Suppose you just inherited $25,000 from your Aunt Louise. You
have decided to invest in an S&P...

Question

Suppose you just inherited $25,000 from your Aunt Louise. You
have decided to invest in an S&P Index fund, but you haven't
decided yet whether to use an ETF or a mutual fund. Suppose the ETF
has an annual expense ratio of .09 percent, while the mutual fund
charges .21 percent. The mutual fund has no load, but the ETF
purchase would carry a $25 commission. Assuming this is a long-term
holding and you are not concerned about being able to margin or
short sell, which is the better approach?

Prince · Accepted Answer

Sheet1
	Particular	Charges	Commission	Total Payout
	ETF	$22.50	$25.00	$47.50
	Mutual Fund	$52.50	0	$52.50
	Since, Total Payout in ETF is less than total Payout in Mutual Fund, ETF is better approach.

Suppose you just inherited $25,000 from your Aunt Louise. You have decided to invest in an S&P Index fund, but you haven't decided yet whether to use an ETF or a mutual fund. Suppose the ETF has an...

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