Investing in ETFs vs. Mutual Funds... What's the Story here???

ABOUT THIS EPISODE

What's the difference between an ETF and a Mutual Fund... and why does it matter to you? There are many differences and you need to understand the benefits of each. One is not necessarily better than the other, but there are reasons to lean in one direction if it fits with your portfolio and investing plan. There are so many options available that you need to talk with a financial professional like Amazon bestselling author, John Browning. Connect with John by texting "LIFE" to 21000 or GuardianRockWealth.com.

Welcome to the build your life podcast with John Browning. Build your life as a relaxed and unedited conversation with financial expert in number one Amazon bestselling author, John Browning Jones the founder of Guardian rock wealth and serves clients across the United States. John's the author of the book build a life, not a portfolio, a guide to your financial future based on your personal values, which you can purchase on Amazon, or stay around to the end of today's show and I'll tell you how to get a free copy milled right to your door. I'm Michael The lawn, your host for the next few minutes as we chat with financial expert and business owner John Browning. Hi, John Browning, how's your day going, sir? is going fantastic. How about you? You know I'm going. It's going great. We are having a superb weather. I'm loving a life talking you and learning a lot today about finances and acronyms and numbers and letters. I just don't know anything about John, so it's always good to learn. You know, my wife is has been a nurse for the past thirty years, MMM and there are certain things, certain acronyms that she uses that I have started just to pick up and use an everyday language now and this. It's the same with every industry, the ear and we all have our own different acronyms and we forget that most people don't know what the world we're talking about, because we live it, eat it, breath that every day, right, they do. Yeah, and so, yeah, so let's unpack that, because that's me today. We're talking today about in investing in etfs versus mutual funds. What's the story here? ETF? I hear it occasionally that I really couldn't explain it to anybody. So I'm asking you, John Brownie, what is? What is an ETF, first of all, and let's understand the difference between investing in that versus a mutual fund. We can do that and you know, before, or sort...

...of before we start, I just want to make sure everybody is aware. This is not investment advice, as never is. It's just information. And before I get a lot of hate mail, mutual funds are just fine. Yeah, okay, I just will explain a few ways where exchange traded funds do things a little bit differently than mutual funds. Okay, and I have as part of my Wall Street career, I ran mutual funds, I helped to run mutual funds and they paid for some of my kids to go to college. So I am I am not saying anything bad about mutual funds. And I also ran some exchange traded funds and, okay, you have to explain what that is. So I hope you will ex exchange traded funds. Okay, so mutual funds are generally managed by a portfolio manager who has a team around him at a large firm and it's made up a lots of different investors. They take all the money from all those different investors, put it in one pot and that portfolio manager then invests in the way that the mutual funds says it will invest. And there's a thing called a perspectives that tells you exactly how that happens. Right, and I would just guess that about zero point zero, zero, zero, zero, zero. One percent of people actually read those prospectives. Right, but wait, wait, wait, wait, you're supposed to read them. You are actually supposed to read them. Yeah, they were designed to hold my garbage can down, John, yes, they're. You're supposed to read them, and that's why, as as a mutual fund or exchange traded fund or anything else that that you own, you will get this in the mail or through electronic now it doesn't even wait down your your trash came because you just hit the leat. That's right,...

...because that you know. I just had to like, if they want you to read them, they should write them in English. I'm trying to read them, John. It doesn't make any sect. And the funny thing is they they actually came up with. The SEC came up with a requirement that they had to be written in plain English. Why? So? They're actually better now than they used to be. Okay, but the problem is that there's so many things. Thank you for all the lawyers listening in today. Thank you for making it necessary to hedge against all the different things that possibly could go wrong or etc. That just make even plain English. There's just so many things. Yeah, and you know, for good reason, you do want to protect investors, but they're in the result is very few people actually read it. That unless people understand it. So a little off topic there, but that mutual fund is managed by a portfolio manager, individuals, and one of the issues with mutual funds are that if, say, you own the mutual fund and I own the Mutual Fund, and one day you just get upset. The market went down by good, by thirty percent in March of two thousand and twenty. You get upset and you sell. I now have either a loss or possibly a gain that I have to pay taxes on because I'm part all that mutual fund that you decided. Not Mean you decide and sell your shares, but we all share in that because it's mutual fund. Is All one big happy right. Okay, so that's one thing about a mutual fun. The other thing is you don't really know what you want and any given time, and I will tell you that being part of all street, one of the things that does happen is right around the time when we would have to submit our in your quarter earlier report, we...

...would make sure in trim certain positions because there's just some things we didn't want to take phone calls on. Yep, you know, I see in your top ten. You you'll know what your top ten holdings are at the end of the quarter, at the end of the year, because it has to be published. But what the Mutual Fun portfolio manager wants you to see is what those top ten holdings are going to be on that particular day that they took that snapshot. God, okay, so the Wall Street secret that we know. Yeah, I'm gonna get hate mail now, I'm okay. So you never really truly know what you want because below those top ten are about, you know, a hundred, fifty or more others, unless it's a really concentrated fund, which right do exist. With an exchange traded fund, it is generally and their course, always it gets complicated. I have say generally, because not all of them are like this, but generally speaking they're going to be based off of some sort of published index. Okay, you were going to know what you own, okay, and in what proportions you own it. So you have that knowledge, which is nice to know, right, and you can't have somebody who may have an emotional attachment to a particular security may be decided not to be disciplined because their the port from a portfolio manager and they don't have to nothing saying that they have to do things a certain way. So you know what you own and what percentage and at the end of the year there may be a tax. Will get a taxable loss based but it's based on what the index did during that year, not necessarily what based on what gareholding number two or shareholding number twenty five did over here. Sure that makes sense. So they're what I call a little bit more efficient. And there are actively managed to exchange traded funds as well that...

...do have that portfolio manager and generally there are guidelines that they have to follow. Okay, so it's good to know that those exchange traded funds are out there. Again, generally they are cheaper. So if you look in that spectus and you read all the fine print, you'll see the different fees and charges that a mutual fund has versus most exchange traded funds and you can see how much you're paying to get that level expertise and get that level of diversification. Okay, so how mighty is the picture between the two of those at this point, because it's still more difference, very much so, because we're Gonn to hold another podcast. Just unpact what you just said. Okay, keep going. All right. So the other big differences with a mutual fund. You say you see in the morning that I really like to sell XYZ fun so you sell it. That sale doesn't get put in until the end of the day. So if it's a really good day, you'll do you'll be happy. It's really bad day, you can't do anything about it. You're you're selling at the end of the day mark and unclosed. Nothing you could do with an exchange traded fund. Those are treated just like an individual stock equity security and because of that you know exactly when that execution took place. Okay, so if you see something you don't like in the morning, you can sell that particular security. Right, that doesn't have to wait until the end of the day. Okay, at it was. Can Be really important in certain circumstances. Right. So, so real. I mean one an ETF forces a mutual fun it's not that one is better than the other. It's just that they have different strengths and weaknesses. Maybe, based on the individuals plan, would that be kind of accurate? That's right. I...

...would say that, generally speaking, again, waiting for the hate. You know it's going to come out after this, that exchange treated funds. It's hard to say they're not just more efficient and cheaper ways to go then than a mutual fund. Okay, again, generally speaking, there are some mutual funds out there that are super cheap and super efficient, but there are thousands and thousands of them and most of them are going to be more expensive than your average exchange treated fund. Okay, less efficient. Okay, all right, that kind of makes sense. But again, how would the common guy know that? Probably wouldn't. He need somebody like you who understands all this to have that conversation right, right, because I think, I mean, I hear ats all the time, so I all you knew that, honor do. It's like, okay, well, I need NETF. Go find me ANYTF John. No, that's not how that's not how it should work. Right, right, and there's there's very few times that you can these days, now that exchange treated funds have become mainstream, it's very rare that you would find a sector or an exposure that you wanted to have access to and have as part of your portfolio that did not have, okay, exchange treated fund that would substitute for a mutual fun doing the very same thing, okay, axxllent. So again it just boils down to the the value on that you bring to the table as a financial advisor to talk with people, help them lay out a plan for their future. The the really helps them build a life. And their portfolio could be made up with some ETF, some mute fronts, some stocks. I mean it could be a variety of...

...things that make up the portfolio. You just can't pick and choose without having a plan in place. And that's what you help people do, right. That's specific to them and you know, mutual friends in the Exchange Street. Of funds are just too yeah, they're just too there's unit investment trust, which I also created, literally thousands of. Both of you did investment trust over the years and and they might be the right it certain certain circumstances as well. Used correctly, any number of different things. There are what they call structured products. There are derivative securities, which, again, this is not investment advice, and derivatives and structured products need to be used only, please, only use those if you are professional and really fully understand those. Is kind of like you. You just don't put, you know, a chainsaw in the hands of a eight year old, right. I mean that would be bad, bad idea, unless you've got the training to know how they fit in and and work well within the portfolio. Okay, wow, that's a deep that. Those were deep waters man. I think here's what I would recommend. Don't try to figure this out yourself. If you're as confused as I am. Just reach out to John Browning, Guardian Rock wealthcom or text him. Text the word life to twenty Onezero. One thing that I've learned right now, John and from this episode, is there there's a magnificent amount of options out there of how to build a portfolio to support my life. I am wholy incompetent to do it myself, as are many people who were listening. So just that's why I encourage me able to reach out to you, have a conversation with John, request a copy of his Amazon best selling book. That will help you understand who he is and why he does what he does and how he works with people, because he's just a conversationalist, the WHO also happens to be a financial expert in helping you build...

...the life that you want to build back by a really cool portfolio that include some of these things that we talked about today, if it makes sense for you. So have a conversation with John Browning and let him help you build the life that you've always dreamed of having, and that's what he does. He's in your corner and I assure you he will pro approve his value to you over and over the year. So, John, thanks. Wow, you know what it it we just scratch the surface. It's like opening your your brain in peeking in and realizing the depths of your knowledge of all of this financial stuff. Is You. You have definitely forgotten more about financial advising than I will ever know, and that's why you do what you do. So thanks for sharing a bit of your wisdom. Let me encourage people to reach out to you by Texting Lifelife to twenty one tho, or just go to John's website, Guardian rockwellthcom John Browning, thank you so much for another fabulous episode of Your podcast. All right, thanks so much for being here with me. You're welcome to always enjoy always a plague. All right, we'll see you. See, money really is a big part of our lives, and John Browning can help you and your family learn how to keep money in the proper perspective. It's important, but it's only a tool that can help you build the life that you want. If you like, John Emeill, you a free copy of his book build a life, not a portfolio. Go to John's website, Guardian Rock wealthcom, and click the contact to US link and send your request. John Will Mell a copy of his book right to your door absolutely free. Thanks for listening to building your life podcast with John Browning. Be Sure to subscribe to this podcast so each new episode will be sent to you automagically when it's released. Have a terrific day.

Nothing in this podcast should be construed as personal investment advice and past performance is no guarantee of future results. Investing is not appropriate for everyone. There is a risk of loss associated with investing in the markets. No representation or implication is being made that using any methodology or system will generate profits or insure freedom from losses. Please remember that investing carries risk. Guardian Rock Wealth LLC and it's affiliates are fiduciary investment advisors. Please consult with US or another experienced qualified investment advisor before making any investment decisions and or trying to implement any of the strategies and tactics we may discuss in any of our publications or podcasts.

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