Q: My new idea is would I be better off using ETF's instead of mutual funds?
Answer: That depends.
Seriously, though, I assume you're only talking about the taxable account here. The large cap domestic and foreign index funds [like from Vanguard] are very tax efficient, like the ETF's. I think ETF's have an advantage in small caps, especially small cap value.
The expense ratios for the Vanguard index funds are usually equal to or just above comparable ETF's, but the index funds require no transaction fees if bought directly from Vanguard. If you're going to keep everything at TDAmeritrade, buying/selling the ETF's might have less in transaction fees than buying Vanguard index funds through TDAmeritrade.
Q:Also what group of ETF's are the best?
The cheaper and more tax efficient the better. I think Vanguard's VIPERs are undercutting a lot of the iShares ETFs in expense ratio. The difference in portfolio composition between something like a total stock market ETF or a value ETF from iShares vs. VIPERS isn't going to be all that different, so I'd compare fees.
You should check out Vanguard's
page on ETF's vs. Mutual funds.
Also, before you start looking at which ETF's or Mutual Funds to buy, have you thought about what asset classes you want to include/exclude? For example, domestic vs. foreign stocks, large stocks vs. small stocks, value vs. growth, stocks vs. bonds, etc. After you decide these breakdowns, it become soooo much easier to choose ETF's or funds.
- Alec