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Financial Products & Services / Exchange-Traded Funds (ETFs)
|Subject: Re: What Are the Tax Advantages (If Any) of ETFs||Date: 9/27/2005 4:06 PM|
|Author: ZuzuFool||Number: 1061 of 2167|
I still think that mutual funds are the ideal vehicle for dollar cost averaging. Depending on your broker and the fund, you should not have any fees when you buy [different brokers offer different funds as NTF - no transaction fee - so check first if the fund you are interested in is one of them]. Downside is that there may be some penalties if you trade out of a fund without holding it for a specific time period - generally ~ 3 months and the fees are often more than with ETFs.
I am heavily into ETFs right now mostly because I rolled a 401k into a self-managed IRA. When lump sum investing, the transaction fee to buy into ETFs is low.
A few ETFs focus on high dividend paying securities. These may be of interest to you - at least until bond yields increase. I make DVY the largest holding in my IRA (I'm 42). PEY and some more recent offerings from powershares are in this category as well (http://boards.fool.com/Message.asp?mid=23079606). These do carry price risk, but offer upside potential as well and with generally less volatility than non-dividend paying securities. They each yield about 3% (check each one).
Unfortunately I don't know of a good mutual fund that offers a similar strategy.
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