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mutual fund vs index fund? (probably stupid question)

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  • mutual fund vs index fund? (probably stupid question)

    Hi all, I was hoping you could help me with a weird question/situation

    I decided to take on Personal Capital's recent offer for a free conversation to talk to one of their advisor and hear them come up with a plan for management my assets (they're supposedly going to pay me $100 for my time, I won't believe it until that happens). However, during the initial conversation yesterday, the guy kept saying my current financial advisor might be tricking me, acting like a broker and buying a bunch of mutual funds rather than indexed funds. Now, i should probably get rid of my current advisor for a few different reasons we don't need to explore here, but I'm not sure that what the Personal Capital guy said makes sense. These are the funds I currently have through the accounts my current financial advisor manages (both in my Roth and taxable accounts):

    VVIAX Vanguard Value Index Fund Admiral Shares
    VIMAX Vanguard Mid-Cap Index Fund Admiral Shares
    VIGAX Vanguard Growth Index Fund Admiral Shares
    VFIAX Vanguard 500 Index Fund Admiral Shares
    SWSSX Schwabb Small Cap Index Fund
    FSIVX Fidelity Spartan International Index Fund Fidelity?
    FPADX Fidelity Emerging Market Index Fund

    Aren't they all indexed funds? And, in a more broad sense, aren't all indexed funds specific types of mutual funds (that happen to be passively managed, with lower fees, and that try to match a specific index)? Or am I getting it all wrong?



    thank you!
    Nathan

  • #2
    yes, index funds=mutual funds. not sure what PC guy was saying. Maybe PC person meant actively-managed mutual funds vs index funds. From your list, those all look like low-expense passive index funds to me and I don't see an issue

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    • #3
      Sounds like they gave you stress and unnecessary worry along with that $100.

      A good rule of thumb is that if someone is paying you to attend a meeting where they’re selling something (advisors, time shares, etc.), that’s a good indication that you shouldn’t go.

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      • #4
        Originally posted by nathanfrenk View Post
        Aren't they all indexed funds? And, in a more broad sense, aren't all indexed funds specific types of mutual funds (that happen to be passively managed, with lower fees, and that try to match a specific index)? Or am I getting it all wrong?
        No, you've got it right. An index fund is just that: a fund that follows a specific index. Both mutual funds and ETFs can be index funds. But not all mutual funds and ETFs are index funds; there are plenty that are actively managed.

        Your current advisor has you 100% invested in a broad range of index funds, which is excellent but unfortunately not typical. He's done right by you in that.
        Last edited by artemis; 05-04-2022, 05:33 AM.

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        • #5
          Originally posted by CordMcNally View Post
          Sounds like they gave you stress and unnecessary worry along with that $100.

          A good rule of thumb is that if someone is paying you to attend a meeting where they’re selling something (advisors, time shares, etc.), that’s a good indication that you shouldn’t go.
          *Cough cough* Drug reps *Cough*

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          • #6
            thank you all for the very helpful answers!
            this makes me even more convinced to not take PC's services for asset management - will stick to their free online tools

            (as a side note, those are the funds my advisor got me only after I very very specifically asked for low cost indexed funds, lol , so I'm glad at least he followed the instructions).

            thanks again!
            Nathan

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            • #7
              PC wants to take over your investment portfolio and charge an AUM fee. You have done right with your portfolio. Stick with it

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