BACKNEXT

How do I buy an ETF?

Probably the biggest disadvantage to ETFs is that you've got to buy them through a broker. Even with the low fees available at discount and online brokers these days, brokerage commissions can seriously erode ETFs' low-expense advantage, especially when you're investing small sums of money.

For example, if you were planning to invest $100 a month in ETFs, even a cost of just $10 per trade would mean 10% of your investment is being siphoned off. So your ETFs' price would have to rise 10% just to recoup your buying cost. And don't forget that you'll have to pay a commission when you sell, too.