Etf vs index fund white coat investor

In terms of Vanguard, are the ETFs really any cheaper than an admiral share mutual fund? Is a mutual fund better in this regard? Advisor fees, high mutual fund expense ratios, and poorly disclosed K fees can add up quickly. I actually use both, depending on the situation. As you can see, Vanguard sets the admiral and ETF expense ratios at exactly the same level. The ETFs, however, must be bought and sold on the open market, so there are some bid-ask spreads you are also paying when you buy and sell.

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Are there any pros or cons for investing in ETFs - for a long term investor and am not looking to draw anything out. Thanks a bunch for the input. Tags: None. Most broad ETFs are investing in a large of stocks to basically try to match the performance of various indexes. They are usually very lost cost and many brokerages even allow commission free trades. My account is at Charles Schwab. Broad Stock Market Index. The goal isn't to outperform the market, but match it at a lower cost. Since fees have been shown to eat away large portions of people's portfolios, the low cost nature of ETFs has shown to create similar returns.

I have purchased individual shares in companies where I felt there was a very good chance for upside returns whether through dividends or growth, but my portfolio and contributions aren't all that large so the commissions do each into my earnings. I have lately just been investing in the ETFs because they are commission free. I hope that helps. Yet those who wait for the LORD Will gain new strength; They will mount up with wings like eagles, They will run and not get tired, They will walk and not become weary.

Comment Post Cancel. VOO has a lower expense ratio. The White Coat Investor. Yes, there are cons to investing in ETFs. Bear in mind I'm assuming you're using appropriate ETFs- low-cost, broadly diversified, heavily traded, well-managed etc. There are plenty of crappy ETFs just like there are crappy funds. Helping those who wear the white coat get a fair shake on Wall Street since Thanks again.

So, from the tax point of view, you feel it is less desirable?? Most spreads on good etfs are a penny, and I prefer the market price which is much more transparent than some end of day NAV change price that could be anything.

I think iShares just decreased their expense ratios on their major funds to 0. Why only VOO? If only a single fund VTI or a tdf is probably simpler and slightly more diverse.

I'm not saying ETF is better or worse. I've also had the opposite happen when TLHing, I sold the first ETF high, then the market dropped, and I bought the second one low a few minutes later.

But it's not something you have to deal with when you use a traditional mutual fund-both funds are transacted at end of day prices. I like the ETFs because of their lower expense ration until I have enough to get into admiral shares. I think most of them compare to the corresponding index funds.

It allows me to be more diversified with less money at the start. I wouldnt get too hung up on the difference or even switch later on unless there was a cost benefit to do so. In reality, the only difference between the two is the legal structure. In addition to the above differences, ETFs shield you from lots of transaction and capital gains that you might otherwise incur among a same holdings mutual fund and that is a benefit in a taxable account. Otherwise, differences arent worth losing sleep over.

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E.g: If I were to invest $ in Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) or Vanguard Total Stock Market ETF (VTI). Would it be better to invest these funds into an ETF index fund instead? wanted to comment on the tax efficiency of ETFs versus mutual funds.

I confess that I play favorites. It is still my favorite mutual fund and I suspect I will own it until the day I die. There is a very good reason why all mutual fund prospectuses must tell you that past performance is no indicator of future performance. But the process I use to select mutual funds leads to excellent long-term performance, the only kind I actually care about. So what is the track record of TSM?

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My Favorite Mutual Fund

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Mutual Funds

Login or Sign Up. Index funds vs ETFs. Posts Latest Activity. Page of 1. Filtered by:. Previous template Next. I am a relatively new investor trying to understand the basics of investing. I am certain this question has been addressed somewhere else, but I would appreciate your patience in answering it. IS there a difference in fund allocation when investing in an index funds as opposed to the corresponding ETF. I understand the trading differences, NAV vs real time.

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Index funds have been a major holding in my retirement portfolio for over 15 years. Here's how I use them and how they faired in

Mutual Funds Vs ETFs: Which is Best?

I run into this question all the time. Many beginning investors wonder if they should be investing in traditional mutual funds TMF or exchange-traded funds ETF. Once they learn a little more, they discover it matters far more that they are investing in the right kind of mutual funds low-cost index funds and doing it the right way buying and holding a diversified collection , rather than whether the fund is traded on an exchange or not. Nevertheless, there are some subtle differences between the two that may help you to decide which one to use in your circumstances. ETF proponents claim better tax-efficiency, higher transparency, lower average fees, intraday liquidity, and insulation from forced buying and selling as strengths of ETFs. Their detractors point out spreads, premiums and discounts, tracking errors, and difficulties with dividend reinvestment. This, of course, ignores the primary argument against ETFs—that speculators are far more likely than long term investors to use ETFs. As John Bogle , founder of Vanguard has said,. I freely concede that the ETF is the greatest marketing innovation of the 21st century. But is the ETF a great innovation that serves investors? I strongly doubt it. For better or for worse, ETFs have opened indexing to a new market of stock traders.

Vanguard ETFs Vs Mutual Funds- Friday Q&A Series

So this is one of those back to basic posts. If you already know index funds rule, feel free to move on to something else on the site. This is the main reason I use index funds as the major building blocks in my portfolio and the main thing I look at for those minor portions of the portfolio where I consider doing something different from indexing. The empirical data is quite clear on this. Buying individual stocks or bonds introduces uncompensated risk , i. This is the risk of a company going bankrupt or a borrower defaulting or being downgraded. This is when an individual security goes down in value when the overall market is going up and it happens all the time to people who buy individual securities. Mutual funds give you broad diversification, pooled costs, daily liquidity, and professional management all for a very low cost. You can get those particular benefits with an actively managed mutual fund just as well as an index fund. However, the data on active management vs passive management is clear too.