Comments on: Are You a Dinosaur for Not Investing in ETFs?

By: Tax Deadline Looms! | Money Smart Life

Tax Deadline Looms! | Money Smart Life — Tue, 30 Mar 2010 13:20:26 +0000

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By: neal

neal — Mon, 29 Mar 2010 22:05:48 +0000

I can’t disagree. The ETF has all these benefits. I am looking for something in addition – performance.

By: neal

neal — Mon, 29 Mar 2010 22:04:53 +0000

RJ,

I look at short-term performance – 1 year and less. As a result, I rarely find an ETF that makes the grade. If I can’t find a fund that beats the index (rarely) I’ll buy the index. Usually an index fund but possibly the ETF.

By: neal

neal — Mon, 29 Mar 2010 22:02:27 +0000

I actually am not a buy and hold investor so I don’t restrict myself to any particular group. I also dislike the commissions and even the ETF’s with no commissions have higher management fees.

By: Another Scott

Another Scott — Mon, 29 Mar 2010 17:57:48 +0000

If you manage your own investments through a brokerage account, ETFs are clearly the easiest way to diversify your portfolio. I started trading stocks and now almost exclusively trade ETFs. In addition to benefiting diversification, ETFs, like stocks, are very easy to trade and portable. If I find a better deal at another discount broker, I can just transfer my entire portfolio for a small fee.

By: RJ Weiss

RJ Weiss — Mon, 29 Mar 2010 17:38:20 +0000

Loved the last paragraph Neal.

I think it’s more of a debate between ETF’s and mutual funds based off the same index. Both have their advantages, would be interesting to know what you think Neal.

By: Darren

Darren — Mon, 29 Mar 2010 16:50:18 +0000

Neal, if you’re a buy and hold investor, what about index funds rather than the ETF? I know your post was on the comparison between ETFs and actively managed funds, but here are my thoughts.

Correct me if I’m wrong, but while index funds have slightly higher expense ratios, ETFs charge a commission for every trade, just as in the case for a stock. So if you’re a buy and hold kind of person, wouldn’t the ongoing commission charges from regular ETF buying eat away at your returns, as opposed to buying through an index fund?

I personally don’t invest in ETFs for this very reason, and just stick to index funds.

By: Abbey

Abbey — Mon, 29 Mar 2010 14:43:23 +0000

I’ve probably been out of the loop for quite a while now because my husband thinks I get too anxious or depressed whenever finances are being talked about. But I just might ask him about this to see if he thinks this is a great investment. Thanks for sharing.

By: Neal@WealthPilgrim

Neal@WealthPilgrim — Mon, 29 Mar 2010 14:33:30 +0000

I agree w/all your comments Biz…….

I think it’s really important to focus on your goal — which usually includes making money.

That being said, who cares what the expenses are? Let’s look at the results. And often, the ETF results aren’t there.

By: The Biz of Life

The Biz of Life — Mon, 29 Mar 2010 11:00:03 +0000

Not all ETFs are passive index funds. So please don’t come away that misconception. Mutual fund companies are jumping on the ETF band wagon to introduce actively managed ETFs that will turn over their portfolio and generate capital gains and losses. Most ETFs have low expense ratios because they don’t have to maintain the typical mutual fund back office operation to process cash in and out. But expect expense ratios to increase as more mutual fund companies get in the game. ETFs can be traded all day long encouraging speculation. They also have bid/ask spreads, discounts or premiums to Net Asset Value, and broker fees. For the small investor it is still probably best to stick with a traditional index fund through someone like Vanguard. Only very long term holders of passive index ETFs will see the benefits of the lower fee structure.