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Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million.

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ETF Investing: Save On Fees





ETF can be a lower-cost alternative to mutual funds --- for domestic equity only. International ETFs are usually more expense when it comes to management fees.

From CNN Money:

ETFs can be an excellent way to invest a large sum such as a 401(k) or IRA rollover, a bonus or some other windfall. Use ETFs for the portion of the money that you want to put into U.S. stocks, where ETF annual operating expenses are typically lower than those of comparable index funds.

Yearly fees for ETFs that give you broad exposure to foreign markets, on the other hand, are higher than what you'd pay for an index fund, while fees for bond ETFs and index funds are about the same.

One caveat: Because ETFs trade like stocks, you buy them through a broker, which means forking over a brokerage commission. That can eliminate ETFs' cost edge if you're making frequent investments or putting in small amounts.

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