Stock Markets Exposed

What are the advantages & disadvantages of INDEX ETF and INDEX FUND? Which one is better?

Which is the best index to follow? Dow Jones Industrial Average Standard & Poor's 500 Nasdaq Composite Wilshire 5000 Total Market Russell 2000 Fortune 500 Value Line FTSE 100 - United Kingdom Hang Seng - Hong Kong Nikkei - Japan DAX - Germany Toronto Stock Exchange (TSX) - Canada CAC 40 - France

Public Comments

1. No solid answers to any of this. There is no best index. ETFs generally lower expense than index mutual fund but not always. ETFs also have broker fees. Need to focus on building diversified portfolio vs this overthinking. You don;t watch any you just invest. ADX PEO EWA EFA etc
2. That's a pretty tall question. ETFs trade on the stock market like stocks. They can be bought and sold quickly, compared to mutual funds, which normally you can't sell until the end of trading for the day. Since they act just like stocks, you have to pay a commission to the broker and the price of the ETF could be higher or lower than the actual value of the index. Which one to follow is based on what they stand for and what you want to follow. For US markets, DJIA is only 30 stocks, the S&P 500 follows 500 stocks, Nasdaq follows the NASDAQ market as a whole, etc. Some that you listed follow only foreign markets. Valueline follows the Valueline's recommended stocks. Russell 2000 follows 2000 growth stocks I believe. Some are weighted averages, which means there may be a more shares for one stock than another, based on their market capitalization, etc., while others are not. This should give you some kind of idea of what you are up against. You should always educate yourself on the investment before making any investment. Some good sites are CNBC, Yahoo finance and Motley Fool.
3. I agree, the reason you would buy an ETF is to avoid the fees of a fund. And I would say in america you would want to follow the S&P 500. Diversity of companies will give you a better look at the economy as a whole. Regards, Nicholas http://www.currency-profits.com
4. I choose ETFs because they better let me manage the taxes becuase they are taxed like a stock. In a mutual fund there are constant small gains from any investors adding or withdrawing money which change the size of the fund. This is minor but it does exist so there is some tax benefit to ETFs if you are long term and the taxes are easier to handle also in terms of less items at the end of the year. If you are having many tranactions such as adding a set amount monthly the trading commisions will probably make ETFs worse, but if you invest in lump sums ETFs make the most sense to me. I use Barcley's www.ishares.com but Vanguard is also good and some of theirs have lower fees but only very slight 0.02% ishares to me has a better offering all around and the fees are very good and often the best.