<p>I think that you might factor in your own investment style in deciding between ETFs & Mutual funds. I now prefer ETFs because they are more flexible to get in and out. I am managing a small Coverdell account I created for my grandson – I’ve contributed the max allowed of $2000 per year since he was born, so it’s a nice little investment account but not enough money for large investments. I also set it up with the broker’s dividend reinvestment service, so additional shares of ETFs can be purchased without fee as the dividends come in. I like the ETFs because of the flexibility - no minimum investment – plus I can set up his account with trailing stops to protect against a downturn in the market. Obviously not concerned with tax issues as it is a tax-sheltered account. </p>
<p>HImom,
Vanguard has this article
<a href=“https://advisors.vanguard.com/iam/pdf/Efficiency_transcript2.pdf”>https://advisors.vanguard.com/iam/pdf/Efficiency_transcript2.pdf</a></p>
<p>Thanks, DrGoogle. I guess I remain fairly confused. Probably won’t matter much, as we are just buy and hold investors that hang on for the long term and can generally have no fee to buy or sell ETFs or mutual funds associated with the brokerage. </p>
<p>If it were small sums and I wanted flexibility and stops, I can see how and why an ETF would be helpful. We are mostly thinking of our taxable and tax deferred and exempt accounts. </p>
<p>If I was going to buy an index fund, I would lean toward a mutual fund rather than an ETF. </p>
<p>I am not sure how many remember the flash crash in 2010, but on May 6 the Dow Jones plunged 1000 points in a matter of minutes. More than 21,000 trades were cancelled, almost 70% of them were ETFs. A subsequent report blamed ETF trading for much of what happened that day. Although the explanation for what occurred is rather technical, it is important to remember that while ETFs traded chaotically, mutual funds were unaffected.</p>
<p>It should be noted that ETFs can trade at a discount or a premium. ETFs which are not widely traded may have wide bid/ask spreads, sometimes causing them to trade at a discount to their net asset value. It also not unheard of for ETFs to gap down through limit orders, certainly a nasty surprise for an unsuspecting investor.</p>
<p>Having said the above, I not necessarily saying ETFs are unsafe. The incident on May 6, 2010 was an outlier, which is not likely to be repeated. However, I don’t think you can say ETFs are as safe as mutual funds.</p>
<p>Thanks for those thoughts. Will probably start with regular Low Expense Ratio index mutual funds and see how things progress. Will see what Vanguard CFA has to say. </p>
<p>Anyone using a signal on a Forex account? I’ve been looking at it and it loos very profitable. I set some up on some demo accounts to make sure everything looks as it should. </p>
<p>This’ll fit more into the “outright gambling” bit of this topic. But I’m seeing a few of these signals with demonstrated returns of around 15% a month over the past several months upwards of a year. The strategy I’m seeing a lot of is put money in and withdraw half the profits each month, let the other half compound. </p>
<p>They use different strategies so some are riskier than others, but the execution on some of these is pretty amazing. Wondering if anyone is well versed in these here. </p>
<p>Just for today, Wed., 6/4, there is a $1.99 Kindle book on amazon, “Four Pillars of Investing,” by William Bernstein, who is an Oregon practicing neurologist and a financial guru. It is lower than the regular price and has pretty good reviews. <a href=“http://www.amazon.com/The-Four-Pillars-Investing-Portfolio/dp/0071747052/ref=cm_cr_pr_product_top”>http://www.amazon.com/The-Four-Pillars-Investing-Portfolio/dp/0071747052/ref=cm_cr_pr_product_top</a></p>
<p>I bought it but haven’t yet read it. The reviews seem positive.</p>
<p>reviving because emm1 had some new thoughts, and dstark is back!! Welcome back.</p>
<p>So, I just started following a signal with $15,000. This probably falls into the “outright gambling” category - a signal means I’m not taking any action on this except for which signal to use. It’s been running for a little under 24 hours so far.</p>
<p>At the moment I’m at about $140 loss on that $15,000, but that’s from a $600 loss a few hours ago, and $120 loss when I started typing this post. So far it’s not been in profit territory since I started. This signal is volatile, highly leveraged. Maybe I’ll see some profit tomorrow morning, or maybe I’ll be down $1000. </p>
<p>I put an equity limit at $10,000. So if my equity goes down below 10K it will stop the signal and close out all trades. I can keep you guys posted if any of you are interested in this. </p>
<p>Oh, the other outright gambling I have going on, I threw $5 on megamillions tickets. Draw is in 15 minutes. </p>
<p>What are you trading?</p>
<p>Right now the signal is long on USDJPY and short on AUDUSD. 1.8 lots on each. </p>
<p>Also just hit first profits. At about $80 profit right now. It’s exciting!</p>
<p>Ok… I never traded foreign currencies.</p>
<p>
</p>
<p>Ah, sorry, misunderstood the question. </p>
<p>You understood the question. </p>
<p>I just made a comment. </p>
<p>Good luck.</p>
<p>I wish to share my recent experience with my 401k and maybe some of you can learn something from it. Imagine my surprise after coming home from 4th of July vacation and I find out Vanguard automatically “transferred out” all my shares in Fund X and “transferred into” Fund Y in my 401K account. Fund X and Y are essentially the same funds but Fund Y has a lower expense ratio so at first glance one would think I should be happy with the transaction. Well, I’m not.</p>
<p>I have been buying shares of Fund X for the past years and I’m ecstatic with the paper gain. However, since I’m happy with the fund performance and Fund X pays dividends and I bought most of the shares at a low price, I had no intention of selling it. While I’m supposed to be happy with the booked gains over the sale of Fund X, I just now bought Fund Y at a high price for the entire sale amount of Fund X! What’s the use of dollar-cost averaging in Fund X when Vanguard, without warning, just automatically sells it and buys Fund Y at what I’d call a “toppy” price? Please note that I did not enroll in automatic reinvesting at all in my 401k account except when reinvesting dividends.</p>
<p>A stock analogy of what happened to me is for example, I bought GOOGL stocks for the past 5 years with prices from $230 to $420. Let’s say I stopped buying more GOOGL stocks early last year because I wanted to invest in value stocks. A couple of weeks ago my brokerage company automatically sells all my GOOGL stocks at $593 and uses the entire proceeds to buy GOOG stocks at $590. So, instead of sleeping soundly at night because I bought GOOGL at lower prices, I am frustrated that I have just bought GOOG at a top price.</p>
<p>I wish there was some warning from Vanguard so I could sell Fund X, park the proceeds in a safe cash fund and scale into Fund Y or some other fund over the next months. </p>
<p>Did the transfer generate any tax consequence? If not why is it bother you because it’s technically the same fund with low expense. So in your head you can still think you bought X at lower prices.</p>
<p>
Well, I can’t think in “head” terms because it’s technically different funds because the ticker symbols are different and my money management software will show a loss once Fund Y’s share price drops below my forced buy price.</p>
<p>Thinking along the same line as DrGoogle. If there are no tax consequences, does it matter? Vanguard did that to us a couple of years ago, it seemed like they renamed or closed funds. No consequences except a little confusion in accounting. A little irritating, but the money was the same. They may have notified us, but we didn’t notice.</p>
<p>
How is it the same when your cost basis is now vastly different?</p>
<p>It’s the same mutual fund - just different share classes with different fees.</p>
<p>You will be saving money going forward thanks to the lower fees. This is a good thing.</p>