pros and cons of etfs reddit

Exchange Traded Funds and Closed End Funds can be traded mid-day, Mutual Fund transactions are only once a day after the close. One of the key goals of any good asset allocation strategy is diversification — … An Exchange Traded Fund (ETF) is an investment vehicle; a hybrid of mutual funds, and closed-end funds. Additionally if your question is specific to a broker or easily found on google it will likely be removed. Pros of Thematic ETFs There can be benefits to investing in thematic ETFs: • Buying a thematic ETF can make it convenient to invest in a specific sector or trend an investor is interested in. If the market is flat typically what you see with the leveraged etf is a small down day. They differ mainly by capital requirements, access, and risk. Would you not loose a lot of money due to quadratic variation? They are the ETF version of a balanced mutual fund. An expense ratio indicates how much investors pay each year, as a percentage of the amount invested, to own a fund. This is because the cost of equity financing changes from day to day. Cons of using Questrade turned into Pros. If you are really, truly, into passive investing with low fees, Vanguard is hard to beat. ETFs can be traded throughout the day, just like regular stocks. Passively managed ETFs are relatively inexpensive. I am assuming at this point we will get only good news, bought it at 0.09...all time high sits at 72.....which is massive massive upside potential. The Pros and Cons of ETFs Some benefits of exchange-traded funds have been oversold, while others are under-appreciated, argues Morningstar's global director of ETF research Ben Johnson … Think of options as insurance (i.e home insurance) . There are two main downsides to REIT ETFs. Please note that as a topic focused subreddit we have higher posting standards than much of Reddit. A Smith Barney study based on January 2002 trades found that spreads on domestic ETFs averaged 0.33% (0.087% when weighted by market cap) and on foreign ETFs 0.87% (0.59% when weighted by … The debate on ETF vs mutual funds generally stems from the fact that mutual funds are primarily actively managed and often fail to beat the indexes that ETFs track after management fees are taken into consideration. I would stay out of LEAPs for a while and wait for the next ride to come around. If this post is asking for advice or a beginner question it will likely be removed. By Lance Cothern Updated: Aug … Please direct those questions to your broker. However leveraged ETFs would reliably produce profits on a bounce. Their … Looking for income? Oversold : ETFs' cost advantages, relative to index mutual funds tracking like benchmarks and charging like fees. OK. Join our community, read the PF Wiki, and get on top of your finances! If you are investing less than the amount required for Admiral shares, an ETF will be cheaper. For risk-averse investors, this type of ETF structure may sound appealing. This is a somewhat sophisticated market strategy, but not rocket science and more and more people are employing it. I am not expecting it go back to 72 but even 7.2 will be a huge win. What are the pros and cons of LEAPS vs leveraged ETFs, in terms of implied financing cost, leverage decay, etc? Closed-end funds can be one solution. I invested in a certificate VONT BULL DOW JONES X8.... yes x8 leverage. However, … (volatility drops on a rebound and can cut the value of your options by more than 50%). Theta decay can be mitigated by rolling out. For buy and hold strategies, this is a moot point. Beta decay can be mitigated by basically avoiding it -- don't use daily resetting leveraged ETFs when volatility is high or expected to be high. I did some calculations and believe now is a good time to buy leveraged products. While there certainly are active ETFs and passive mutual funds, ETFs are generally associated with passive index tracking and mutual funds with active management. Ultimately, for buy and hold, there is very little difference, provided you are above Admiral fund minimum investment amounts. An open-ended mutual fund, on the other hand, is priced at the end of the day at … When it returns to normal then start buying. Pros and Cons of ETFs ETF proponents claim better tax-efficiency, higher transparency, lower average fees, intraday liquidity, and insulation from forced buying and selling as strengths of ETFs. So before you pile into one, be sure you grasp their pros and cons. Cons: * If you have a prostate, your risk of prostate cancer goes up. There is also negative compounding. Below are some of the pros and cons of owning ETFs: Pros: Offers diversification; Easy to trade; Low expense ratios; Tax efficient First, using an ETF won't give you as good returns … Not sure if anyone did this before during 2018 crisis and loaded heavily on leveraged products? So if I incur capital gains on the mutual fund, but I'm unemployed (in professional school) so I don't submit taxes, how do I pay taxes on those gains? Both are fine, but if you don't understand the difference well, I'd just go with mutual funds. So, before you invest in them, you need to know what these pros and cons are and decide if ETFs are the right option for you. I don't really understand the pros and cons of each although I understand that an ETF is not a mutual fund but a sort of stock in and of itself. http://www.thinkadvisor.com/2015/03/02/under-the-hood-tax-treatment-of-etfs-vs-mutual-fun. Thanks so much. An ETF is … If this has been discussed in detail before, please just direct me there! What do you want to do with them? TL;DR, all of these are viable. Pros: * You can get bragging rights among uneducated sex-negative kids on Reddit, if that’s your jam. Early in 2018, Vanguard launched a family of three asset allocation ETFs that allow you to hold a diversified portfolio using a single product. Please don't yell at me. Basically ETFs are traded on the market just like stocks, while mutual funds have a redemption price that's reset only once every 24 hours. Assuming you are going with an index fund, look for one that reliably tracks the index and has a low expense ratio. Violations will result in a minimum 30 and likely 60 day ban upon first instance. If you are new here please take the time to review the rules and take special note of the following standards. With a mutual fund, capital gain distributions made by the fund are considered taxable events and thus you will have to report them on your tax return. For those with $10,000, VTSAX is the "gold standard". In the dark days of the Great Recession, the ProShares … With mutual funds, there are no call options available against the instrument to sell. It does limit your upside too, so if the ETF appreciated 20% in the next 12 months, your upside would be limited and wouldn't participate in the entire gain. Would one do better in some markets but not others? Pro: Insulation from stock … The main difference is commissions. Note simply arguing over off topic politics is sufficient to warrant a ban - please review the linked threads before posting as this post serves as your only warning. Or direct me to a place more beginner than that? Leaps will always be more expensive then buying the same quarterly delta option and rolling it. But before buying in, it’s important to look at the pros and cons of these investments. Dividends earned from the fund, will often sit around until accumulated to such a degree, that they can buy more, whole ETF shares. Either that or buy on the way down in small lots. Therefore, if you're into active trading, the ETF might be better for you, while if you like buy/hold the mutual fund might be better. That’s a really intriguing abstract. I think a pro to ETF's, and a con to a mutual fund, is that with ETF's if you choose to, you can sell call options using a covered call strategy. That's a lot. The below article might explain this better. Best to buy before your house burns down rather than after. Press J to jump to the feed. For instance, … A covered call strategy is a more conservative way to play, but can be very useful in sideways markets that we have been in for 1.5 years, and much more effective in risky markets where downdrafts occur as you are afforded some protection in the premiums received for selling the calls. I would say that would make up for the inability to buy partial shares. Q: My friend recently said that I should dump all my Canadian and international ETFs, and invest instead in an S&P 500 ETF for my Couch Potato portfolio.I was worried that holding only U.S. … Some mutual funds might wave trading fees, while you have to pay the broker in every ETF transaction. This particular one went down to 8 but then recovered to 40, which is x5 profit so there is a sign that these products do recover over time. With a mutual fund, dividend earnings can be reinvested almost immediately for partial share amounts. Please contact the moderators of this subreddit if you have any questions or concerns. 2) Important: /r/ investing operates a zero tolerance policy for violations of our political posting guidelines so please review them here and here. Do you think the cost savings add up to more the getting a >1 year expiration so you can hold for long term capital gains? Just like any other investment vehicle, exchange-traded funds have their own benefits and drawbacks. Watch the $VIX. But CEFs can entail risk. Mutual funds can only be purchased when the market is closing, and prices are updated at market closing. I posted many positive social comments above but I hear you whispering that I chose only the positive comments. I think a pro to ETF's, and a con to a mutual fund, is that with ETF's if you choose to, you can sell call options using a covered call strategy. Learn the pros and cons of creating an investment portfolio made up only of exchange-traded funds (ETFs), which have become alternatives to mutual funds. This can be a way to hedge your investment if you fear there is downside to the market, and still provide an ample return of 7-10%. 3) This is an open forum but we expect you to conduct yourself like an adult. This can be a way to hedge your investment if you fear there is … I'm relatively new to investing and was interested in looking at the long term growth opportunities of ETF's, and so set up a DeGiro account. ETFs are more tax efficient than mutual funds: Both ETFs and mutual funds are treated the same by the IRS in that investors pay capital gains taxes and taxes on dividend income. That said, there are slightly different tax implications between mutual funds and ETFs due to the way they're structured. Press question mark to learn the rest of the keyboard shortcuts, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1149340. An inverse ETF allows investors to essentially “short” a stock, without taking on many of the risks of that action.Shorting often requires investors to use a margin … Disagree, argue, criticize but do not use personal attacks. The Pros The biggest pro of inverse ETFs is that holding one is an opportunity to make money while the stock market is crashing. ETFs trade at a price that is updated throughout the day. With an ETF, you're only on the hook for taxes when you redeem the fund (assuming you've sold at a gain) and when receiving dividends from the fund. ETFs hold a basket of assets such as stocks, bonds, or commodities; and trade on a market exchange so they can be traded anytime stocks trade. An ETF lets you make just a single investment, and that makes subsequent tracking easier. They were designed to be day traded. When you buy or sell an ETF through a brokerage (unless you have free trades), you will pay a commission. Leveraged ETFs are horrible for anything long term. In the same way, ETFs have the advantage of not having to sell assets to pay out redemptions, unlike managed funds, where forced sales of assets in falling markets can reduce the … ETFs are slightly more tax efficient, since any capital gains within the fund are not taxed until you sell. There is also negative compounding. Inverse ETF Pros and Cons . Pro of an ETF: Diversification. If you're going with a company like Vanguard, ETFs have an advantage with respect to expense ratios when starting out. I am a bot, and this action was performed automatically. If you were into speculation, and regular selling, an ETF would make more sense than a mutual Fund. If you are a buy and hold investor, it doesn't really matter. My understanding is that to invest in a product tracking the market, I can buy ETFs or mutual funds. Could you possibly distill it down to basics for me?

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