View Full Version : ETFs vs Index funds vs Mutual funds

08-24-2005, 05:19 PM
Suggestions for $30,000, want to invest one 1,2 or 3 of these alternatives?

Pros/cons of each one?

08-26-2005, 06:07 PM
This is a very simplistic take...but, what it really comes down to is the expance ratio; if you are going to invest all your money in one lump sum then EFT would be the cheapest, Index funds second, and mutual funds the most expansive, on average. On the other hand, if you plan to dollar cost avg. then Index funds are probably the cheapest, followed by mutual funds then EFTs. And yea, only about 20% of the mutual funds will outperform the correspoding Index funds(mostly because of this expanse ratio). And you can buy EFTs that follow the index.

08-26-2005, 07:00 PM
If I'm not mistaken you have to check the value on EFT's when you buy them, they may be selling under the value of the EFT and therefor they could be much cheeper than index or mutual funds.

08-26-2005, 08:14 PM
The only problem with EFTs is if you want to invest, say, $1000 into a certain fund every month. In these cases the brokers fees will eat away all the advantage of the EFT. Otherwise, I believe they are the way to go, for they usually have lower expanse ratios than their corresponding index funds. Plus, as you state, you may be able to get them at a flat discount if you can time it right.

08-26-2005, 10:51 PM
Yea I agree they are not the way to go for the average investor who wants to add a little money each month. Another advantage of most EFT's is that there is no minimum, just the price of the share, where most funds (index or mutual) usually have a 3k min.