This is one of the 20 tough financial questions posed in the “Do This or That?” cover story in the September 2011 issue of Kiplinger’s Personal Finance. Use the drop-down menu above to consider other financial conundrums and the right answers for you; share your own experiences and insights in the Discuss field at the bottom of this page.
Invest in exchange-traded funds if you want to be able to buy and sell funds when the markets are open, and you feel comfortable placing orders—for example, you know the difference between a stop-loss order and a stop-limit order. You may also be partial to ETFs if you want to lower your costs; fees for many ETFs, most of which simply track an index, are rock-bottom. And ETFs are a smart bet if you expect to trade rarely or to work with a discount broker that waives trading commissions for certain ETFs (as Fidelity, Schwab, Scottrade, TD Ameritrade and Vanguard do). In addition, consider ETFs and similar exchange-traded products if you want to invest in asset classes or employ strategies that may not be available with regular funds (see When Exchange-Traded Notes Trump ETFs). For example, a good way to invest in gold bullion is through iShares Gold Trust (IAU).
Invest in regular mutual funds if you think you can pick managers who can beat their benchmarks and you’re willing to do the research necessary to find them. (You can also buy index funds in mutual fund format.) Use regular funds if you’d rather not have to worry about placing stock-market-like trades, or if you worry that some crazy market event, such as the May 2010 flash crash, could wreak havoc with prices of ETFs. Finally, use mutual funds if you want to practice dollar-cost averaging—investing a fixed amount at fixed intervals.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
SEE ALSO:
SPECIAL REPORT: Smart Moves with Exchange-Traded Funds
-
AI vs the Stock Market: How Did Alphabet, Nike and Industrial Stocks Perform in June?AI is a new tool to help investors analyze data, but can it beat the stock market? Here's how a chatbot's stock picks fared in June.
-
Stock Market Today: A Historic Quarter Closes on High Notes"All's well that ends well" is one way to describe the second quarter of 2025, at least from a pure price-action perspective.
-
Best Banks for High-Net-Worth Clientswealth management These banks welcome customers who keep high balances in deposit and investment accounts, showering them with fee breaks and access to financial-planning services.
-
Stock Market Holidays in 2025: NYSE, NASDAQ and Wall Street HolidaysMarkets When are the stock market holidays? Here, we look at which days the NYSE, Nasdaq and bond markets are off in 2025.
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?Markets When does the market open? While the stock market does have regular hours, trading doesn't necessarily stop when the major exchanges close.
-
Bogleheads Stay the CourseBears and market volatility don’t scare these die-hard Vanguard investors.
-
The Current I-Bond Rate Is Mildly Attractive. Here's Why.Investing for Income The current I-bond rate is active until November 2025 and presents an attractive value, if not as attractive as in the recent past.
-
What Are I-Bonds? Inflation Made Them Popular. What Now?savings bonds Inflation has made Series I savings bonds, known as I-bonds, enormously popular with risk-averse investors. So how do they work?
-
This New Sustainable ETF’s Pitch? Give Back Profits.investing Newday’s ETF partners with UNICEF and other groups.
-
As the Market Falls, New Retirees Need a Planretirement If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.
