Im in the process of putting together my portfolio and am having some difficulty deciding what would be more beneficial for a novice investor that is going to make small monthly contributions between 500-600 dollars, mutual funds, etf's, or a combination of the two.
Since eft's trade like stocks and have a commission every time you want to purchase more shares, would it be more efficient to just own mutual funds since you can add a min. of 100 a month without incurring extra costs?
Thanks for any replies in advance.
The only real advantages of ETFs is they trade like stocks and have lower management fees.... but they have transaction costs*. Mutual funds have end-of-day fills only, no transaction fees in no load funds, but higher management fees. There are leveraged and inverse ones of both.
Too many variable to say for sure which would be better.
*There are some ETFs you can buy and sell without paying commissions. Some have a minimum holding period to avoid commission/charges, but others do not.