ETFs generally have lower associated costs than comparable mutual funds. This isn't news, I know, but since costs are one of the few variables over which we have control as investors, I don't mind flogging this deceased ungulate.
The expense ratio is the most obvious cost reduction. For example, the legendarily inexpensive Vanguard 500 Index Fund has an expense ratio of 0.17 percent, while Vanguard's S&P 500 ETF has a barely noticeable expense ratio of 0.05 percent. This makes ETFs an ideal choice for investors making a sizable, broadly-based, one-and-done purchase.
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But for new investors building a portfolio through small, regular contributions, reduced transaction costs may be an even better reason to consider an ETF over a mutual fund. Even low-cost brokerage platforms charge fees to buy and sell some mutual funds. These fees can be $25 or more. And by the way, if the fund is on a "no transaction fee" platform, the chances are pretty good that you're paying a higher expense ratio to cover the fees charged by that platform to the fund family.
If your position is $100,000, a $15 ticket charge barely registers. But if you're investing $200 per month or rebalancing a $5,000 Roth IRA, consider searching for no-fee ETFs to populate your colorful asset-allocation pie chart.