The Icing On The Cake - Kivalia Guidance For Commission-Free ETF Programs

Sep. 24, 2013 1:55 PM ETIVV, SPY, IVE, OEF, SPTL, MBB, IWC, CWB
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Contributor Since 2012

Kivalia is an open investment advisory platform that brings consumers unparalleled insight & education into their portfolios with ongoing, actionable advice.

Exchange-Traded Funds, or ETFs in short, have grown enormously in popularity amongst individual investors over the last few years. And for two good reasons: instant diversification and ease of use.

ETFs are securities that track an index, a commodity or a basket of securities much like a traditional mutual fund would. Because ETFs are constructed to track a specific market index or sector, they very much resemble common passively-managed index funds, such as the Vanguard 500 Index fund, providing investors with instant broad diversification at low investment cost.

And because ETFs trade on an exchange, unlike a mutual fund, they can be bought and sold throughout the day, just as easily as any stock.

In recent years, the rapid increase of investable money in ETFs has pushed the industry to provide greater and cheaper choices for individual investors. For the firms managing these funds, a price war drives down costs (for an ETF, like a mutual fund, the cost is called the 'expense ratio'). Nowadays many of the leading brokerage firms offer defined groups of commission-free ETFs to their clients. That's right: ETFs are ever cheaper to own, and can even be free to trade. What's not to like?

To help you navigate through the different offerings, we apply our evolving investment outlook to the various lists of no-cost ETFs at the country's leading brokerages including Fidelity, Charles Schwab, TD Ameritrade and E*Trade. This makes Kivalia an ideal resource for advice not only on your retirement plans, but also your non-401(k) investment accounts!

Let's look at these four different no-commission broker lists in more details.

  Approximate # of ETFs available ETFs Average cost Advice
60 0.3% View
100 0.4% View
100 0.3% View
90 0.6% View

All four platforms offer an extensive set of ETFs to choose from, and at reasonable cost. Fidelity, Charles Schwab and TD Ameritrade all provide ETFs representing a diversified mix of sectors and asset classes, allowing to one to easily construct well-balanced portfolios. The set of funds offered by E*Trade seems to be biased towards international securities and commodities, with very few options for bonds, unfortunately.

Although the performance of a portfolio is almost entirely a result of its allocation, cost of investments can play a significant role. And with all things equal, cheaper is better. Here again, Fidelity, Charles Schwab and TD Ameritrade offer the lowest cost ETFs.

Ease of use, instant diversification and commission-free, these platforms offer a lot of benefits for the individual investor. Deciding on which of these funds to allocate to and by how much remains a difficult task, and that's where Kivalia can help you.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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