ETF -vs- Mutual Funds

[st1102]

With the recent rising popularity of ETF's do you think there is any chance that these will overtake Mutual Funds within the next 5-10 years?

[housenuts]

only problem with etf's is it becomes costly if you want to make monthly contributions to it.

i think for this reason most people will stick to mutual funds so they can add 10% of their paycheck to it each month with no commission charges.

[mtgordon]

Do you want to know if ETFs are better or do you want to know if they're going to be more popular?

[investormcgee]

[ QUOTE ]
only problem with etf's is it becomes costly if you want to make monthly contributions to it.

i think for this reason most people will stick to mutual funds so they can add 10% of their paycheck to it each month with no commission charges.

[/ QUOTE ]


No commission charges on mutual funds? So you're not talking 'A shares' where they'll charge a typical 5.75% front load? Or 'C shares' where the average expense ratio is typically around 2%?

Unless I am seriously mistaken ETF's are much cheaper to invest in for the average investor with an online broker. $7 bucks will get you an ETF on scottrade. Granted if you are contributing $50 at a time this will kill you but for larger amounts ETF's are the way to go. Plus there are tax advantages with ETF's compared to mutual funds.

[housenuts]

[ QUOTE ]
No commission charges on mutual funds? So you're not talking 'A shares' where they'll charge a typical 5.75% front load? Or 'C shares' where the average expense ratio is typically around 2%?

Granted if you are contributing $50 at a time this will kill you but for larger amounts ETF's are the way to go. Plus there are tax advantages with ETF's compared to mutual funds.

[/ QUOTE ]

i'm talking about making frequent contributions. you can put $100 into your mutual fund every month at no additional cost. ya, the expense ratio is more ie. 2% compared to .5%, but that's once a year, and you aren't being dinged with a $9.99 commission charge like you would be if you were adding $100 to your ETF each month.

i myself prefer ETFs. i just came back from a 1-year job where i made a bunch of money, so i was able to invest a lot at one time. this made the commission charges on buying the ETFs basically negligible.

[kyleb]

ETF's are free through Zecco, are they not?

[gull]

Commissions are indeed $0 at Zecco, but that doesn't mean buying and selling is free. You still have the implicit cost of one half of the bid-ask spread.