AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner practitioner and have performed fee only investment management and financial planning services for the past 11 years.
Expert: John D Smith, CFP Date: 10/7/2007 Subject: ETF and Mutual Funds
Question Hello!
I am 32 and have began to invest for retirement.
I have a couple questions if you don’t mind:
1) I plan to start an 403B and an IRA. I have some investments in mind (eg: Int value funds, U.S. Value funds, S&P 500 index funds etc).
Now my question is to fit these investments I have in mind, should I choose Mutual funds or ETF’s?
2) I noticed that when I go to buy a mutual fund through a broker, I am charged a transaction fee (say $20). I heard that if I buy that same mutual funds directly through the company that offers it I pay no transaction fee. For example, if I want to buy a Vanguard Large Cap Mutual Funds from Scottrade I would pay say $20 in fees. But If I bought that fund directly from Vanguard there would no fee.
So if this is the case, then why do people buy mutual funds through a broker vs directly from the company.
Thank you
Asad Raza
Asad_raza5367@hotmail.com
Answer People will typically purchase mutual funds through brokers such as Scottrade in order to be able to consolidate their holdings and purchase mutual funds from various mutual fund companies without having to open accounts at each company. Also, if an investor wants to purchase other investment in addition to mutual funds, this can be accomplished whereas this is not usually the case at a mutual fund company. I hope this helps.
