Andy.N
Confused about dryer sheets
Hello everyone, I just wanted to gather some opinions about the pros and cons of choosing mutual funds or etf for a ROTH IRA, more specifically vanguard index funds. Here is my understanding
ETFs: pros and cons
Consistently smaller expense ratios (all though they require a brokerage account, $20/yr so until I have more money invested it will actually be more expensive than the mutual funds)
No minimum investment
More Liquid ( don't think this is much of an advantage for Roth investing)
No purchase or redeem fees
cons is losing money in the bid/ask spread
Mutual Funds:
can own partial shares, easier to reinvest.
no brokerage account required.
once I have 10,000 to put towards a single fund, I will qualify for admiral shares which have expense ratios nearly as low as the ETFs
Right now I am interested in small and midcap us stock funds and emerging market funds. I have 10,000 for both 2010 and 11 to invest. The emerging market fund has a purchase and redeem price which makes it pretty easy to choose ETF. But if I want to go a different route I think mutual funds my better suit my needs, especially once I have enough invested for admiral shares. Another point is I plan on doing additional investing outside of my Roth, in which case I might want the brokerage account because I have read ETFs have tax advantages over mutual funds, meaning the $20 fee is inconsequential for my comparison. But through my research I believe that low cost index funds are the investment tools best suited for myself, I just don't know whether to use the ETFs or the Mutual Funds. All thoughts and comments are welcome, sorry for rambling I'm just so interested to hear your thoughts, if you need clarification just ask. Thanks again!
ETFs: pros and cons
Consistently smaller expense ratios (all though they require a brokerage account, $20/yr so until I have more money invested it will actually be more expensive than the mutual funds)
No minimum investment
More Liquid ( don't think this is much of an advantage for Roth investing)
No purchase or redeem fees
cons is losing money in the bid/ask spread
Mutual Funds:
can own partial shares, easier to reinvest.
no brokerage account required.
once I have 10,000 to put towards a single fund, I will qualify for admiral shares which have expense ratios nearly as low as the ETFs
Right now I am interested in small and midcap us stock funds and emerging market funds. I have 10,000 for both 2010 and 11 to invest. The emerging market fund has a purchase and redeem price which makes it pretty easy to choose ETF. But if I want to go a different route I think mutual funds my better suit my needs, especially once I have enough invested for admiral shares. Another point is I plan on doing additional investing outside of my Roth, in which case I might want the brokerage account because I have read ETFs have tax advantages over mutual funds, meaning the $20 fee is inconsequential for my comparison. But through my research I believe that low cost index funds are the investment tools best suited for myself, I just don't know whether to use the ETFs or the Mutual Funds. All thoughts and comments are welcome, sorry for rambling I'm just so interested to hear your thoughts, if you need clarification just ask. Thanks again!