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Last year (while I was busy with my real job) I stuck most of my investments in Vanguard ETFs that I bought through Ameritrade for a one time $9.99 fee.
Why pay the $9.99 fee (for each ETF) when you can get them for free with Zecco as long as you have $2,500? If you have less, Scottrade costs only $7 per trade and Scottrade has financial statements that go back 5 years. I use Google Finance and Yahoo Finance for charts. You can even use trailing stop orders with Scottrade. Also, one day when you sell them, you'll have to pay $9.95 again (although the net present value of the long-term investment will be much smaller than the purchase commission).
What should you buy?
I think that VGK, VTI, VBK, VPL, and VO should dominate your ETF portfolio and that a small percentage should be in VWO or EEM. I like VWO and EEM as long-term only investments on a dollar-cost averaging basis.
Well, since you can use Zecco, which charges no commissions, I would only buy up to 5-10% of my portfolio in VWO. However, I think the majority of your portfolio should either be in US stocks or developed international countries (not the developing world). The developing world will become fruitful again if there's a pullback as there is still much potential in these areas. However, there is high risk if you choose that investment.
I think the idea of using limit orders is a good one. You can look at support and resistance levels and then make an informed decision.
I like ETFs better than index mutual funds because the fees are even lower.
VTI, VB, VBK, VO, VV and SPY all have a 0.1% expense ratio. VGK, VPL, and DIA all have a 0.2% expense ratio. VWO has a 0.3% expense ratio. IOO has a 0.4% expense ratio. Lastly, PZI and EEM have expense ratios of 0.7% and 0.8%, respectively. VGTSX has an expense ratio of 0.32% and VTSMX have an expense ratio of 0.19%.
With Zecco, I have to agree. You pay commissions on mutual funds rather than ETFs if you use Zecco; it costs $10 to trade a mutual fund. ETFs have no commission as they are traded like stock. I like the idea of free trading as this makes it easy to dollar-cost average. However, if a mutual fund does perform in the top 20% of all funds, it might be wise to use a mutual fund rather than an ETF. In comparing index mutual funds to ETFs, it is likely that the ETF is a better buy. For example, you might perform better holding FGBLX than you would if you held IOO and 40% of a bond ETF, since FGBLX has averaged over a 9% rate of return (as a balanced fund) over the last 10 years and has averaged in excess of a 12% rate of return over the last 5 years. VGSTX has performed at a 17.5% rate of return, VTMSX has performed a dismal 10.08%, and VBLTX has performed at a 7.25% rate of return. If we assume that VBLTX acted as the global bond index (not such a bad assumption, we'll make it 8% to make the comparison conservative).
8% * .40 = 3.2%
17.5% *.4 * .6 = 4.2%
10.08% x .6 x .6 = 3.6628%
Market Return = 11.0628%, net of .22% expenses = 10.84%
FGBLX Return = 12.15%, net of expenses = 10.97%
The conclusion that I have is that in order to pick a mutual fund over an ETF, it must be a superior fund choice. However, to be successful year after year is a very difficult feat and as you become larger, you are simply charging higher fees and acting like an index fund as your large size prevents you from successfully following the fund's strategy that caused it to be successful in the first place.
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