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Index Investing: Warren Buffet Approved

It goes without saying, Warren Buffet is a legendary investor. Even if you know nothing about investing, you know he's synonymous with success. A true household name. His track record speaks for itself. From 1965-2018, he led Berkshire Hathaway to annualized returns of ~ 20% . In contrast, the S&P 500 had average annual returns of  ~ 9% over this time. Beating the market by twofold is impressive, to do it for decades is unheard of. How Does He Do It? Buffet is a value investor. He spends a lot of time analyzing fundamentals, only investing in companies that meet his rigorous standards. Should I Pick Stocks Like Warren?  No. Despite his success, Buffet is a huge advocate of index investing. Why? Fees, Fees, Fees "A low-cost fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many years ago, and everything I have seen since convinces me of its truth."  Fees devour returns. Index

Staying Calm During The Downturn

It's jarring to see your portfolio drop 30% in a few days. No matter how experienced an investor you are, nobody likes to lose money. In times like this, there's a lot of noise out there. Ranging from good advice to outright scams. No one can predict the future, but markets have been through the wringer. From famines to world wars, financial collapses to political scandals. Odds are we'll get through this too. Things will bounce back. Until then, here's a couple things you can do to weather the storm. Social Media Distancing A lot of folks are stuck at home, bored. It's easy to lose your day to endless scrolling. Constantly checking your feed isn't making anything better. It only adds to your anxiety and stress. Check in to stay responsibly informed and stop there. This will reduce your likelihood of getting emotional. Emotional trading is never good. Stick to the plan. Stop Checking Your Account The move to digital banking is great for investors. Fi

ELI5: ECN Fees

You're new to investing, have done your homework and is ready to get started. You find a discount brokerage offering commission-free ETF purchases . Perfect! You'll save a ton on fees. You enter in your first order and to your dismay, a fee! ECN? What is this? I thought there were no fees? Commission-Free Doesn't Mean Free? There's a misconception that commission-free trading equals to no-fee trading. A commission  is the cost of facilitating and executing a trade. Commission-free still leaves room for other charges, such as foreign exchange fees and the lesser-known ECN fees. ECN Fee?  ECN stands for Electronic Communication Network . ECNs are intermediaries that match brokers to stock exchanges. ECNs charge on a per-share basis for their services, typically fractions of a penny. Some brokers pass these fees down to their clients, others just absorb them. When Do They Apply? ECN fees only apply to trades that "removes liquidity". A trade that re

Why ETFs Are Cheaper Than Mutual Funds?

ETFs are widely acclaimed for their low fees. Equity ETFs charge an average MER of 0.40% , whereas equity mutual funds charge  1.5% - 2% . Many popular ETFs are even cheaper.  VOO allows you to own the entire  S&P 500 for only 0.03% . Talk about a bargain. How are ETFs able to charge so little?