Mutual Funds or ETF's?? That is the question...

[Chulke]

So I was thinking of opening a new investment account with USAA...(not sure, and have not made up my mind yet, they're just the easiest because I bank with them).

I have been contemplating this for a while now but USAA has limited options when it comes to Mutual Funds with no-load and no-fees...and they are extremely limited on their available ETF's. So, I guess what I am asking is...Is there another brokerage firm that has higher fund availabilities with lower cost per trade prices? (Which I'm sure there is...) and If so, what company would everyone recommend and why? ETF's?? or Mutual Funds??

I'm open to individual stocks too, but like the diversification that Mutual Funds and ETF's offer. I'm also hoping to trade these Mutual Funds or ETF's like we do with TSP but with more capability to make more trades in a month than the 2 free trades we get with TSP.


Happy Investing!

[cswift01]

So I was thinking of opening a new investment account with USAA...(not sure, and have not made up my mind yet, they're just the easiest because I bank with them).

I have been contemplating this for a while now but USAA has limited options when it comes to Mutual Funds with no-load and no-fees...and they are extremely limited on their available ETF's. So, I guess what I am asking is...Is there another brokerage firm that has higher fund availabilities with lower cost per trade prices? (Which I'm sure there is...) and If so, what company would everyone recommend and why? ETF's?? or Mutual Funds??

I'm open to individual stocks too, but like the diversification that Mutual Funds and ETF's offer. I'm also hoping to trade these Mutual Funds or ETF's like we do with TSP but with more capability to make more trades in a month than the 2 free trades we get with TSP.


Happy Investing!

I do some investing with USAA. They are not bad. They don't advertise this, but they also give Fidelity mutual funds and Fidelity ETFs for free. This is because most of their administrative processing (investments only) is handled by Fidelity. So, it's not a bad decision.

Personally, I'm investing via Fidelity. Their index funds and ETFs are just a tad cheaper than Vanguard. On the other hand, Vanguard offers more flexibility (i.e. more index fund types). I don't think you could go wrong with either investment company.

If I had to do it today, I would probably have selected Vanguard. This is because I'm also investing via USAA (through other means) and already have access to Fidelity options. I do like the iShares that Fidelity offers for its ETFs and you don't get them free from USAA. I don't think Vanguard offers them free either.

Things to think about.

Best,

Me

[Timber82]

Vanguard lets you trade all MUTUAL funds and ETF's in the vanguard family free of charge. Side note if you are looking to run a daily strategy in this account you are not able to enter and exit the same fund within a 30 day period so you'd need to do that via ETF's. Personally I would recommend against putting all your eggs in one basket.

[evilanne]

There isn't much difference between most of the discount brokerages, Schwab, Fidelity & TDAmeritrade all are rated high, low trade fees and 90+ free EFTs. Schwab has highest number of free EFTs https://www.stockbrokers.com/compare?br ... ameritrade

[TopNotch]

Definitely ETFs if you're planning to trade frequently. I prefer ETFs to mutual funds. I only invest in mutual funds with an expected 20%+ annual rate of return that I intend to remain in for a long time.

[wisepierre]

Definitely ETFs if you're planning to trade frequently. I prefer ETFs to mutual funds. I only invest in mutual funds with an expected 20%+ annual rate of return that I intend to remain in for a long time.

What mutual fund guarantee a 20% annual return, over the long haul?

[TopNotch]

No fund can guarantee a future rate of return. Notice that I said "expected" and by that I mean how I expect the fund to perform based on my research. I know for a fact that most of Vanguard's international funds are up over 20% this year. I'm sure that similar funds with Fidelity, etc. are too.

[Luzdemano]

You can invest in nearly any company from USAA, Vanguard, fidelity, T Rowe etc. through the fund marketplace. And if you do automatic investing the fees are generally waived. Worth looking into

[maui21ice]

I am in the process of transferring my USAA Roth IRA to a Vanguard one as we speak. Reason why? Lower Expense ratios on the mutual funds.

I was looking at funds with USAA and many average around a 1%+ expense ratio average (my growth fund was 1.18%) which is pretty high, especially compared to the Vanguard ones. The one's I've been looking at have expense rations from .18%-.46% or even lower when you get $10,000 or $50,000 in those accounts and move them to Admiral Accounts.

[TSPsmart]

I agree that all the large discount brokers are close enough in costs today that it does not matter too much on which one you pick.

What I think is more important is looking at each individual ETF (and Mutual Fund) from the perspective of assets under management. There are some thinly traded ETFs at all of these brokers.

If you are going to trade often, then look at the average spread in their bid/sell price. A thinly traded fund may have a large hidden cost in the difference in the bid/sell pricing.

Another potentially devastating issue with ETFs are the use of limit orders to protect yourself. Remember, Limit Orders become Market Orders when the price moves below your limit price.

A couple of years back there was a "market glitch" and while some of the exchanges shutdown, selling moved over into the ETFs that track indexes. One ETF traded over 55% down that day for a few hours while the index it tracked was only down 5%.

So a limit order 20% below the previous day's closing price turned into a SELL ORDER and executed when the ETF was down 50% for some unlucky investors. And it was not the high speed traders that lost money on that day. It was the guys at the back of the line selling via their "discount" broker.

Cheers,

[Chulke]

My thoughts are to treat this account as though it were a TSP account also. I would buy and trade on a monthly strategy basis much like I currently do with my own TSP. The only difference is that I will be buying either mutual funds or ETF's. I'm just trying to decide which one I will buy Mutual funds that match a target market or an ETF that matches a target market. If I use the USAA mutual funds these would be my monthly targeted funds I would use per my chosen strategy:
USSPX= S&P500 or the C Fund
USMIX=DWCPF or the S Fund
USIFX=EFA or the I fund
and a mixture of these 2 funds for the F Fund would be USGNX & USFIX

There are no mutual funds or ETF's that equate to the G Fund.

If I use ETF's my choices are as follows:

Fidelity:
C Fund=FUSVX
S Fund=FSEVX
I Fund=FSIVX
F Fund=Have found one yet...

Vanguard:
C Fund=VFIAX or VOO
S Fund=VXF
I Fund=VTMGX or IEFA--> (not sure if this is a Vanguard Fund)
F Fund=VBTLX


Thoughts?

[mindofmush]

If you're using a daily strategy to mimic the TSP mutual funds, I figure mutual funds would be the better choice. (But it would be interesting to see if ETFs incur higher costs over the long run.)

As to the G fund equivalent, you can chose a strategy with no time in the G fund or use Cash like everyone else.

[wisepierre]

No fund can guarantee a future rate of return. Notice that I said "expected" and by that I mean how I expect the fund to perform based on my research. I know for a fact that most of Vanguard's international funds are up over 20% this year. I'm sure that similar funds with Fidelity, etc. are too.

There are no ETF's or indices out there where you should be "expecting" 20% returns a year. I don't think even Berkshire Hathaway has returns that good, consistently.