How To Choose The Best Index Fund

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Here's how to choose the best index fund: Via ForbesAdvisor

It’s not exactly transparent that you’re paying an expense ratio as there’s no line item on your regular fund statements that shows how much the fee cost you. Instead, it’s a percentage of the fund assets that is automatically deducted from your returns.

With an index mutual fund, you can place an order at any time, but the price of your purchase or sale will be based on the value of all the underlying securities at the close of the current trading day. If you place an order after the market has closed , your trade will be processed at the closing price on the following trading day.

Many mutual funds require a minimum initial investment that can be $1,000 or more. But if you open an account at a brokerage you can get rolling with an initial investment of just one ETF share, which is typically going to be a lot less than a fund minimum. You may even be able to get started purchasing just aMoreover, ETFs often have an expense ratio advantage. Sometimes it’s hairsplitting: The Vanguard Total Stock Market ETF has an 0.03% expense ratio and the mutual fund version charges 0.04%.

 

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