How To Keep & Grow Your Money #11

In this letter we analyze the Vanguard Information Technology ETF.

Ticker: VGT | Price: $569.24 | Market Cap: $65.1B | Average 10-Year Annual Return: 17.0% (as of August 2024).

What is it (short): The Vanguard Information Technology ETF is an exchange-traded fund that provides investors with exposure to the U.S. information technology sector, including major tech companies like Apple, Microsoft, and Nvidia.

What is it (long): This ETF tracks the performance of the MSCI US Investable Market Information Technology 25/50 Index, which includes a mix of large, medium, and small U.S. companies within the technology sector. The fund aims to provide broad exposure to the growing technology industry, which includes companies involved in software, hardware, and semiconductors.

Our thoughts: The Vanguard Information Technology ETF is a great choice for investors seeking long-term growth potential in the tech sector. With a relatively low expense ratio and significant exposure to leading tech companies, this ETF offers an excellent opportunity to tap into one of the most innovative and high-performing sectors of the U.S. economy.

Do your own research and if you would like to take our free course to learn how to invest into ETFs and Index Funds at Index Institution™ go here.

What’s driving high-net worths out of the UK?

Economic Challenges:

Prime Minister Keir Starmer has revealed a £22 billion deficit in the UK’s budget, previously undisclosed by the former government​

Starmer warned that the country faces both an "economic and societal black hole," and things are likely to worsen before improving​

Impact on Citizens…

Higher Taxes: While income tax hikes are unlikely, other taxes like capital gains and pension relief may increase​

Public Services: Cuts to public services and increased borrowing are expected to fill the budget gap​

Social Issues: The Prime Minister highlighted broader societal challenges, including overcrowded prisons and strained public resources​

Looking Ahead: Economic uncertainty is leading many high-net-worth individuals to consider leaving the UK for more stable, tax-friendly environments

If you would like to explore legally paying less taxes and maximizing your freedom check out Global Optimizer™ or click here.

Financial concept to learn in this edition: Index Funds

What Is an Index Fund?

An index fund is a type of mutual fund or exchange-traded fund (ETF) that aims to track the performance of a specific market index, such as the S&P 500.

Index funds are known for their low costs and passive management, which helps investors keep more of their returns over time.

Key Points:

1. Passive Investing: Index funds don't actively pick stocks; instead, they simply replicate the performance of a given index.

2. Lower Costs: Since there's less trading involved, index funds generally have lower fees compared to actively managed funds.

3. Diversification: Index funds provide exposure to a wide range of sectors and asset classes, depending on the index they track.

Why Are Index Funds Popular?

Index funds have gained popularity because they offer a cost-effective way to invest in a diversified portfolio without needing extensive research or trading. Over the long term, many index funds have outperformed actively managed funds due to their lower fees.

For instance, data shows that nearly 88% of actively managed funds underperformed the S&P 500 over 15 years, highlighting the strength of passive investing​

Benefits of Index Funds:

• Lower Costs: Expense ratios for index funds are typically much lower than for actively managed funds, sometimes as low as 0.04%.

• Broad Market Exposure: Index funds can provide exposure to entire sectors or markets, like the S&P 500, Nasdaq Composite, or the Dow Jones Industrial Average.

• Historical Performance: Historically, many index funds have outperformed actively managed funds, especially after accounting for fees and expenses.

• Tax Efficiency: Index funds typically have fewer capital gains distributions due to lower turnover, making them more tax-efficient than actively managed funds.

Index funds are a great option for investors seeking long-term growth with minimal costs, though they come with limited downside protection during market downturns. Whether to invest in an index fund depends on your financial goals and risk tolerance.

To learn more about Index Funds read more on Investopedia here and learn how to invest in them here.