Index Funds vs. ETFs

[Macallik86]

Dapped both posts but if OP is focused on broad, index tracking ETFs then he would not really be going against Bogle's advice.

With that said, @Panther both ETFs and Index funds are pretty hands off. I trade ETFs but my long term investments are all Index Funds. Many brokerages waive commissions on a list of Index Funds and if you open a Vanguard account, you don't pay commission on Vanguard Index Funds, so I just have automatic contributions to buy Index Funds monthly for free. That is not a possibility with ETFs

 

[mamba]

Dapped both posts but if OP is focused on broad, index tracking ETFs then he would not really be going against Bogle's advice.

With that said, @Panther both ETFs and Index funds are pretty hands off. I trade ETFs but my long term investments are all Index Funds. Many brokerages waive commissions on a list of Index Funds and if you open a Vanguard account, you don't pay commission on Vanguard Index Funds, so I just have automatic contributions to buy Index Funds monthly for free. That is not a possibility with ETFs

Just to clarify. You can buy both Vanguard Mutual and ETF Index Funds commission free.

 

[MMS]

Just open a Betterment account and setup the auto deduct from your bank account, set your risk and let then do the rest, I believe there is no minimum and their fees are low. With Vanguard you are looking at needing 3k for most of the funds (a couple allow 1k).

do you have an account? this looks amazing

 

[GetSomeMoney]

do you have an account? this looks amazing

Yeah, I have auto deduct set up for every two weeks, its real simple, you can set up an account in like 5 minutes and be done with it. Betterment invest in Vanguard funds and the cost are comparable to Vanguard and is kind of a no brainier if you don't have a 3000 ready to invest. I do have a Vanguard Roth IRA account which has been solid but you can't beat the ease of Betterment. Wealthfront is another popular one and Acorns is really popular right now it's just the fees are higher than Betterment and Wealthfront. If you are a little nervous, just start out with 50 or 100 dollars just to see how it works and you can set your risk tolerance so they can invest how you want.

 

[mamba]

Yeah, I have auto deduct set up for every two weeks, its real simple, you can set up an account in like 5 minutes and be done with it. Betterment invest in Vanguard funds and the cost are comparable to Vanguard and is kind of a no brainier if you don't have a 3000 ready to invest. I do have a Vanguard Roth IRA account which has been solid but you can't beat the ease of Betterment. Wealthfront is another popular one and Acorns is really popular right now it's just the fees are higher than Betterment and Wealthfront. If you are a little nervous, just start out with 50 or 100 dollars just to see how it works and you can set your risk tolerance so they can invest how you want.

You don't need $3000 to invest in Vanguard ETFs. That only applies to the non-Admiral Class Vanguard mutual funds.

You use paying fees atop fees when you can just buy the Vanguard ETFs yourself!

Acorns also invests in Vanguard ETFs. But, they aren't investing in the best ones in terms of growth.

 

[GetSomeMoney]

You don't need $3000 to invest in Vanguard ETFs. That only applies to the non-Admiral Class Vanguard mutual funds.

You use paying fees atop fees when you can just buy the Vanguard ETFs yourself!

Acorns also invests in Vanguard ETFs. But, they aren't investing in the best ones in terms of growth.

I mentioned earlier they had a few of funds where the minimum was 1000 (which is where I started) but most do require more. Paying the extra 0.25 if you aren't willing to invest 1000 dollars up front isn't a bad thing plus remember Betterment is investing for you, at Vanguard you will need to pick the ETFs that work. Acorn is taking 1 dollar out each month and with the spare change approach, you probably aren't investing enough, most people only do a few dozen transactions a month, you just aren't investing enough with Acorns plus the returns on equal money seems to be higher with Betterment and Wealthfront based on studies. If you have 1000 or more, people really should look at Vanguard but OP and others are new and Betterment and Wealthfront are good starting places.

 

[mamba]

I mentioned earlier they had a few of funds where the minimum was 1000 (which is where I started) but most do require more. Paying the extra 0.25 if you aren't willing to invest 1000 dollars up front isn't a bad thing plus remember Betterment is investing for you, at Vanguard you will need to pick the ETFs that work. Acorn is taking 1 dollar out each month and with the spare change approach, you probably aren't investing enough, most people only do a few dozen transactions a month, you just aren't investing enough with Acorns plus the returns on equal money seems to be higher with Betterment and Wealthfront based on studies. If you have 1000 or more, people really should look at Vanguard but OP and others are new and Betterment and Wealthfront are good starting places.

Acorns is taking $1/month in terms of fees.

It's doing fractional investing, so unless you are pumping in a lot of money, your gains will get eaten each month.

 

[Serious]

Acorns is taking $1/month in terms of fees.

It's doing fractional investing, so unless you are pumping in a lot of money, your gains will get eaten each month.

What do you consider a lot of money

 

[mamba]

What do you consider a lot of money

At least a $20 dollars per month.

Acorns is doing fractional investing, so you aren't owning whole shares of the underlying ETFs until you sink good money in there.

As a result, you aren't going to see the benefit of dividend disbursements on a per share basis until you actually start owning whole shares.

That takes more than just $50 in the Acorns account!

Yet, that $1 fee hits you every month.

Let's say you put $100 in Acorns and don't do anything else in terms of capital injection.

Assuming a 10% growth rate via index tracking, you're talking $110 in a year. Well, you've also eaten $12 in fees during thay period as well! You may have gotten a little dividend payout as well.

But, your effective ROI is negative in this case.

In other words, you need to pump a good chunk in there per month so that your gains/dividends outpace the $1/month fee.

Acorns needs to reduce the $1/month fee.

 

[satam55]

At least a $20 dollars per month.

Acorns is doing fractional investing, so you aren't owning whole shares of the underlying ETFs until you sink good money in there.

As a result, you aren't going to see the benefit of dividend disbursements on a per share basis until you actually start owning whole shares.

That takes more than just $50 in the Acorns account!

Yet, that $1 fee hits you every month.

Let's say you put $100 in Acorns and don't do anything else in terms of capital injection.

Assuming a 10% growth rate via index tracking, you're talking $110 in a year. Well, you've also eaten $12 in fees during thay period as well! You may have gotten a little dividend payout as well.

But, your effective ROI is negative in this case.

In other words, you need to pump a good chunk in there per month so that your gains/dividends outpace the $1/month fee.

Acorns needs to reduce the $1/month fee.

There's a competitor app to the Acorns app called Stash Investing:

 

[mamba]

There's a competitor app to the Acorns app called Stash Investing:

Fee structure is similar

 

[mamba]

There's a competitor app to the Acorns app called Stash Investing:

You can use Robinhood to do no-commission trades. I'd use that for stocks that don't pay dividends.

Currently, Robinhood doesn't have a dividend reinvestment option.

 

[Serious]

You don't need $3000 to invest in Vanguard ETFs. That only applies to the non-Admiral Class Vanguard mutual funds.

You use paying fees atop fees when you can just buy the Vanguard ETFs yourself!

Acorns also invests in Vanguard ETFs. But, they aren't investing in the best ones in terms of growth.

So should I switch to betterment