Publisher's Synopsis
Reach your financial goals automatically Funds or ETFs Mutual funds or ETFs? That is the question. Whether it is nobler to pay a set annual fee or a set annual fee plus commissions. Whether you will trade, rebalance, market time, buy and sell or sector rotate or just hold the same funds for long periods so your money compounds. Wall Street says you should trade ETFs because ETFs have the edge over funds. It is easier to sell the "dogs" when you have ETFs than when you own funds. It is HARD to leave your money alone to grow by compounding the earnings. It is cool to be a "player." Warren Buffett's first rule: Don't lose money. He also said his holding period is forever. Don't sell. He swears by compounding: "My wealth has come from a combination of living in America, some lucky genes, and compound interest." When the average investor uses a trading account, they earn only 3.79% annually (vs market returns of 11.06%) according to DALBAR's QAIB for 10, 20, 30 years. Active managers' returns trail a simple index 83% of time. On the other hand, with specially constituted ETFs you can take advantage of momentum investing and sector rotation easily. You can trade ETFs like stocks even though they are really index funds. ETFs don't force you to pay tax on gains you may not have actually experienced. Even though Buffett claims that "The stock market is a device for transferring money from the impatient to the patient," some investors just 'know' they can beat the averages by being 'impatient' when the right opportunity appears. ETFs can do that. Ultimate Wealth Management
