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ETFs vs Index Mutual Funds

Posted on 12/26/16 at 6:30 pm
Posted by quadfest
NOLA
Member since Aug 2010
232 posts
Posted on 12/26/16 at 6:30 pm
Question - I've been reading Bogleheads, trying to get an understanding about investing. One part I don't quite understand is that it sounds like ETFs are basically cheaper, more flexible funds. And the book clearly recommends ETFs - yet they cont to point out that index funds are the way to go, even over ETFs. Why is this the case?

TIA - for what it's worth, I have both, but trying to decide which one I should emphasize on more.
Posted by 3morereps
The Gym
Member since Jun 2015
6735 posts
Posted on 12/26/16 at 8:20 pm to
You can't go wrong with index funds or etfs, both have low expense and have a passive investment strategy.. they are pretty much the same, just make sure those expense ratios are low and it's returns are close to the benchmark
Posted by gpburdell
ATL
Member since Jun 2015
1420 posts
Posted on 12/26/16 at 8:52 pm to
ETFs can have spreads just like individual stocks. So with low volume ETFs you might have to worry about buying/selling at a significant premium/discount. This might even apply to high volume ETFs if a crash is happening.

I use ETFs vs funds because I prefer Vanguard products and I have my accounts at Fidelity.




This post was edited on 12/27/16 at 12:14 am
Posted by 3morereps
The Gym
Member since Jun 2015
6735 posts
Posted on 12/26/16 at 10:42 pm to
This is a good point, sticking with the big name providers is a good idea... state street, powershares, GS, etc, etc... putting in limit orders will take care of this too
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