ETFs generally are more tax efficient for say brokerage accounts. Less capital gain distributions. We have ETFs in our brokerage and mutual funds in the IRAs.
we had over six figures in a taxable brokerage, our advisor had it all invested in mutual funds. One fund had a 90% turnover and we got clobbered with taxes on short term cap gains that year. We told him to replace those mutual funds with ETFs and it put a stop to that, he should have had us in ETFs all along.
VTI is 3 basis points, VTSAX is 4 basis points. so even less difference than stated--point being, they're pretty much the same and anyone who touts VTI over VTSAX solely cause it's cheaper is arguing a moot point.
I have a Roth account with robinhood with only one etf s&p 500 splg with an option to auto invest, daily, weekly or monthly, but it’s so easy to invest manually it basically take seconds, this way I can buy the dips.
@ aside, interesting if a comment gets edited (my other comment RE fees, in this case, for clarity, it removes the channel like). Makes sense since an edit could alter the meaning of the comment.
Vanguard S&P 500 Index Fund *VFIAX exp ratio 0.04% vs. ETF version VOO exp ratio 0.03%. On $1 million that’s $100. BTW, if your 401K plan is with a large enough employer, the funds might be the Institutional versions vs the Retail investor versions. Vanguard’s Institutional S&P 500 fund has an exp ratio of 0.02%. *(That $100/$200 savings per million $ more than offsets our $39 annual plan fee and typically once per year withdrawal fee of $25 to top off our spending bucket via a partial rollover… while also preserving the liability protection of a 401K vs an IRA without.)
If you're not playing the market then ETF’s really isn’t necessary. I suppose you could make an argument for ETF’s if you had a brokerage account and you wanted to play with it. But if your strategy is to buy and hold then leave it alone in a mutual fund.
As others have mentioned, a mutual fund is much more likely to distribute dividends and capital gains each year. Unless you're holding this in a Roth, then the ETF usually makes sense to avoid the tax implications.
ETFs generally are more tax efficient for say brokerage accounts. Less capital gain distributions. We have ETFs in our brokerage and mutual funds in the IRAs.
Surprised this wasn’t mentioned. Seems like a key reason to use one vs the other.
Great point Andrew
Josh, Mut funds can have capital gains paid annually, and ETFs DON'T, until you sell shares. THAT'S a difference. I love myutual fund, more gains!😊
I was having trouble understanding, but your sniffy joe analogy really helped me understand LOL
Sniffy Joe always comes through
we had over six figures in a taxable brokerage, our advisor had it all invested in mutual funds. One fund had a 90% turnover and we got clobbered with taxes on short term cap gains that year. We told him to replace those mutual funds with ETFs and it put a stop to that, he should have had us in ETFs all along.
Hopefully you didn’t have a large cap gains hit when you liquidated
@@HeritageWealthPlanning it was 2022, took a big fat loss when he sold the mutual funds and bought the ETFs.
Hey!! Thanks Josh!!! That really helped!! 😁
VTI is 3 basis points, VTSAX is 4 basis points. so even less difference than stated--point being, they're pretty much the same and anyone who touts VTI over VTSAX solely cause it's cheaper is arguing a moot point.
My HSA auto invests into mutual funds, ETF's and individual stocks. And it does fractional shares.
Good review highlights of your "Everything You NEED to Know About Investing" course. Keep up the good work Josh.
Man- I really need to promote that !
Price also different between VTI and VTSAX, but when you look at the historical trend curve, they track each other.
I have a Roth account with robinhood with only one etf s&p 500 splg with an option to auto invest, daily, weekly or monthly, but it’s so easy to invest manually it basically take seconds, this way I can buy the dips.
good stuff Josh
Gratzi
Great explanation Josh.
Thanks for the help on these…I’m a little smarter for it today…it takes a little longer to comprehend because it’s cold here in Maine.❄️❄️
Great video! Vtsax has 3000 minimum to open account. Does ETF also have a minimum? Also, does ETF have fees when you buy or sell? Thanks!
Depends on the brokerage where you hold it
Why do financial planners say basis points, just say the percentage. They usually say the equivalent percentage right after anyway.
Because .04 percentage points is harder to say. Just that simple
ETF’s - can buy and sell throughout the day. I thought we weren’t supposed to attempt to time the market?
No one is saying you have to do that
@ aside, interesting if a comment gets edited (my other comment RE fees, in this case, for clarity, it removes the channel like). Makes sense since an edit could alter the meaning of the comment.
Where is Fidelity. Such a Vanguard simp…😂😂
Vanguard S&P 500 Index Fund *VFIAX exp ratio 0.04% vs. ETF version VOO exp ratio 0.03%. On $1 million that’s $100.
BTW, if your 401K plan is with a large enough employer, the funds might be the Institutional versions vs the Retail investor versions. Vanguard’s Institutional S&P 500 fund has an exp ratio of 0.02%. *(That $100/$200 savings per million $ more than offsets our $39 annual plan fee and typically once per year withdrawal fee of $25 to top off our spending bucket via a partial rollover… while also preserving the liability protection of a 401K vs an IRA without.)
If you're not playing the market then ETF’s really isn’t necessary. I suppose you could make an argument for ETF’s if you had a brokerage account and you wanted to play with it. But if your strategy is to buy and hold then leave it alone in a mutual fund.
As others have mentioned, a mutual fund is much more likely to distribute dividends and capital gains each year. Unless you're holding this in a Roth, then the ETF usually makes sense to avoid the tax implications.
#PVCPOK
🤣