They slice! They dice! They're cheaper than index funds! ETFs, which are mutual funds that trade like stocks, are the hottest tickets in the mutual fund business. But they're not for everyone.
| Row 0 - Cell 0 | What You Need to Know About ETFs |
| Row 1 - Cell 0 | Get Going With Exchange-Traded Funds |
| Row 2 - Cell 0 | Simplify Your Investments |
Before you invest, ask yourself several questions:
- How often do you buy or sell investments?
- How long do you intend to hold your ETFs?
- How much do you want to invest?
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.
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.
Commissions range from about $5 to $25 per trade if you go with a discount online broker. If you plan to trade ETFs frequently, try FolioFn, a firm that lets you make hundreds of trades for a flat fee that starts at $199 per year.
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.
Go back to our main list for more problems solved
Go to our slide show for other helpful tips
-
Baby Boomers vs Gen X: Who Spends More?Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
Retire in Finland and Live the Nordic DreamHere's how to retire in Finland as a US retiree. It's ideal for those who value natural beauty, low crime and good healthcare.
-
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.
