"CMJohnson" <johnsoncm[at]mail.com> wrote in message
news:1175646816.919931.292630[at]n59g2000hsh.googlegroups.com...

- quote -

12b(1) fees do not pay for any research or trading.

They are strictly marketing/sales fees. What the SEC says is that they
"cover distribution expenses and sometimes shareholder service expenses ...
Distribution fees include fees paid for marketing and selling fund shares,
such as ..."
http://www.sec.gov/answers/mffees.htm#distribution

Mark Freeland
BnetOnewsX[at]sbcglobal.net

"CMJohnson" <johnsoncm[at]mail.com> writes:

- quote -

Neither do index mutual funds. You really need to distinguish
between actively managed mutual fund and index mutual funds.

- quote -

Again, you need to be more careful here. A mutual fund may
not advertise itself as "no-load" unless there is either
no 12b-1 fee at all or that fee is less than 0.25%.

Many funds one buys in a no-transaction-fee fund supermarket
carry such fees, as do most funds sold through brokers or
advisors. But many many funds that one may buy directly
carry no 12b1 at all.

You seem to keep comparing ETFs to *actively* managed funds.
Even there, many actively managed funds have no 12b1 fees,
but you are comparing apples to oranges in several ways here.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

"Since I am not planning to touch the funds a lot, would ETF's be
more
advisable? Also are returns on ETF's better than Mutual Funds?"

It depends on what you invest in really. As I said before, ETF's
don't turn their holdings often. This will result in a minimized
capital gains distribution (which you will pay tax on), and a good
mutual fund can shift between holdings or acquire new holdings as
needed. There are those who say otherwise, but if you think about it
(or read about it for that matter) ETF's don't charge as high 12b 1
fees as mutual funds. That's because they don't pay as many people to
do things like: research, or active trading. The best thing I can say
is this: 1) I think ETF's are a wonderful choice over individual
securities, but not a substitute for funds themselves. 2) Look at the
ten year (or life) return for the ETF's you are considering and then
go to the NASD web site and choose the fund fee calculator to
calculate returns over that same period of time. Make sure you get
the appropriate rate of return from a third party like Morningstar on
the funds.

"Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote
- quote -

Given that companies like Fidelity are more generous with
low balances, I think the statement as a whole is reasonable
as a "heads up" to folks.

But nor does this reality keep me from recommending Vanguard
in general to others (if that's what concerns you). Its fund
expense ratios remain among the best, if not thee best, in
the business. Its still "index fund city," and I urge
newbies to buy index funds.

"Elle" <honda.lioness[at]nospam.earthlink.net> writes:

- quote -

That's an unfair characterization, given that Vanguard's low-balance
fees get paid back into the fund itself, not to the management
company. In other words, those fees compensate all shareholders for
the out-of-scale-to-assets costs that small shareholders impose on the
fund.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

On Apr 1, 12:55 am, "Ron Peterson" <r...[at]shell.core.com> wrote:
- quote -

Thanks Guys!!!! Atleast now I am abit clearer and am leaning towards
mutual funds.
Re- iterating my scenario, I am planning to put about 3k in ROTH IRA.
I plan to buy some funds and leave them alone for about a year
atleast. And depending on their returns and potential next year,
change them if needed.

Since I am not planning to touch the funds a lot, would ETF's be more
advisable? Also are returns on ETF's better than Mutual Funds?

Some random readings suggested Mutual Funds over ETF's since my aim is
to make money for long term. It further added about using Eaton Vance
over other Brokerage accounts, suggesting how you can just put money
to your ROTH and not worry about other fees. Finally it advised to buy
Class C Open ended mutual funds.

Could some one throw more insight into this please?

I know my confusions never end, but will hopefully soon so.
Thanks
Manny

I concur with Bread's outline of 'when to consider an ETF,
and when to consider a mutual fund,' noting that, from what
I have read, one may be superior for some people in some
situations; the other may be superior for others blah blah.

Andrew K.'s post raises something a bit new worth
emphasizing: How Vanguard is offering more and more ETFs all
the time (so it has seemed in the last year or so), indeed
helping consumers circumvent some of that nasty
nickel-and-diming (so it seems) of Vanguard's mutual fund
policies.

For my purposes, the one area in which I watch ETFs is
international stocks. I think it was because I found some
with much lower expenses than various mutual fund offerings.
International mutual fund expense ratios are still on the
high side, generally speaking, compared with domestic stock
mutual funds, last I checked.

<BreadWithSpam[at]fractious.net> wrote in message
news:yobabxpwibm.fsf[at]panix1.panix.com...

- quote -

Also, two Vanguard funds (Emerging markets (VEIEX) and FTSE All-World Ex-US
(VFWIX)) have purchase fees (0.5% and 0.25% respectively), and one (VEIEX)
has a redemption fee (0.5%). Both of these funds have corresponding ETFs
(VWO and VEU) that do not impose these fees. So depending on your ETF
transaction costs, it may be less expensive to buy the ETF.

"Elle" <honda.lioness[at]nospam.earthlink.net> writes:
- quote -

The same may be said of any well-managed index funds
whether ETFs or not.

- quote -

There are some other very small tax-related distinctions,
but for most folks, overwhelmingly, the main differences
between ETFs and more traditional index funds are related
to one's transactions into and out of the funds.

ie. if you are going to be buying a little bit at a time -
a lot of smaller purchase transactions - a regular index
fund is very likely to be superior, since every transaction
into or out of an ETF generates a brokerage commission (as
well as potential bid-ask spread costs which are harder to
pin down).

If you want to buy in and then sell out in a relatively
short period of time, an ETF may be better, since many
traditional index mutual funds impose some sort of short
term trading fee (ie. some of the Vanguard international
index funds have a 2% redemption fee if shares are held
less than 2 months).

Additionally, ETFs may make more sense if you want to
hold several funds but don't have enough to make the
various minimums (ie. again, typically some $3k/fund -
if one only has, say, $5k to invest and wants more than
one index, that could be costly, though minimums are
often waived or much lower if one commits to making
additional regular investments).

As I said, mostly the issues are transaction-related.

As far as expense ratios - they are so close that unless
you are talking about a *lot* of money, these transactional
issues will overwhelm. And if you are talking about a lot
of money, there are often even lower-expense classes of
shares in the traditional funds.

For other tax-related issues about ETFs, this is not a
bad little summary:
http://www.fool.com/investing/etf/20...be-taxing.aspx
though note that early on, it talks about regular funds making
year-end distributions which are taxable, etc - without noting
that regular index funds typically don't have much in the way
of cap-gains to distribute any more than ETFs typically do.
(It mentions an *actively* managed fund which made a 20+%
distribution, but that's a bit of an apples-to-oranges
comparison given the rest of our discussion here)


--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

"CMJohnson" <johnsoncm[at]mail.com> wrote
- quote -

There are specialized ETFs. There are specialized mutual
funds. There are S&P 500 index ETFs. There are S&P 500
mutual funds. I suggest you re-check the pros and cons of
each, because those you list are not ones I have ever seen.
Today I would hesitate to draw a distinction between the two
categories of mutual funds.

On Apr 2, 4:43 pm, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -

Well, ETF's don't trade much inside of their basket of holdings. The
holdings are meant more as a cross section of the sector or market
they represent. This means that there are minimal capital gains
distributions that, despite creating a taxable event, can make up a
significant portion of return. Plus, fund managers can move their
portfolios to match or hedge market movements, ETF's don't do this as
much. Don't get me wrong they are good, just be careful to look into
all the pros and cons.

"CMJohnson" <johnsoncm[at]mail.com> wrote
- quote -

What benefits do you claim mutual funds have over ETFs such
that mutual funds are clearly the superior choice?

"Slain" <Slain.k[at]gmail.com> wrote
- quote -

Would you please define "robust"?

If Fortune magazine knew it all, there would not be a
guzillion other methods for picking stocks.

- quote -

How much time do you have to study companies' fundamentals,
among other things?

Before buying individual stocks, I recommend you at least
skim:
_The Intelligent Investor_ by Ben Graham
_The Future for Investors_ by Jeremy Siegel

When you can intelligently explain (1) what it means to own
stock; (2) why stock prices tend to keep up with inflation;
(3) the significance of reinvesting dividends through ups
and downs of a stock's share price; and (4) how a
well-allocated collection of index mutual funds does against
any random stock pick, then IMO you may contemplate a search
for stock picks.

Slain wrote:
- quote -

My opinion is, since this will function as an emergency fund, you should
keep it liquid, either laddered CDs (a few CDs of varying maturity to
take advantage of the higher rates depending on maturity) or a decent
money market fund.
It's a way to avoid the risk that your transmission will die the day the
fund or stocks are down, and you need to tap that money. (This is why I
feel compelled to refine the way I present the dual use Roth. It has to
come with this type of warning.) If you save your way to a strict
emergency fund, then this account gets invested in the stock market.
Even then, few here, if any, will suggest individual stocks.

JOE

On Mar 31, 9:10 am, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
- quote -

Thanks Elle and Joe!!!!

I now have my first step clear!!! I do have 40k matching at my place
and contribute to it. I set it up with lots of diversity. I am
planning to use the ROTH IRA as my emergency fund and also as a
retirement fund. Since gains from ROTH IRA are long term, I might do
Mutual funds.

I am also thinking about stocks. I know diversity is an issue, but if
I buy robust stocks which are say recommended by Fortune etc, would
that be a better idea?

Or would you advise just sticking to mutual funds with good returns?

Are you trading on your own? I agree with Elle and Joe on this one,
for the most part, but ETF's aren't the holy grail the media is making
them out to be. They are basically funds traded like stock, so you
get the diversification, but not so much the benefits of fund
investing. I really recommend minimizing the debt first tho.

On Mar 30, 3:12 pm, "Slain" <Slai...[at]gmail.com> wrote:
- quote -

That's a good idea because you would be diversifying your risk.
Normally, I prefer investing in individual stocks, but foreign stocks
are difficult to buy because not all are traded on American stock
exchanges and information is sparse. For instance, I own some EWY
(iShares MSCI South Korea Index ETF).

--
Ron

Slain wrote:

- quote -

You can withdraw your deposit at any time. The earnings are what would
incur tax and 10% penalty. There are enough combinations of how the
money goes in and how/when it comes out that understanding the rules
isn't so simple. We are still discussing whether a roll-over (from a
regular IRA to a Roth) avoids penalty after 5 years. The IRS pubs are
not as well written as we'd like.

Your questions are far from dumb. They are quite appropriate for a
beginner, and welcome here.

We never did ask - do you have a 401(k) at work? If it has a matching
provision, are you getting the full match? That's the first step for
most people getting started.

JOE

"Slain" <Slain.k[at]gmail.com> wrote
- quote -

No. The run-of-the-mill, ordinary Roth IRA contribution may
be withdrawn at any time. What you may be thinking of is
something called a Traditional IRA Conversion to a Roth IRA.
The conversion amount cannot be touched for five years
(using the IRS code's calendar). Earnings cannot be touched
without penalty in either case until several other
requirements (notably, age) have been met.

Don't be shy about googling on the subject of IRAs,
withdrawals, etc. Many good consumer sites are available on
them. They tend to be repetitive. Anything you read that
strikes you as odd can be queried further here.

- quote -

Ask about this in a separate thread. I happen to use my
brokerage's (Fidelity's) money market fund. Currently it's
paying 4.9%. Many institutions are paying in the 4.5+% right
now, so this is for what you should aim.

Where is your money currently parked? If you say, then this
might help others give you advice.

www.bankrate.com is a good resource for checking money
market rates nationwide, including online offerings.

Note that U.S. interest rates are anomalous now, with what's
called an "inverted yield curve" present. This means short
term rates (e.g. money markets) are very close to or even
better than long term CD rates (e.g. over 3 years).
Historically, such a situation has not lasted too long
(maybe a couple years?), and longer terms start to pay
better interest. This is some kind of argument for a CD
ladder going out about five years, or to whenever, depending
on your timeframe for needing the money.

- quote -

No dumb questions exist here, AFAIC. Money and its handling
are important to surviving.

On Mar 30, 3:26 pm, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -


Thanks Elle!
For some reason I had the idea that the ROTH IRA cannot be touched for
5 years and the earnings for a longer period of time. Is that True?
- quote -

I am planning to set up a seperate fund for emergency and the house.
Your suggestion is CD's. I also heard about ING etc. Do you have any
suggestions for those where I can contribute regularly?

I know some of these questions are really dumb, but for a first times
some times the information out there is over whelming.

Thank you!!!