ETFs vs Mutual Funds--Here's why mutual funds are the better choice

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ETFs and mutual funds share a lot of similarities. But there are also some key differences that make index mutual funds better suited for long-term, buy and hold investors.
Timestamps
0:00 Introduction
0:30 Mutual Funds
2:47 Actively Managed vs Index Mutual Funds
4:54 How mutual funds work
6:10 How mutual funds are bought and sold
9:36 ETFs (Exchange Traded Funds)
13:02 Why mutual funds are better than ETFs
14:30 Mutual Funds vs ETFs
18:10 When buying ETFs may make sense
21:00 ETFs vs Index Funds vs Actively Managed Funds
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While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
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22 июл 2024

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Комментарии : 229

@Emmakalley 3 дня назад

Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.

@bellinicheaq 3 дня назад

People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.

@harmanlapointe 3 дня назад

Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.

@Hernymane 3 дня назад

I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.!!

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@greg5892 7 месяцев назад

For anyone reading this in 2023, Fidelity at least now allows automatic investment in ETFs

@priayief 2 года назад

My impression is ... there are nuanced differences. Personally, I don't trade stocks where the bid/ask is significant. And I'm Canadian - here the MER for all funds whether ETFs or mutual funds, have relatively high MERs - especially mutual funds. And I remember the days (too long ago) when mutual funds' minimum investment was a barrier for me. If I was a beginning investor with a limited amount to invest, then I'd definitely go the ETF route. Generally speaking, I'm not convinced that mutual funds have an edge over ETFs. Nonetheless and as as always, I appreciate hearing your opinions. Always well-researched, logical and well-explained. Thank you.

@mikeflair6800 3 года назад

I as as long term as their can be. ETF's for me. You can always just hold them. Much more flexible and tax efficient.

@wread1982 2 года назад

Same here and you know the price throughout the day

@TheSmartLawyer 2 года назад

I would rather the NAV determine the price. Buy and hold in my Vanguard SEP. Tax efficient and reliable. Dividends reinvested. Beautiful!

@assomeoneelse2275 2 года назад

I do too

@conrad_t Год назад

Schwab index funds in the IRA and vanguard ETFs in the taxable

@BasicPoke 2 года назад

You're awesome, Rob. Keep it up.

@robinwoodbury2563 2 года назад

I appreciate Rob's comparison and analysis of the differences between Mutual Funds and ETFs, but he's neglected a few considerations that strongly favor ETFs for me. First, among Vanguard ETFs, they are offered at the same (or even lower) Expense Ratio as Admiral Shares of the Mutual Fund that usually have a much higher minimum investment threshold (sometimes extraordinarily and inaccessibly high) compared to Standard Investor Shares in the same Fund. Second, I purchase all my ETFs using Limit Orders (that cost no more to execute) and set 'my price' that I'm willing to pay and I wait... for the gyrations of the market to trip past my price on a down moment. If, after a while, the order doesn't execute, then I need to reconsider 'my price' and modify my Limit Order accordingly.

@pnkrckmom 3 года назад

That was the best comparison of ETFs and mutual funds I've heard yet!

@ExtraGuac007 Год назад

ETFs gives me more control as a brokerage customer. If Fidelity starts acting like a knucklehead, I can readily move my VOO to Schwab or Vanguard and not be stuck to Fidelity's ecosystem.

@SueTNguyen 9 месяцев назад

I appreciate your simple investment approach for a novice investor like me who just want to buy and hold.

@fabiGBOtown 2 года назад

I always learn so much from these. Thanks Rob

@coast_into_retirement 2 года назад

Thanks Rob. I would also like to add that I set up most of my investing to be automatic. Neither Fidelity or Vanguard will by ETFs automatically like they will a mutual fund.

@roselapierre9575 Месяц назад

Thank you!!!! I’ve been looking for this explaination for so long.

@warlord69enrico 4 месяца назад

i have both... the point is DO IT,

@georgeroesser974 Год назад

Rob, Finally thought of a video (maybe several?) that would help every level of investor find fruitful - maybe I missed it -an explanation as to how we can find out hidden costs on mutual funds that impact on returns. SEC rules seem like they are not enough. Thanks, George

@davejoseph5615 5 месяцев назад

My least favorite things about mutual funds are the capital gain distributions and the add-on account fees. How do ETF's handle those? I think it would also be easier to manage a brokerage account containing a variety of ETF's rather than dealing with individual mutual fund company websites.

@gnoekus 10 дней назад

Thank you Uncle Rob! Learning a lot from you.

@jimtwombly2109 Год назад

Very well explained Rob. I was curious as to what the difference was between the two.

@parvathijilumudi1693 4 месяца назад

Thank you i was looking for this information before making a decision. I plan to stick long term MF makes sense with price comparison if minimum investment is not a concern. Thank you for your work.

@M1911jln 2 года назад

It is my impression that there are tax advantages to ETFs, but you didn't address the tax issue at all.

@thoryan3057 2 года назад

When I had initially opened up my Roth with Vanguard and learned that automatic investments were not possible with their ETFs, I knew that their mutual funds were the better option for me. I started with $1,000 in a target date fund and after it reached $3,000 (not from the returns but mostly from future investments) I sold it and bought VTSAX.

@keltonjohnson6197 2 года назад

Bid ask spreads are tighter than they look. Normally you can buy and sell 1 penny around mid price in a liquid ETF even if the bid spread seems larger than that. Also, Vanguard uses ETF share class to help manage capital gains in their mutual fund share classes. That tax efficiency is therefore unique to vanguard mutual funds but is actually the property of ETFs.

@happytravels2480 3 года назад

I hold mutual funds in my 401k and etfs in my Ira and taxable. I like both for different reasons. I like mutual funds for keeping me from buying and selling too much and the extra year end capital gains payouts. In my IRA and taxable accounts I much prefer ETFs. I’m charged a large fee to buy and sell(rebalance)mutual funds, and etfs are free. Also, there’s nothing worse than not being able to get into or out of a position during the day if you wanted to.

@inquisitvem6723 2 года назад

ETF for Roth IRA

@islandhopper100 6 месяцев назад

@@inquisitvem6723 backdoor everything to roth ira and etf's for the lower expense ratios....too simple for these investment gurus to admit to....they need to keep you confused and offer advice. Exponential growth of tax free money is your superpower.

@pablo08034 3 года назад

As with most choices in finance, I like to own both-depending on the purpose.

@travis1240 3 года назад

I like to hold ETFs in a taxable account because they tend to be a bit more tax efficient (even more than an index mutual fund). Here is why : In a mutual fund, when someone sells, the fund may need to liquidate holdings in order to cover it, generating capital gains for all fund holders. In an ETF the ETF share is directly sold to someone else, so generally doesn't generate capital gain until YOU sell. I agree though that in a tax advantaged account, index mutual funds are superior.

@retired8484 3 года назад

Yeah, that was a horrible error in the video. It's the single most important reason to stick with ETFs, although it doesn't matter in the specific case of Vanguard. Also, the VFIAX vs VOO comparison was also wrong. They are not at all identical funds. They are the exact same single fund.

@jwdepriest 2 года назад

And time of day DOES matter. Buying in the morning is statistically a higher long term return than buying at market close.

@David-fv7zg 2 года назад

@@jwdepriest I would like to see your evidence of this.

@UrielX1212 2 года назад

It is a lot easier for me to automatically invest in mutual funds which is why I go the mutual fund way. Rarely do I see that much in capital gains distributions at the end of the year in a taxable account.

@UrielX1212 2 года назад

@@jwdepriest I would like to see evidence in this aswell. Sounds bogus.

@asdgkh3589 2 года назад

Another thing to keep in mind... if you are resident in the EU, it is much easier (or sometimes the only way) to invest in passive index-tracking funds (like Blackrock, Vanguard etc.) via ETFs, provided they are UCITS compliant.

@Shadowguy456234 3 месяца назад

Or - Switzerland :) Although here we don't have to worry about UCITS...yet.

@philip5899 18 дней назад

The argument for Bid-ask spread is valid but isn’t great enough vs the freedom to buy and sell at limit orders , value far more than that !

@ryantan8666 Год назад

The only argument he makes for buying mutual funds over ETFs is that you have to pay the bid-ask spread on ETFs. However, a similar transaction fee applies to mutual funds as well. They may call it the bid-ask spread as well or a transaction fee. After all, how do the mutual fund managers cover the cost buying and selling the underlying assets when an investor buys or sells units in the mutual fund? This has to come from the expense ratio (all fund investors pay) or a transaction fee (only the investor who buys/sells pays). If anything, the total cost of managing an ETF is lower because the turnover of the underlying assets are lower because units are not created/destroyed so often. Always remember, there is no such thing as a free lunch.

@MsTubbytube Год назад

thank you for a clear concise explanation

@Lowspeedoperator 2 года назад

For the novice investor thirsty for knowledge the details in his content are pure gold to me.

@barrybritt3352 2 года назад

Overall, I like total stock market index funds. For those wanting to know what price they are buying a total market index such as VTSAX, one can monitor the CRSP US Total Market Index during the trading day and precisely determine if it is going to be a red day or green day.

@PradeepKumar-eh1wh 2 года назад

Easier would be to track equivalent etf, in this case VTI. The mutual fund VTSAX would perform almost identical.

@mguti090 2 года назад

Or you can skip that and just buy VTI

@user-pj6nn9mr3n 3 месяца назад

Fidelity has a few index MFs with zero interest expense ratios

@MC-gj8fg 2 года назад

Selling cash secured puts and covered calls via the wheel seems like it's not only a low risk method of options trading, but accelerates returns compared to the historic 10% market average by a considerable amount. The only downside I can see is that we may miss out on some upside in those years where the market just crashes through the ceiling, but over the long term it looks like, even taking commissions and short term capital gains into account, selling options on even relatively safe amd low implied volatility ETFs like XLF returns way better in listless markets. As far as how options perform during a crash...that I haven't experienced yet.

@satinderbank4607 2 года назад

Rob, Is it true that perhaps with Mutual Funds one has the ability to decide to invest based on closing price - so if you like a particular MF and its NAV have gone down a few basis point then decide to invest on that day - Kind of like market timing based on EOD pricing.

@TenOfZero1 2 года назад

I think what you might be missing here is that a lot of ETFs will act as market makers as well, and will buy/sell shares during the day to keep the market price at the NAV. I also feel like there is value of being able to buy/sell when I want and get filled immediately, without the risk of markets moving a lot from now till the end of the day. Also in Canada a .04% MER on a mutual fund is unheard of.

@mplslawnguy3389 8 месяцев назад

Nobody cares about Canada.

@martinXY 2 года назад

It did take a moment before I realised that no matter what I chose to do, I wouldn't be dealing with the big ass spread. That came as a relief.

@JamesShack 2 года назад

Don’t many Mutual funds have dual pricing that works just like a bid offer spread ?

@carlbook2051 2 года назад

Load funds have a spread. No loads do not. Loads represent a sales charge generally split between the mutual fund and the broker.

@ericosei-owusu824 2 года назад

Awesome video.

@peterfischer7084 2 года назад

Are there "synthetic" mutual funds? For non-US investors at least this may make quite a difference regarding taxes.

@abstractwater Год назад

I don't understand why the bid/ask spread for an ETF is more significant than not knowing which price you're going to pay for a mutual fund when you buy it. The latter seems much worse to me...

@diponsible 2 года назад

Hi Rob, thanks for this informational video, as i am is not US citizen and cant buy US mutual funds also i cant afford the minimum initial investment, are its still right to hold ETF as long term investment portfolios? Im glad if you can answer my question.. Thank You

@michaeldbouck 6 месяцев назад

I prefer ETFs when managing my M1 Finance Roth. I have my custom 5-fund "pie" comprised of ETFs and the auto-rebalancing feature of M1 takes all of the hassle out of buying them.

@PHILosophy1025 2 года назад

The two reasons I like mutual funds over ETFs is because I can invest every dollar I intend to save. That may not be the case with an ETF. It’s possible to have money that will just sit in the settlement fund. The second reason is the ease of doing tax loss harvesting. In an mutual fund I can simply do and exchange and it will sell and buy for me at NAV. With an ETF, I would need to manually sell and buy. I don’t want to spend the time to do that and risk a price fluctuations within that process. Mutual funds allow me to do tax loss harvesting with little effort and time.

@rontoland9605 Год назад

I watched your video where you promote m1finance. I checked it out and like it. However, only ETFs can be added to the portfolio on their platform. Comments?

@SanjeevDD 2 года назад

For me ETF is a preference as I like to know the price when I am doing the transaction. I am curious about the comment that selling covered calls can lose one lots of money. If one is not greedy and sets a strike price outside the likely range then one could generate additional returns.

@IndexInvestingWithCole 2 года назад

"If one is not greedy and sets a strike price outside the likely range then one could generate additional returns." Until it gets called away

@dhumaladitya Год назад

I don't see much of a difference even for buy-and-hold investors

@HokieAlum08 2 года назад

I think one of the biggest things that you mentioned in passing is the purchasing of partial shares. It may not be an issue at Vanguard but at Schwab, you can't buy like that. So if you want to utilize DCA on a monthly contribution schedule, ETFs aren't an option at all. Depending upon your brokerage, that may be the deciding factor for someone.

@michaellearmonth3412 Год назад

One of the reasons I chose ETFs over Mutual Funds is that I believe there is less opportunity for malfeasance regarding ETFs, like the 2003 mutual fund scandal when select customers were allowed to trade in mutual fund shares after the markets had closed, at the closing price for the day.

@djryan8944 Год назад

Expense ratio is slightly higher. Why would I want to pay more?

@ken01209 2 года назад

Hi Rob, is the capital gain tax on this mutual fund negligible? I know sp500 fund has very low turn over ratio but ETF such as VOO has no such a problem since it is traded like a stock. There would be no tax burden until you sell your shares.

@drott150 2 года назад

There is a tax burden even if you buy and hold for years. VOO gives off a dividend annually that you must pay every year. It may be relatively small, but there is a dividend that will be taxed every year.

@PradeepKumar-eh1wh 2 года назад

How about Capital Gain Distribution of Mutual funds? Doesn't it make etf more tax efficient?

@DavidEVogel 2 года назад

A mutual fund distributes dividends, qualified and ordinary capital gains. You pay taxes on dividends and ordinary dividends.

@jamesrockford2626 2 года назад

Older people like mutual funds because that's what they understand and trust. It's much like old people still listen to old music.

@drott150 2 года назад

Ok Rockford files.

@frankb1 5 месяцев назад

What about suprise tax bills with VFIAX?

@shenjuan1 3 года назад

What about buying funds of transaction fees from other houses? In this case, isn’t ETF the only way to go because many houses now charge zero trading fees on ETFs.

@pecv4776 8 месяцев назад

Can ETFs set up automatic invesments?

@pranaliu6185 Год назад

I really don't know that I heard anything that showed mutual funds are > ETFs except maybe the statement being repeated(clickbait?lol). You can always put in your ETF order at the EoD.

@DavidDLee 2 месяца назад

TL;DR they are almost the same. ETF: bid/ask spread at the day of making a transaction, can be lower expense ratio Index mutual fund: one price, calculated at the end of the day, expense ration can be higher (but lower than actively managed mutual funds).

@mehmetaydinlik914 2 года назад

I like this channel but this video did not justify why mutual funds are better. Only reason given was about the spread on buy and sell prices. Is there any other reason? ETF expense ratios are lower and you can sell and buy them instantly. Why would anyone go for a mutual fund? Most brokers don't charge trading fees for ETFs anymore. I recently tried to buy a vanguard mutual fund from schwab account and i was asked to pay a fee but i can buy the same fund as etf without any fees. Am i missing something here?

@MrZonYT 2 года назад

Same opinion here! Still dont understand how Mutual Funds could be better than ETF.

@AK-ky3ou 2 года назад

Automatic investing for one, set it and forget it. Not possible as far as I know for ETFs except for 1 brokerage.

@JesseHeap 2 года назад

@@AK-ky3ou m1 finance and most robo advisors like wealthfront allows automatic investments in ETFs. But agree its not allowed at the larger brokerage firms.

@johna9994 2 года назад

I think someone could make a 20 minute video on why ETFs are better with the points you made. I would add that you are able to set a limit order on ETFs

@andresisaza6096 2 года назад

Right and mutual fund in the long run there so much money you loose with those high fees. Imagine having 100k invested and pay 1% a year 1.000usd year in management nop thanks

@mikem.5995 Год назад

All a question of preference and how much you can invest at once.

@RandomJane104 Год назад

If you have the minimum investment then mutual funds are fine for buy and hold. My Roth is made up of ETFs because I just started it and deposit $575/month. Only have a total of $3k in it. I might "transfer" to equivalent mutual funds when I have enough in each to meet the minimums. I am only considering that though because it would make automatic investing possible. Right now I just have a calendar reminder set for when the funds hit my brokerage account to remind me to go in and invest the additional funds. Also there are some I don't want to invest that much in at first. I don't pay transaction fees with Vanguard because my total value is over the threshold.

@DashAU Год назад

Im not sure if you gave an answer to anything. so for clarification ETFs sound better to me.

@helmgimble1258 Год назад

I think your advice might be a bit American specific. I went with ETFs because of the ownership model in Australia. With the CHESS system, I own the shares personally, mitigating all sorts of risks, which is more than I can say about mutual funds.

@tomenterline2783 2 года назад

When I sold some Vanguard Admiral shares, I got a message that I couldn't buy any shares in the same fund for 30 days. That convinced me to stick with ETFs.

@maymey Год назад

That was likely a "wash sale". The same thing can happen with ETFs.

@PennyPincher60 10 месяцев назад

ETFs require a lot less headache when dealing with taxes. When mutual funds rebalance at the end of the year, doesn't this force u to pay taxes on the gains? You also get a tax credit on the losses but who wants to deal this major headache when u don't have to as it adds major complexity to ur life. ETFs make you life a lot more simple unless I am misunderstanding something.

@dylanschang6386 3 месяца назад

You’re entirely correct, I’m not sure why this guy completely neglects to address this

@gihanilangakoon Год назад

I like your analysis of MF vs ETF

@alex182618 2 года назад

The most important is that mutual funds reinvest dividends, because you can buy partial share of a mutual fund. You can invest exactly one dollar or $3.45 into a mutual fund.

@danh2716 2 года назад

I don't have a problem buying exact amounts of ETFs in my Fidelity accounts. I just bought exactly $6,000 worth of VTI in my ROTH after the first of the year.

@scottivlow9962 Год назад

@@danh2716 you can reinvest dividends it's called DRIP even TD Ameritrade will gives you the option on the selection. Schwab will also have the same option but only if you select it. I think by default it is dividend cash out that reinvestment. That's how it is on TD A. You can't buy partial shares but dividend reinventing is a different matter.

@mplslawnguy3389 8 месяцев назад

You can reinvest dividends in ETFs as well. I have ETF's in my taxable account, just because I only buy them when I have some extra funds laying around, but the bulk goes into Roth and my 457b accounts, which are mutual funds.

@davido.9180 Год назад

@Rob B great video and detailed explanations - when i read the comments it’s funny most the questions are answered already in the video - expense ratios being the same or close , buy and hold the mutual is simple - less bells and whistles that I really don’t need great video!

@millerdave6 Год назад

Elsewhere you expressed a preference for the M1 Finance platform which, as I understand it, only deals with ETFs, not the underlying index funds. [I'm thinking specifically about investing in Vanguard index funds.] Is the ease of using M1 Finance a reason to choose the ETFs to invest in?

@rob_berger Год назад

I would say no. I would consider the services, technology, etc. of a broker first. I like the rebalancing feature of M1, particularly for those starting out. For those closer to retirement, I prefer Fidelity.

@millerdave6 Год назад

@@rob_berger Thanks.

@johnwzimmer405 2 года назад

One can trade an ETF like a stock and set a stop. Buy and hold is not as efficient as sitting on your hands in cash during down turns. I had to deal with mutual funds in my old 401k and got warnings when I would sell and then buy back in less than 30 days. So if one has 30+ years and is willing to ride out the down turns I'd agree that mutual funds are workable... just not my cup of tea.

@alex182618 Год назад

Bid ask spread can be ridiculous in some cases when ETF is narrow or specialized

@lindapatrick2676 2 года назад

One other reason to buy ETF is if your brokerage firm is other than Vanguard and you want to purchase a Vanguard fund without paying extra fees from your current broker. Is that correct?

@I..cast..fireball 2 года назад

A valid reason

@thinkeric 2 года назад

Hi Rob, discovered your channel in Feb 2022 with your video about the latest Vanguard date-based fund news. I was one of the people who got lucky - the date based funds were in my IRAs and not subject to a big capital gain - but I’m wondering if your general opinion of mutual fund vs ETF has changed now.

@2cartalkers 6 месяцев назад

Taxes, not the state---taxes.

@billgrabbe9992 Год назад

I see two advantages of ETF's for ordinary people. 1. Equity ETF's don't have capital gains distributions. That's a good thing in a taxable account, especially one with long term holds. 2. Some useful ETF's don't have mutual fund counterparts. I believe that target maturity bond funds are a good example. You get diversification in an ETF versus holding individual bonds, and you still get a targeted maturity date that you would have with a bond that you plan to hold to maturity. If I'm missing something here, please let me know.

@unitedstateser 2 года назад

Hi Rob, can you talk about funds like GUT and CLM? I know clm gives back some capital, but if you own the shares, why is that bad? With gut, I don't think they return capital and they pay a consistent 8% yield. Why mess around with the ups and downs of the market when you can just buy these?

@esbiermann62 26 дней назад

Is Robinhood just ETF's?

@genericusername5909 11 месяцев назад

The perspective here is strictly American. Everyone doesn’t have access to the same mutual funds at the same cost (not counting cost of currency exchange). So in the EU for example an ucits compliant ETF for eg S&P500 will be both cheaper and be closer to the index, which makes for a massive difference

@harmanlapointe 2 дня назад

As an lnvesting enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?.

@keithpoolehomecoffeeroasti489 2 месяца назад

Yeah i got burned a little bit with the Vanguard ETF as a casual investor (ie kinda dumb and forgetful). I was online and on the phone with Vanguard for unrelated reason and i casually asked why i had $15k in a settlement fund. Well i normally do taxes on the weekend and also remember to contribute to IRA at that time. So i was contributing to the VOO ETF but forgot to call the next business day when actual price is determined to actually move funds from settlement fund to the index fund. Did this twice apparently. So anyways the 1 basis point not worth it for people like me who want to invest but deal with it once and be done with it, set it and forget it.

@kathymclaughlin2248 2 года назад

I am so confused. Sounds like you prefer mutual funds for long term, but in so many of your videos and profiles you promote EFT's??? Can you help me understand?

@raleedy Год назад

ETFs are better for taxable accounts because they allow for more control over the timing of income and realized gains.

@AK-ky3ou 2 года назад

The irony of this comparison is they literally are the same fund.

@MC-gj8fg 2 года назад

Aren't ETFs better for our brokerage account, as opposed to our IRA, due to tax efficiency?

@AK-ky3ou 2 года назад

Not when it comes to vanguard index mutual funds, other companies index mutual funds, yes it’s better to own the etf in taxable.

@imdoc7872 Год назад

ETFs are more tax efficient, lower cost, and no minimum entry investment.

@george6977 4 месяца назад

With mutual funds when you sell you do not know at what price you are selling. In October 1987 the market fell 23% in a day. It could happen again.

@iamgoddard 2 года назад

What about taxes? I'm reading that ETFs are more "tax efficient."

@Wakemeup456 2 года назад

21:00

@oflavia2910 2 года назад

For Internarional non US investors isn’t there ETFs with no dividend ? As investors who earn dividend from US ETFs are liable to 30% withholding tax we wish to avoid given these are being held for long term ie retirement. thanks in advance

@paulocruz1544 2 года назад

yes there are. Find the ones that are Accumulation, instead of Distribution.

@oflavia2910 2 года назад

Thanks. Could you help with atleast one name or how to filter on “ accumulation” pls thanks

@paulocruz1544 2 года назад

@@oflavia2910 you have to look the ones that are available at your brokerage service. Some examples: IWDA, VAGU, EMIM.

@john99776 2 года назад

Buy and hold investors don't have much of a selling price risk with ETFs because they rarely sell. As for buying risk, what is so difficult for regular dollar cost averaging investors about looking at the relative prices during the day and buying when you think it will be lowest for the day? It's not a huge risk point but a potential small reward opportunity on which one can hone their performance. So, the ETFs overall have just a bit more reward opportunity and very little if any downside. With Vanguard non Admiral shares, also one basis point lower fees for the ETFs, and of course no minimum. Rob is listing all of the relevant details showing the small but real versatility and opportunity benefits of ETFs, but then coming to a conclusion which makes no sense to me. His main rationale seems to be that looking at daily price fluctuations frighten him, but index fluctuations are too small to be very scary. Rob's presentations in general are excellent.

@esfanintan Год назад

@robberger I’m with Fidelity and if I want to buy a Vanguard mutual funds Fidelity charges me an extra $75 and for that reason I’m forced to go ETF because there is extra charge on that.

@alexanderb4465 2 года назад

I am a big fan of your channel and agree with 90% of your advice overall but this advice you give on choosing mutual funds over ETFs I do not agree with. For example on the vanguard it costs 0.04% expense fee for the mutual fund compared to the 0.03% fee for the ETF on a fund with the EXACT same holdings. And another important consideration is that if a bad news headline hits the newspapers that causes a dramatic drop in the market.....having the ETF let's you bail out in an emergency at the best price compared to a mutual fund fund that won't calculate the nav until the end of the day. There have been days that you would have lost an extra 5% or more by being trapped in a mutual fund. And I will tell you something else .... When 20% of the participants in a mutual fund decide to bail out in the same day (such as what happened when COVID was announced I march of 2020) it causes massive damage to the mutual fund and it's liquidity because the fund manager will be forced to sell assets to cover all the outflows of customers. So I my opinion it is a bad idea to invest in mutual funds when there is an ETF equivalent. Vanguard even said that the reason the ETF has a cheaper fee than it's mutual fund equivalent is because so many more people are in the ETF instead of the mutual fund version. Mutual funds are a deprecated and old fashioned instrument. They are going the way of the DoDo 🦤

@alexanderb4465 2 года назад

I hear it said so common that "you can't time the market" and that people should sit in same fund for years without exiting it but that that is not a logical thing to do. If I am in a fund that has lost more than 10% year to date I think it would be smarter to exit the position and to buy back in after the bear market has reversed. In the interim one could also choose to sit in an inverse ETF and continue making money

@robertallan4489 Год назад

The 'problem' with index investing is the fact that most are capitalization weighted. So the top 10 holdings is really all that you are investing in. The rest are just along for the ride with largely meaningless influence. So direct investing in those top 10 is not as complicated as you make it here. Equal weighted indexes usually perform lower than a capitalized index because 'diversification' really does not give you better performance. So index investing really is not the one all answer to good investing that you've made it.

@mplslawnguy3389 8 месяцев назад

Yes, but it reduces the volatility. It's the best option for most people. You do you.

@drott150 2 года назад

You left out an important advantage mutual funds have over ETFs. Mutual funds like the Vanguard S&P500 can have funds automatically invested into them every pay period or 2 weeks etc without any effort on your behalf at all (facilitating dollar cost average investing). In contrast, ETFs do not allow that convenience. If you wish to dollar cost average into ETFs you have to log onto your account and manually buy more shares every time.

@Youtuberkt 2 года назад

not true. Most brokerages provide automatic investment option that retrieves fund from a specified bank account and invests into the plan you set up. For instance, etrade has that feature.

@drott150 2 года назад

@@RU-vidrkt The one's I'm familiar with only do that with Mutual funds. For instance, Vanguard provides that function for its total stock index VTSAX, but does not offer that option for its total stock index fund VTI.

@FlyingSolo77 3 года назад

Why are the NAVs different? At this very moment VFIAX has a NAV of 408.48 and VOO has a price of 402.57. Shouldn't they be pretty close? Maybe this is a topic for another video. Enjoying your videos so far.

@alrocky 2 года назад

Q2 No their share prices do not have to be similar. Initial share price is an arbitrary number. Look at: ~ $236 = Vanguard Total Stock Market ETF (VTI) ~ $114 = Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

@DaystarHiker 2 года назад

What indicates it is an index fund?

@AK-ky3ou 2 года назад

You’d have to verify by reading the prospectus. Or just read the summary of the fund. It’ll say it tracks an index

@ChrisKAloha Год назад

I contribute to my mutual funds in my Ira through my principal financial broker. I have no idea what he is charging me.

@ryann8348 Год назад

I can buy VOO with no commission. VFIAX costs me $35 per trade.

@gieb6428 Год назад

If you own the mutual fund, you always have a Buyer

@Rw5768 6 месяцев назад

I detected no positives given to index funds over ETFs…

@sabretom7594 2 года назад

VFIAX expense ratio .040. Vanguard 500 index ETF VOO expense ratio .003. Your choice.

@TheSmartLawyer 2 года назад

Super low either way unless you're tossing around lots of weight as an active trader....

@vincentwong1127 2 года назад

@@TheSmartLawyer a dollar saved is a dollar earned

@tedpritchard5619 2 года назад

Is a possible advantage of ETFs that, depending on your trading platform, there is no platform fee in addition to the fund expense? Vanguard charges an ongoing platform fee which is something my share trading platform doesn't

@kevinschultz6091 2 года назад

I think that might simply be the specific ETF vs. the specific mutual fund. I've got a 0-fee mutual fund in my 401k. However, it's pretty new; I think older (ie, managed) mutual funds tend to have high(er) fees than newer ETF's.

@arentibbs799 2 года назад

I wonder if you have changed your opinion after Vanguard slammed their customers with a huge unexpected tax bill? I have mutual funds in my Vanguard Roth IRA. I've had mutual funds in taxable accounts but have been burned. In one case, lots of capital gains distributions. (Not sure whether to sell and take the Long Term Capital Gains tax hit or leave it.) In the other case, the company stopped keeping track of my cost basis, which was a major PITA when I cashed out.