ETF? WTF?

by astanhaus

Financiers LOVE their acronyms more than $$. The more not obvi(ous) the better!

ETF= Exchange traded fund.

(click on the bold-faced vocab words:))

ETFs are giving Mutual Funds (MFs) a run for their money in the popularity contest that is the stock market.

Why hot?

Best of both worlds: ETFs allow for diversification (like a fund) and frequent trading (like a stock).

Easy access: ETFs don’t have minimum investment requirements like MFs. Good news for newbie investors.

Why not?

Tips: Owners have to pay extra $$ per trade. If dollar cost averaging is your investment strategy, then commissions are your enemy.

Passive Action: Index investing is really the only option for these babies. You have to believe the market is efficient (and be anti-Warren). Do you believe??

When you make the MF/ETF decision…ALWAYS read the prospectus.

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

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