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Re: Invalid Assumptions?
Old 11-30-2004, 05:32 AM   #21
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Re: Invalid Assumptions?

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Just realize that there are a lot of hassles with ETFs as an ongoing investor. *Even with "inexpensive commissions" you are going to need to be investing a lot at one time to get the %age cost down. *Even if you get $10 commissions then you need to invest $1000 at one time to keep the cost at 1%. *If you've 5 ETFs (spread over some different asset classes - 1 US Total Market, 1 EAFE type, 1 Emerging Market, 1 RE, and maybe 1 precious metal) then you need $5000 dollars at a time. *That's only to keep the fees at 1%.

You've also got to let the money build up over time until there's enough to invest. *That means that the money isn't really working (brokerage interest rates are low) and that you've got to have more discipline about saving it.

Another problem is that you can only invest in whole units of shares. *You can't with a normal brokerage buy fractional shares. *Even non-round lots (groups of 100 shares) can be a little harder to sell though it isn't as bad as it used to be.

Really think about this. *It wouldn't be that hard to open a Vanguard mutual fund account and have them auto-deduct from your chequing account on a regular basis.
My commissions are only $1 per 100 so generally I won't get near a 1% even for the low priced ETF's (disregarding spreads of course). However, because it's per 100 when I get to a certain size I believe I can do better by going to Scott or Brown, etc. And, as you pointed out, I may be able to do better yet by going to Vanguard. But at this point my accounts are relatively small and I play with a variety of strategies and so I'm not quite to the point where I feel I have to move. But that will be a good problem to have: accounts that have outgrown their broker!


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Re: Invalid Assumptions?
Old 11-30-2004, 05:34 AM   #22
Recycles dryer sheets
 
Join Date: Jul 2004
Posts: 173
Re: Invalid Assumptions?

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"Brokerage interest rate are low" caught my eye.
Not only are they low, they are so low it is almost an insult to be told what they are paying you. *It might
be better PR to pay nothing and just tell the client they need to *find a place to park the money. *For those of you wondering; yes I understand why they pay such
ridiculous rates. *That doesn't mean I don't resent it.

John Galt
This place gets their money on volume. They're the Walmart of trading/investing and they're very good at it from all I've read/heard. Their phone help can be a little weak but even that's improved. They've even SIPC insured...
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Re: Invalid Assumptions?
Old 11-30-2004, 06:58 AM   #23
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Join Date: Jan 2004
Posts: 75
Re: Invalid Assumptions?

the beauty of ETF's is they price dynamically unlike mutual funds.With funds you are GAURANTEED to buy/sell the high/low of the day.The constant reference to the fee structure vs vangaurd is WAy overblown.ill gladly pay up for more freedom of movement.As to selling fractional shares,ive found it to be very easy,in fact i always giggle as somebody buys my last .067 of a share.If ETF's are such a bad way to go,then why is vanguard entering this market?Being a "dirty market timer",transaction fees and any management fees are just a cost of doing business,ideally overcome by being a "dmt".--ak
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