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Saving & Investing
by Sid Kirchheimer, AARP Bulletin, August 24, 2010
If the roller-coaster stock market isn’t enough to turn your stomach, here’s another reason for Pepto-Bismol: the high fees charged by many mutual funds.
Sure, what ultimately matters is the total return on your investment, not the fees. But lower fees are one reason for the growing popularity of exchange-traded funds, investment instruments you can buy and sell on financial markets like ordinary stocks.
ETFs often track an index such as the S&P 500. Many brokerages will charge you a commission to buy ETFs, but once you own them you’ll typically pay fees of just 0.5 percent a year, or $50 on a $10,000 investment, compared with the 5 percent or more that many mutual funds charge.
To get the specific numbers for what different funds charge, including ETFs, visit MarketRider.com. For another side-by-side comparison, go to the website of the Financial Industry Regulatory Authority.
For $10 a month, MarketRider provides a detailed portfolio manager tool for ETFs and other investments based on your age, retirement time frame and other factors. It also gives alerts on when to rebalance.
Of course, ETFs are not the only place where you could put your money. So check with your financial adviser or do some serious research at online sites to decide what’s right for you. You can get information at folioinvesting.com, sharebuilder.com and etrade.com.
Sid Kirchheimer writes about health and consumer issues.
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