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toronexti
53o
Joined: 03 Sep 2004
Posts: 4153
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 Posted: Thu Sep 25, 2008 12:13 pm Post subject: ETFs vs Mutual funds |
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| I'm not really getting what the differences here are? Except I guess ETFs don't change positions often? Opinions on which are better? |
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wade
Should be Banned
Joined: 11 Oct 2004
Posts: 3055
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| Posted: Thu Sep 25, 2008 9:48 pm Post subject: |
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I'm a big fan of ETFs vs Indexed funds.
They try to achieve the same goal - tracking a piece of the market. But exchange traded funds are bought and sold just like regular stock shares out of your brokerage account. They aren't "actively managed", so overhead is low . More importantly, with ETF's you aren't stuck with the tax burden that mutual funds carry unless you sell (dividends may apply tho).
The drawback is that they carry commission fees and capital gains taxes just like all other stock moves do - the more you buy and sell, the higher your cost wil be. Thus they are best suited for long term. So for someone (like me) who doesn't move money around very often ETF's are the way to go imo.
For every mutual fund to be had I'd bet there is a cooresponding ETF, but I only follow the big indexes. The untimate decision comes down if you want to go long term or want to be more flexible with your money. Vanguard Vipers and Ishares are the two big EFT offerings I follow fwiw. |
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rocketplayer
Sugar Daddy
Joined: 17 Jan 2005
Posts: 2743
Location: The market is a nightmare but I'm in cash!
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| Posted: Thu Sep 25, 2008 10:25 pm Post subject: |
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I believe mutual funds are a dying breed and ETFs will take over as the investor's choice. I know most money managers are moving towards ETFs and away from mutual funds.
much more cost effective, tax effective and can be timed better |
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toronexti
53o
Joined: 03 Sep 2004
Posts: 4153
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| Posted: Thu Sep 25, 2008 11:57 pm Post subject: |
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| what do you mean by "can be timed better"? |
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toom
Spelling Bee Champ
Joined: 06 Apr 2005
Posts: 2389
Location: Basketball season is awesome BAYBEEEEE
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| Posted: Fri Sep 26, 2008 12:23 am Post subject: |
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| toronexti wrote: | | what do you mean by "can be timed better"? |
I think rocket is referring to the fact that ETFs can be traded at any time the market is open. Mutual funds are valued at the end of each business day. If you decide you want to buy/sell a mutual fund that has a stock you like/hate, you have to wait out a full day's trading. With an ETF, you can buy it in minutes.
EDIT I should have been clearer.
Say I think Dimat Enterprises, Inc. (ticker: 53OFF) stock is about to tank because Matthew is going to name Redpill as CEO. My mutual fund ("Poker Growth") owns a lot of 53OFF. I sell my shares at 10 am. At noon, the announcement is made, and the stock tanks.
My valuation of my mutual fund shares is made on the closing price for that day's trading. I get the afternoon result even though I sold before noon.
With an ETF, the valuation is made on the current ticker price. |
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toronexti
53o
Joined: 03 Sep 2004
Posts: 4153
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| Posted: Fri Sep 26, 2008 1:24 am Post subject: |
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OK, so I get the difference now.
Now let's say I want to buy some ETFs how would I go about doing that? |
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nukeduke
ITH BBQ Host Master
Joined: 07 Mar 2005
Posts: 2998
Location: Nashville
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| Posted: Fri Sep 26, 2008 4:42 am Post subject: |
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| Scottrade.com |
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rocketplayer
Sugar Daddy
Joined: 17 Jan 2005
Posts: 2743
Location: The market is a nightmare but I'm in cash!
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| Posted: Fri Sep 26, 2008 6:31 am Post subject: |
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| toronexti wrote: | OK, so I get the difference now.
Now let's say I want to buy some ETFs how would I go about doing that? |
You can buy ETFs through any brokerage account.
Another advantage of ETFs versus mutual funds is that often mutual funds, when bought through a brokerage account, having a minimum holding period or you incur a fee, sometimes 2% or more, if you sell prior to that period ending.
No such issue with an ETF. |
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Bullajami
Uber Squid
Joined: 03 Sep 2004
Posts: 8838
Location: Mrs. Bull's Doghouse
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| Posted: Fri Sep 26, 2008 7:03 am Post subject: |
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| nukeduke wrote: | | Scottrade.com |
That's who I use - but, of course, you knew that!  |
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