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ETFs: A Better Way to Pick Stocks

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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.

Updated September 2, 2011 and originally published October 20, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 3 comments… read them below or add one }

avatar Sun

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, :-).

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avatar Luke Landes ♦127,505 (Platinum)

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.

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avatar Lazy Man and Money

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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