Anyone here trade in EFT's?

[Hokie]

I am thinking about investing some of my IRA money in EFT's - exchange traded funds. From what I read they are like mutual funds but trade like stocks. They are usually linked to an index like the S&P or to a stock sector like financial or technology stocks. One article I read recommended FDL. FDL invests in dividend leaders. SPY tracks the S&P 500.

[scruffy]

1. The advantage to ETFs

is that they do trade like stocks, so you can time your purchases and sales, as opposed to mutual funds, which all are bought or sold at one price at the end of the day. ETFs are also pretty tax efficient - although that's not necessarily a concern in an IRA, and their expenses are generally lower than most mutual funds. There are lots of different ones out there - diferent sector ones as well as ones tied to just about any index you can find.

[Hokie]

2. They look interesting

I have been investing in no load funds for a long time and have done OK. With no load funds around 1.5% - 2% of you principle is going to pay the expenses. I am considering a rollover of a 401K from a former employer to an IRA. I can only invest in mutual funds in the 401K but I could add EFT's in an IRA.

[A HERETIC I AM]

3. You can add anything you want in an IRA, not just ETF's

That is the main advantage of doing the rollover. It opens up your choices to the entire market. ETF's are relatively new however, and many have a very short track record.

Check out www.ishares.com one of the larger ETF families.

You should seek out the advice of a competent, licensed broker/dealer in your area and speak with one face to face. Financial consultants/brokers do not charge by the hour and a consultation won't cost you a penny. One way or another, you are going to have to go through a broker to do your rollover and purchase ETF's. Best to get one that you can trust to give you advice that fits your risk tolerance, your goals and your time horizon.

[Hokie]

4. ETF's not EFT's

My dyslexia is showing again. I keep getting that wrong on this thread.

Thanks for the great advice.

[FormerDittoHead]

5. I've invested in them...

Like scruffy has said, with an IRA deferred arrangement I wouldn't be too concerned with dividends versus cap gains.

I've invested in spy, dia (dow 30) and qqq (nasdaq 100).

As scruffy wrote, unlike a mutual fund that would make you take the ride all the way down and wait until the end of a 'crash' day (geeze, could THAT ever happen again? hmmm), you could set a new stop-loss periodically to prevent a loss greater than 10%, say, and it would execute mid-day...

Otherwise, the diversification benefits would be the same as a mutual fund..

[trof]

6. Take a look at ishares Natural Resources Index (IGE)

It's invested in 'extraction' industries, oil, mining, forest products, etc.
It has done very well and I expect it will continue to do so for the foreseeable future.