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by verdatel 5195 days ago
Index funds are great when you want to do direct deposits every month.. the don't have front-load costs so you can just set up an automatic transfer.

If you invest in ETF's which are traded like stocks then you have to contend with trading fees. The rule of thumb (I've garnered from reading blogs/ literature) is that if your portfolio is < $50,000, then set up automatic payments for all index funds.. however if you have a larger portfolio then it would be worth getting a discount brokerage account and using that to invest in ETFs. This is because having a larger portfolio means that your brokerage house will offer you a discounted trading fee. The advantage of ETFs is generally a lower management-expense ratio than index funds and more importantly you get access to things like REITs and other non-standard financial vehicles.
1 comments
brandoncor 5195 days ago
I wrestled with the ETF vs. Index mutual fund debate too, but I realized that pretty much each Vanguard ETF has an index fund equivalent with the same expense ratio if you invest at least $10,000 to get Admiral Shares. For example, VFINX: https://personal.vanguard.com/us/FundsSnapshot?FundId=0040&#....

At this point, there are only two differences between the two: 1) You can't day trade index funds 2) You can't auto invest in ETFs

Auto investing was really important to me for dollar cost averaging, so I decided to go with index funds rather than ETFs in the end.

By the way, Vanguard does have index funds for REITs: https://personal.vanguard.com/us/funds/snapshot?FundId=0123&...

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