneyji010]

Bro I have 500k sitting in bank should I go all in sp500

[@JarradMorrow]

Nice! It's completely up to you, your investing goals, and risk tolerance. If I had that much then I'd probably dollar cost average $75k-$100k per month into VTI until it was all invested. My goals and risk tolerance might be different from yours though so keep that in mind.

[@moneyji010]

@@JarradMorrow thank you

[@Knights2theEnd]

How are index funds taxed?

[@JarradMorrow]

It'll be based on the type of investment account where you hold the index funds.

[@rickr530]

"Hi guys, I'm Jared with an 'a'" -=double-take=- What about that superfluous silent R, dude!? Your name is a trap.

[@JarradMorrow]

Hahaha I know, right? My mom should have known that one day I would make KZbin videos so it wouldn't help that she spelled my name in a way to make it "unique".

[@Dan-ps6qb]

7:03 questionable Im either hearing shit or not rofl

[@JarradMorrow]

😂 uhh I didn’t hear that word at that time stamp

[@Dan-ps6qb]

@@JarradMorrow sure sure 😂😂

[@TheRetirementality]

I've been trying to put into the Index Funds. It's just so scary for a real estate investor like me. And... what did you say about the tooth fairy?

[@JarradMorrow]

If real estate is your thing then stick with it. If you decide to put money into the stock market then stick with index funds.

[@big0514]

Read the simple path to wealth it’ll ease your fear

[@stephenprice3357]

I think index funds are great for beginners.

[@JarradMorrow]

Thanks for sharing your opinion

[@CaylinMoore]

First comment

[@JarradMorrow]

Someone beat you to it! Hopefully you were the first one to like the video though!

[@seren1ty755]

Used to believe stock trading was the way to profit quickly until I discovered options trading lol.

[@JarradMorrow]

Haha are you trying to force me to make that video?!

[@seren1ty755]

@@JarradMorrow Lol. Well I can't force you to do anything you don't want to do. That is entirely up to you, but I really do believe that your viewers would appreciate the information on that topic because it isn't a very easy topic to understand at first. I am also confident you could make it pretty entertaining and give a very clear explanation on options trading and also how the pattern day trading rule doesn't affect it.

[@pimpnamedslickback7780]

This video is irrelevant for 90% of people

[@JarradMorrow]

Sounds good!

[@dynamichunter843]

First!

[@JarradMorrow]

You win!