ETF vs Stocks

[NeilCartwright]

I know stocks are riskier and w/ ETFs you can expect an annual return of around 9.7%. But how would compound interest work with ETFs, if any?

With a betterment or vanguard account, you would let the Robo investors do the heavy lifting and you would contribute on a consistent basis. Is there any opportunity for compound interest to with these accounts like a Roth IRA?

I’m asking bc if you go with stocks you can get 30% back per year annually, which is good for short term gains but if you’re looking at a 15 yr plan the compound interest would make putting that money you would be investing into an ETF vs putting it in stocks

 

[Black Cher]

I just started getting into investing so I don't know much. I have a betterment account which is ETF. My question is, what is the risk with these types of accounts? Is it possible to lose the money you invest?

 

[NeilCartwright]

I just started getting into investing so I don't know much. I have a betterment account which is ETF. My question is, what is the risk with these types of accounts? Is it possible to lose the money you invest?

I just started as well. But yea i lost money this month with Betterement.

My stocks are doing well but i was reading somewhere a guy recommended putting 2k a month away for 15 yrs in an ETF and you can touch a mil, if the returns are around 9.7% (which is doable).

But i wanted to hear from someone else, im still a rookie in this finance stuff

 

[Black Cher]

If only I had 2k a month to put away I planned to put $800 of my tax return in. I have multiple ETF accounts, one with Betterment and 2 with a company called Ellevest which helps women start investing. I'm wondering if I should split the $800 evenly or what

Edit: My betterment account is 40% stocks 60% bonds (saving for retirement) and my two Ellevest accounts are 36% stocks 64% bonds (saving for house down payment) and 41% stocks and 59% bonds (saving for a trip)

 

[mamba]

Most ETFs pay dividends just like stocks.

If you do automatic dividend reinvesting (DRIP), the money you get in the form of dividends is used to buy more of the same ETF.

So, that’s how the compounding works for you over time. You start getting additional shares by virtue of your original investment.

 

[NeilCartwright]

I just started getting into investing so I don't know much. I have a betterment account which is ETF. My question is, what is the risk with these types of accounts? Is it possible to lose the money you invest?

Most ETFs pay dividends just like stocks.

If you do automatic dividend reinvesting (DRIP), the money you get in the form of dividends is used to buy more of the same ETF.

So, that’s how the compounding works for you over time. You start getting additional shares by virtue of your original investment.

Ok that makes sesne. The guys whole premise is if you start dealing with ETFs its sort of like a guaranteed return just bc of how diversified it is, VS stocks. At the same time some companies are seeting 35-100% growth in some of their stocks. If you young and ready for the assumed risk i was weighing the option of dealing w/stocks instead for a few years while you young.

If only I had 2k a month to put away I planned to put $800 of my tax return in. I have multiple ETF accounts, one with Betterment and 2 with a company called Ellevest which helps women start investing. I'm wondering if I should split the $800 evenly or what

Edit: My betterment account is 40% stocks 60% bonds (saving for retirement) and my two Ellevest accounts are 36% stocks 64% bonds (saving for house down payment) and 41% stocks and 59% bonds (saving for a trip)

Im a younger dude so im more aggressive with investing and ratios in my ETF but id suggest going a lil higher on the stocks vs bonds ratio. Someone correct me if im wrong but the stock market has gone up 70% of the time, too much money in it to be fooling with bonds at this point. I would look into going 85/15 or 90/10 stocks vs bonds ratio

 

[mamba]

Ok that makes sesne. The guys whole premise is if you start dealing with ETFs its sort of like a guaranteed return just bc of how diversified it is, VS stocks. At the same time some companies are seeting 35-100% growth in some of their stocks. If you young and ready for the assumed risk i was weighing the option of dealing w/stocks instead for a few years while you young.


Im a younger dude so im more aggressive with investing and ratios in my ETF but id suggest going a lil higher on the stocks vs bonds ratio. Someone correct me if im wrong but the stock market has gone up 70% of the time, too much money in it to be fooling with bonds at this point. I would look into going 85/15 or 90/10 stocks vs bonds ratio

That’s correct. Upside on individual stocks can be much higher than ETFs. ETFs, via their diversification, are less risky than individual stocks. That is, unless you're investing in sector-specific ETFs—energy, technology, etc. I wouldn’t really advise stock picking unless you really know what you’re doing: fundamental analysis, reading company financials, etc.

To your point about age, the younger you are the more stock weighting you should have in your portfolio for growth. As you get older, that mix should shift heavier toward bonds for wealth preservation purposes.

 

[GunRanger]

With betterment, dividends are automatically reinvested. Honestly it's the best site for long term investing, and i even use it for short term goals like my emergency fund, and major purchases.


Etfs are better long term than stovks because youre buying the whole sector or market, rather than just hoping one company continues success

 

[T.H.E.GOD]

With betterment, dividends are automatically reinvested. Honestly it's the best site for long term investing, and i even use it for short term goals like my emergency fund, and major purchases.


Etfs are better long term than stovks because youre buying the whole sector or market, rather than just hoping one company continues success

Put me on game. So you fukk with betterment. Put a g down and 3 years-5 Years from now you got 10 g’s? Or we talking 10-15 years from now that type of investment? You just constantly keep putting money every check you get into this?

 

[GunRanger]

Put me on game. So you fukk with betterment. Put a g down and 3 years-5 Years from now you got 10 g’s? Or we talking 10-15 years from now that type of investment? You just constantly keep putting money every check you get into this?

You should always keep putting money in. Youre not making 10k from 1k anywhere.


Betterment has you choose your risk level. The percentage of stocks to bonds. So the higher the stocks, the more you can make but th eres more risk

 

[T.H.E.GOD]

You should always keep putting money in. Youre not making 10k from 1k anywhere.


Betterment has you choose your risk level. The percentage of stocks to bonds. So the higher the stocks, the more you can make but th eres more risk

So if I go 90/10, do I have to check where my money is going into or it does it automatic?

 

[GunRanger]

So if I go 90/10, do I have to check where my money is going into or it does it automatic?

They choose the ETFs.

 

[MMS]

ETF basically gonna work like a 401k as long as you put the money back into it. Its not as tax advantaged but you also have more liquidity

i like it for that reason

diversification should be key...I live by the old wisdom:

"The easiest way to double your money is to fold it in half and put it back in your pocket"

as long as you are saving and not paying out interest on debt youll do well. Just research and know what youre buying. All investments carry risk

 

[desjardins]

Betterment has the tax loss harvesting after a certain account level and a better UI......but it's worth looking into buying from vanguard directly if you are buying and holding for a while due to the fees betterment charges you.
I saw a monte carlo simulation someone posted that showed Betterment costing them over $200k over x years buying the same vanguard funds you can get from vanguard directly so it's worth looking into imo

 

[O.iatlhawksfan]

I put my money in my acorn account and they invest in ETFs