| Mutual Funds vs. ETFs Get with the Program, Mutual Funds are Way Too 20th Century By Suze
Orman Can I ask you something? You don't use a Betamax to watch movies at home, do you? And your car isn't outfitted with an
8-track tape player, right? And I'm guessing the chances of you using a rotary phone are about as good as Ben Affleck having
a hit flick these days.
In fact, I wouldn't be surprised if many of you under 30 are wondering what the hell I'm talking about.
Yet while you wouldn't be caught dead with any sort of equipment from the Disco Era (circa late 70s, for all you
youngsters), I bet you haven't thought twice about sticking with old-school mutual funds. And that makes me sorta nuts.
Mutual funds have been around for a couple of generations - and there are indeed still some good reasons to use funds - but
folks, if you rely solely on mutual funds you are woefully out of touch. And you could be losing a lot of money by not
staying au courant.
ETFs: Mutual Funds for the 21st Century
Let's fast-forward through the "pro" argument for mutual funds, since we can all recite the reasons in our sleep:
instant diversification across dozens of stocks in a variety of sectors, professional money management, low
investment minimums, cheap fees if you know how to pick right.
Now that we've dispensed with the obvious, let's spend a few minutes understanding one of the biggest problems with
mutual funds. And I'm not even referring to the lingering mutual fund scandal where some fund managers screwed over
their shareholders by giving preferential treatment to a few big shots who market-timed and late-traded the funds. more...
Article also contains: - ETF ABCs
- A Few Small Basis Points = Big Money
- ETFs are IRS Friendly
- The Brokerage Fee Factor
Fund Facts
While it's obvious to see why I like ETFs, I don't want to give the impression that I think all mutual funds are a
waste. I realize many of you are invested in funds through your 401(k) or 403(b), and that funds are the only option
you have. That's fine. Funds are not necessarily a bad investment. My point is that they may not be the best
investment. And hey, bug your Human Resources department to add ETFs to your 401(k) plan. If enough folks make a
fuss, you just might get your company to listen. more...
Suze Orman has been called “a force in the world of personal finance”
and a “one-woman financial advice powerhouse” by USA Today. She is the author
of four consecutive New York Times bestsellers, including The Road to Wealth.
Suze Orman, a
Certified Financial Planner Professional®,
directed the Suze Orman Financial Group from 1987-1997, served
as
Vice President of Investments for Prudential Bache Securities from
1983-87, and from 1980-83, was an Account Executive at Merrill Lynch.
Watch Suze every Saturday night on CNBC.
Check www.suzeorman.com
for TV listings.
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