When ETFs Make Sense

Here's a short piece from Kiplinger's that gives some advice on when ETFs make sense for investors:

ETFs are the right choice if you make only one or two trades a year, invest a big chunk of cash and hold on for a long time. Although ETFs typically have lower expenses than index funds, you have to pay a commission when you buy or sell them, so you want to minimize trading costs.

Buying ETFs doesn't make sense if you invest a small amount every month or every quarter. If you invest less than $30,000 a year in three or four installments, it could take years to benefit from the lower expenses of ETFs, says Vanguard's Noel Archard. In that case, it's better to stick with index funds. Expenses will be slightly higher, but you'll avoid commissions.

There it is -- short and simple. And because I am a regular investor (I dollar cost average monthly), index funds are a better choice for me.

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Comments

[Amateur Investment]

Hi