WASHINGTON, District of Columbia
United States
George Washington University Arizona State University
AARP Services Inc AARP Corporation for Public Broadcasting Clean Water Action
Philadelphia PA, Tempe AZ, Wildwood Crest NJ, Washington DC
| Game | Score |
|---|---|
 Alu's Revenge |
147910 |
| Backgammon |
166 |
About Me
Interests:
Golf, hiking, water sports (wave runners, jet ski, surfing...), chess, tennis, skiing, camping... Photography, art, travel, Design (industrial, web, graphic...), architecture, science, geology, technology, psychology, sociology, food, investing, financial planning, speculation, building spreadsheetsMy Photos (48)
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Over the last decade I have learned a lot about investing. My father used to be a stock broker so he helped a bit. I have also read, and continue to read quite a bit about investing, and actively manage my own retirement accounts. I know what a PE is, I know how to evaluate companies and I know how to use the powerful tools on the Internet to analyze potential investments. I speculate from time to time as well.
Exchange Traded Funds (ETF’s) go by different names but that’s the corect term. These can be very effective investment tools because of their often extremely low operating costs. You could easily create a well diversified (sector & asset class) portfolio composed of nothing but ETF’s.
The expense ratios can be as low as .09%. That’s 1/10th of a percent expense ratio each year. You will not find any fund, even an Index Fund this cheap. This is why I love these things. Compound those savings across 20 years, and it makes a difference.
Anyone that knows much about investing knows that it’s very difficult to beat the overall markets performance. Typically when people say "the market" they mean the S&P 500. In fact, most fund managers don’t typically outperform the S&P consistently. So the cheaper you can keep your expenses (buy/sell costs, loads...), the better.
ETF’s are often also more tax efficient than most actively managed funds. Funds that have a high turnover ratio cost you more money in taxes, than those with lower turnover rates.
You can buy ETF’s that track any index you like pretty much (S&P 500, NASDAQ 100, DOW, Russel 2000, Wilshire....) and you can find ETF’s to track industries/sectors like natural gas. You can also buy ETF’s that track international markets at a high macro level, like all of Asia, or a very micro level such as Japan. The options keep increasing and the popularity is rising.
A couple of other great things about ETF’s:
1) They are bought and sold just like stocks. You don’t have to wait till close of market for your buy/sell orders to happen. They are as liquid as any stock.
2) There is no front end or backend load like there are with many funds. You simply pay the normal commission for buying and selling, which can be quite cheap. This adds up to higher total returns for your investment.
ETF’s have sub categories, and have general names like iShares (Barclays Global Investors), SPIDR (Chunks of S&P) and many more.
CASES WHERE ETF’s ARE NOT SO GOOD
If you are doing dollar cost averaging, ETF’s might end up costing you more, because you pay commissions each time you buy more shares. Here funds may win out. Although I have read studies where the perfomance gains of dollar cost averaging is actually worst than just buying one time and holding.
GOOD LINKS
http://www.morningstar.com/Cover/ETF.html?pgid=hetabetf
http://www.fool.com/etf/etf.htm - Motley Fool is a great site BTW
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Anyway - just wanted to say HI!!
