<p>"Costs
ETFs and index funds each offer advantages and disadvantages for managing the costs of the underlying assets. In some cases, the difference in fees might favor one over the other. Investors can buy no-load index funds without incurring any transaction costs. Investors buying ETFs will have to pay brokerage commissions.</p>
<p>Tax Efficiency
In nearly all cases, the structure of an ETF results in lower taxes versus the equivalent index fund. This is because the way in which ETFs are created and redeemed eliminates the need to sell securities. With index funds, securities are bought and sold, although with lower turnover than a typical actively managed fund. These transaction will trigger capital gains that have to be distributed to the unit holders. (To learn more, read An Inside Look At ETF Construction.)</p>
<p>Dividends
The nature of ETFs requires them to accumulate dividends or interest received from the underlying securities until it is distributed to shareholders at the end of each quarter. Index funds invest their dividends or interest income immediately. (For more insight, read Advantages Of Exchange-Traded Funds.)</p>
<p>Rebalancing
An investor with a portfolio of index funds or ETFs occasionally rebalances the portfolio, selling some of the positions and purchasing others. A portfolio containing ETFs incurs commissions by buying and selling the ETFs. Because the investor typically trades in board lots, getting the exact weightings of each ETF desired is practically impossible. This is especially true for small portfolios. With index funds, an investor can achieve exact asset allocation weightings because the investor can purchase fractional units. No-load funds have no transaction costs. (For more on this topic, read Rebalance Your Portfolio To Stay On Track.)</p>
<p>Dollar-Cost Averaging
The technique of using ETFs for dollar-cost averaging - spending a fixed dollar amount at regular intervals on a portfolio - is generally impractical. The commission costs and the extra cost involved in buying odd-lot shares makes this strategy very expensive to implement. Mutual funds are a more suitable investment vehicle for dollar-cost averaging."</p>
<p>Go with tradeking or zecco they are the cheapest brokers on the internet. I use tradeking wich has $4 dollar trades. If I made a new account it would probably with zecco because they have $4 dollar trades as well but a little bit nicer.</p>
<p>someone told me not to invest in the stock market right now because it might be like the 70’s and not really increase except for by a bit for years.</p>
<p>While there are some benefits to an index fund over an etf if you hold it, many funds have a penalty if held shorter than some length of time such as 90 days and its higher than $9.95.</p>
<p>By the way in regards to the 70’s although the market like 2000 - 2009 didn’t change as a whole over the decade, there were numerous opportunities to make money as there were large swings in the dow and s&p.</p>
<p>I agree with QwertyKey … read some books, then get an account. It took me twenty years to develop an investing approach appropriate to my family’s circumstances. You may not be successful from the get-go, but you’ll be accumulating valuable information the whole way. I’m sure the people who gave you the $300 would consider that a laudable use of their gifts. Good luck.</p>
<p>As for the size of your stake, use virtual investments to increase it. For example, you might identify four “great” opportunities. Invest in the best one, and monitor all four. Did the “best” choice do best? If not, why not? Did any of the other three do better? Why?</p>
<p>If you wait until you have $30K (or $300K) to invest, you’ll find it’s WAY too easy to invest the money without putting much thought into it. The old wheeze is that people spend much more time planning their annual vacations than they do their investments.</p>
<p>Getting some knowledge before investing will hopefully help in treating it not as a casino as would be the case in just throwing the money into some stock that is being trashed of a company that is heavily in debt and going down the tubes. With a little knowledge, it is less probable that will happen.</p>
<p>In the current market you can by any one of several major financial institutions and/or quasi US Government owned companies for under $5 per share!! (C, FNM, FRE, I am not recommending these stocks! ) with a good chance your investment will be worth less than $1 per share!!! But seriously, for investment, with $300 you are pretty limited. Can’t really buy 2 shares of SPY. Can’t achieve diversification. Mutual funds have minimums that are often $500+. If you want to speculate, you are better off paper trading or using a simulator that many brokerages provide free of charge. </p>
<p>I opened a brokerage account for my son with $4000 of his money. He was trading a bit more actively than I had expected, but it was a learning experience. He was doing ok until he bought that one stock that went, whoops!</p>
<p>I got into TRP in the late spring of 2008, thinking that the stuff I read in “A Random Walk Down Wall Street” by Burton Malkiel wouldn’t apply to me. I wish I was doing dollar cost averaging in the past year. :(</p>
I wish I was doing dollar cost averaging in the past year. :(</p>