Index Fund 5-Year Results — Full Breakdown & Transcript

[00:06] in index funds for 5 years and I wanted to show you the inside story, what kind of returns I've lessons I've learned along the way. I have different investment accounts and I've been investing for over 5 years , only at the beginning I did it

[00:18] buck and it's lasted me financially speaking, where on the one long-term index funds and then if you want to dedicate more time to doing other things like analyzing companies, cryptocurrency trading, botching, whatever, well,

[00:33] fine, but apart from that, what you really have to have, in my opinion everyone should , are diversified long-term index funds. One of the accounts I explain why in a moment, but let's get to what you came here for , I suppose: to

[00:47] check out the results first. Well, look, in 5 years I have obtained a 78.6% return, which annualized means 12% per year. And this little number

[00:59] , considering that I've been investing for a while, and making YouTube videos for years too, is a very good return, especially if we take into account the low risk, in quotes, that we are assuming.

[01:11] Obviously it has more risk than a savings account that only gives you 2 or 3% annually. This is giving us a 12, but by investing in thousands of a 12, but by investing in thousands of

[01:25] betting on one company, like SpaceX, to see what it will do, or just Bitcoin. I'll show you more and scroll down where you can see that we started in May 2021 and now we're in June 2026. That's 5 years. And I say in the plural, we have started

[01:42] because this account is jointly owned with my partner. It's great to have a project together, and it's one of the few, or perhaps the only one (I don't know of any others), where you can invest jointly with another person in

[01:55] index funds. This video isn't about Indexa Capital, this isn't a promotion or showing you one of the ones I use and why. Then I'll give you a quick mini comparison and show you some other accounts I have. Basically, you can

[02:08] invest in index funds in two ways. with a robo-advisor that does everything for you, such as Index a Capital, Finicens, automated portfolios that manage themselves with super low fees, much lower than

[02:21] traditional banks, which charge you 2%. We're talking about how the robot bis charges you 0.5% of your invested capital each year. And the second way is by choosing the stocks or ETFs or index funds to

[02:35] invest in yourself, where commissions then drop to, for example, 0.2%. options. In this case, the one we started with, it works like this. First you create an account, then you ask a series of questions so they know what your

[02:50] investor profile is, such as, "Would you continue investing? Would you want to withdraw everything? Would you stay more or less the same?" And after a few questions like this, which you can do in 10 minutes, they assign you an investor profile from 1 to 10, from more

[03:03] conservative to more aggressive. There's nothing wrong with being aggressive. I say this because the word "aggressive" sounds strange or bad, but it simply means you're taking a longer-term approach, you're not worried about your portfolio fluctuating a lot, and you'll be

[03:16] building wealth over the long term. You'll be allocated more equities and less fixed income because equities offer higher returns, but in ups and downs that I'll show you with the graph—while

[03:29] fixed income is less profitable, but it's all much smoother. evolved. The truth is that it's a spectacularly good graph because it reflects the last 5 years of the stock market and the economy in general—I'm referring

[03:44] specifically to the stock market, not geopolitical events or how salaries compare to daily costs , but purely the stock market. And I tell you this also because, look, at the beginning of 2022 this drop was

[03:57] when Putin started the war with Ukraine. Later. We had a very sharp drop here when Trump announced the tariffs, but look how quickly it recovered. Or later this has been the oil crisis and the

[04:11] Dormud Strait which also recovers very quickly. It might not have happened. It's also possible that anything, big or small, could happen now and cause the stock market to fall, taking years to recover if you are

[04:24] heavily exposed to equities. Also, I should mention that 5 years is not considered a long-term period, so don't jump to conclusions or assume that the next five years will be like mine. They may be the same, they may be better,

[04:37] or they may be worse, and we don't know. And it's also not acceptable to say that since it has risen a lot lately, I'll wait for it to go down

[04:49] fact, there are many studies that show that if you simply invest and leave it untouched for years, contributing as you wish or not, that is much more profitable than people who actively try

[05:02] to predict the market. Speaking of longer terms and returns, I'm here in the MSC World, which is an index fund invest in yourself if you want, just in one. Now I'll show you what's being invested in in

[05:15] my account and other accounts I have, but this one invests in 13 companies from 23 developed countries. I would like to include emerging countries, which is why I give you an idea, notice how we have been

[05:28] . Look how curious this sharp drop was that COVID, which also recovered very quickly. This leads to another good practice, which is to invest every month. It doesn't have to be a large amount, it just has to be

[05:41] one that you can continue to contribute for several months, and you can always change it later. If you earn more money later on, you can save more and invest more. The opposite happens; you go through a rough patch of, I don't

[05:53] know, 3 years. You can invest less or you can stop investing and let the money grow, although not as fast as if you were also contributing. In fact, if I put it in euros, we started with €3,000

[06:06] of our own contribution because my partner and I had €10,000 in savings that we wanted to invest. We have other savings, the emergency fund for day-to-day expenses, but we didn't put the 10,000 all at once, but rather we invested 1,000

[06:18] euros each month until we reached 10,000. From there, €100 each month. I'm blue one. The black ones are our contributions. The blue one is our total portfolio, our contributions plus what

[06:30] the portfolio has grown through investment, that is, what we can withdraw. I mean, that's great. We are experiencing very good profitability. At first we contributed €100 per month after these first € 10,000. Then 200 a month, 300 a month and

[06:44] currently we have been contributing €400 each month automatic transfer from our joint account at BBVA because that's where we have our mortgage, and that way we don't even have to think about it, decide, or

[06:59] unintentionally sabotage ourselves by saying, "Oh, we have more money, let's go for a weekend getaway," or whatever, because if you leave investments as the last thing on your mind, probably—I don't know what ends up happening—you wo n't have any money left over. It's better to have an

[07:13] automatic transfer at the beginning of the month, when you've already been paid, to prioritize yourself and ensure you'll invest and by the end of the month you'll be able to survive as usual. Let's now look at what we're

[07:27] investing in. Although we didn't decide any of this ourselves, we simply answered a series of questions at the beginning to be assigned a profile, and we got a perfect score. We're young, we're long-term investors, we don't have a high

[07:40] and that we'll continue investing. And if you have a 10 out of 10 profile, you can also choose a smaller portfolio, for example, the 6 out of 10 one, smaller portfolio, for example, the 6 out of 10 one, which would be 60% equities and 40%

[07:53] fixed income. In our case, in portfolio 10, you can see the index to capital set on their website. It's all equities divided into these index funds, which are very good in Spain because you can make transfers

[08:07] compared to ETFs, which is a topic for another video. But look at what's being invested in a US stock index fund, the typical S&P 500, another in Europe, another in

[08:21] emerging economies, which I said isn't included in the MSC World because they're only developed markets, in small-cap global companies that are publicly traded and still have several million in value, but not

[08:33] like such large-cap companies and Japanese stocks, which is to diversified. Here are the percentages. Notice how currently the one with the most weight is the United States because it is currently the

[08:45] strongest economy. Something I disagree with a bit about regarding MSC World. If you were to invest only in an MSC World index fund, look below how 72% is in the United States. Here we have it a little more spread out, so to speak. It's

[09:01] also unclear what will be more profitable from now on, okay? that the United States has seen the biggest increase lately. It may still be continue to grow, but compared to Europe which has done worse, now it will get its act together

[09:14] or it is simply a little easier for it to grow because it has not performed as well. But again, you don't know, and you don't have to guess or be thinking about it. Only in the long term, so that you can sleep peacefully at night,

[09:28] so that you don't want to or have to even check it. Now I'll tell you about our first experiences investing with this. The first few months went very positive returns, and I remember Marta, my partner, saying, "Ah, great, this

[09:41] profits." Yes, yes, we'll leave the rest invested, but we'll take the profits and enjoy them, right? And I said, "No, this is for the long term. Don't even think you take it out if we had a really big emergency and we had no other money and

[09:55] no other choice but to take it from here, which you can do whenever good practice to go long-term. Okay, okay, okay. Okay. Then after a few fact there were times when we were

[10:08] in negative territory, like here for example, down 2.5%. So at first she was worried, Ricky, this isn't working, or better to start later, let's take it out before it falls further. And the

[10:23] same goes for Marta, who's the same, it's for the long term, we can be like this for 5 years and be in the red, it doesn't matter, at least we're buying the shares because they're index funds that ultimately invest in shares. At least we're

[10:35] buying at cheaper prices so that later when it goes up, don't worry, don't even think you have this money." The money we need for day-to-day expenses is already safety net, and we've already set aside some savings for vacations. That

[10:48] extra bit we contribute at the beginning of the month, we'll save it for our retirement so we there. And when I say super-treasure, I mean many thousands of euros. Anyway, in total,

[11:01] we've contributed €24,500 to our portfolio here over these 5 years, plus €10,000 to €24,500 to our portfolio here over these 5 years, plus €10,000 to €11,000 in earnings, for a total of €35,500—great! This is very good because we have a joint account, but I

[11:15] also believe that each of us should have something of our own. Look, it's not a big deal if something were to happen someday, if we were to separate— which isn't going to happen—but if it did, you Hey, we're both contributing the same amount, half and half, so when we want to

[11:30] withdraw it, half and half, and that's it, done. Simple as that. But also, since I'm more into investing and I do... I've seen videos on YouTube, I want to look into it a bit more, I also want to invest on my own , since I have other

[11:42] investment accounts. Speaking of other accounts, in Spain you have the most widely used one, My Investor, where you also have portfolios that do everything for you in robot advisor mode. See what I was saying? One is low risk, with

[11:54] equities only 13%, while fixed income is 87%. Then there's medium-low, medium-high, high, and very high risk, where you reach 100% equities, which is our case. Also, notice how the annualized return

[12:07] is higher in portfolios with more equities. Look at this one, a 15% annualized return, and as you go down the scale, this return also decreases . Do n't think that just because it's My Investor and they

[12:20] show you 15%, it's better than Indexa Capital, which in my case has time frame you choose. For example, here they tell you 7 years. In the end, your investments platform, and as The fees are also very similar; if you invest long-

[12:35] term, you'll get almost the same returns. What matters more is how much you invest, exactly what you're investing in— whether more equities or more fixed income—and for how many years you plan to invest. We also have

[12:48] Finicence, which is another robo-advisor. Unlike Indexa, they don't offer the option of a joint account, but they do have thematic strategies for more experienced investors who want to

[13:00] invest in international real estate or top-value Spanish stocks from different asset managers. They analyze which stocks are undervalued or oversold, so to speak, to better leverage

[13:12] potential returns. As always, higher risk means higher returns. All of these robo- advisors I'm showing you are great for anything at all. You can use them for years and years, build

[13:24] wealth, and do very well. The other option is to manually choose your portfolio, your stocks, or rather ETFs, or even better, index funds in transfers whenever you want.

[13:38] Rebalancing your portfolio means not having to sell to buy another, thus avoiding any tax implications. I mean, you don't realize gains, so you don't have to pay taxes yet, leaving more money

[13:50] invested, which further benefits compound interest. In short, index funds are good, ETFs too, but index funds are better if you're in Spain. And one index funds are better if you're in Spain. And one

[14:03] Investor, because in addition to portfolios, you can choose from a multitude of ETFs and index funds. Then there's also Trade Republic. Furthermore, I have a series of videos on YouTube where I grow my portfolio to €1 million, all managed

[14:15] through Trade Republic. I have a cash reserve yield savings account, which provides me with monthly interest payments from the European Central Bank interest rates. Even more interesting is the portfolio section below, where I have my

[14:30] investment funds: the S&P 500 Europe, emerging fixed income, mainly to show it in the videos. And... How are you handling investing? Let me know in the comments, smash that

[14:44] where I'm managing 1 million euros, I'll leave the link here. Thank you so much. M.