ETFs: A Better Way to Pick Stocks

Money Magazine has another impressive article: Perfect Your Portfolio takes a look at Exchange-Traded Funds (ETFs).

ETFs are good for lump sum investing in a particular sector, and the article suggests targeting sectors that have poor recent performance with the idea that they will revert to the mean, providing a decent increase.

ETFs are bad for periodic smaller investments due to the trading fee you have to pay your broker each time you invest.

I have less than $100 in an ETF at the moment. I am invested in a telecommunications sector ETF from iShares, IYZ, in a ShareBuilder [aff. link] account.

Scroll down to read 3 comments on “ETFs: A Better Way to Pick Stocks.”

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3 Comments on “ETFs: A Better Way to Pick Stocks.” To add your own comment, scroll down.

  1. #1: Sun
    Friday, October 20, 2006
    3:29 pm (reply)

    I also have an ETF, PFM, with ShareBuilder and I put $200 every month. Since I opened the account through Costco, I got 25% quarterly rebate on the commission. Even with the rebate that still adds another 1.5% fees on top of the fees PFM charges. Now I am considering if I want to move the investment to Zecco for free trade and free dividend reinvestment.

    BTW, why you only have $100 in ShareBuilder? Bonus? I got two $50 bonus from ShareBuilder as well. Got to take the free money, :-).

  2. #2: Flexo
    Friday, October 20, 2006
    3:40 pm (reply)

    I’m holding off on Zecco until they’ve been around for a while, and the buzz wears off.

    I have more than that in ShareBuilder, IYZ is just one account… I have more than $200 in SB, all free money from a few bonuses. I’ll probably add more when I spot a good opportunity.

  3. #3: Lazy Man and Money
    Friday, October 20, 2006
    5:48 pm (reply)

    I have to admit that I’m looking at Zecco as well as a way to get into ETFs without having to do it in bulk. I had been buying them with my Roth IRA contribution each year (usually VTI). I figure I take a commission buying the stock each year, but I can sell it out all at once if it’s in VTI. Whether I want to with the tax bill will be another thing when that time comes.

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