The biggest advantages of getting into ETFs versus investing in mutual funds or stocks include:

  • Lower cost management fees
  • Low fixed transaction costs
  • Transparency
  • Flexibility
  • Convenience
  • Tax efficient
  • Instant pricing
  • Global investment menu

Nearly every type of investor will find ETFs more compelling than mutual funds.

On the other hand, some of the features which are advantages for most investors can be unattractive for certain others. Fixed transaction costs, which are low for investors buying large dollar amounts of ETFs, become relatively high for investors buying small dollar amounts at a time. Therefore, any investor buying less than $1,000 worth of ETFs at a time should consider buying a transaction-free ETF or mutual fund.