The hidden perils of ETFs

You can save money and diversify with these cheap index funds, but watch out for the pitfalls.

2 of 5

2. Broker costs

You don't buy ETF shares from the fund company. Instead, they are traded among investors.

Danger: Unlike with no-load mutual funds, you have to pay a brokerage commission every time you buy or sell an ETF. That makes them a poor choice if you invest a little each month. Exception: Fidelity and Schwab recently waived commissions on a few ETFs.

NEXT: Bid/ask ratio

Last updated March 22 2010: 12:03 PM ET

Email | Print | Share | RSS

TWITTER
DIGG
FACEBOOK
DEL.ICIO.US
REDDIT
STUMBLE UPON
MYSPACE
MIXX IT

Paste this link into your favorite RSS desktop reader

See all CNNMoney.com RSS FEEDS (close)

More from Money

• The wrong way to pick funds

• 12 ways to cut your taxes

• 3 ways to save money this spring

More Galleries

8 great summer vacation deals

Want the perfect summer getaway? MONEY searched for destinations with balmy weather, unique attractions, fun stuff to do, and great deals from four different categories: beach, mountain, culture and city. More

Best ways to catch up on your retirement savings

Even the most financially responsible people make a few mistakes or run into obstacles along the way. These tips -- from cutting taxes to selling securities -- can preserve a safe retirement. More

Nearing retirement? Fortify your finances

Your financial goals are within reach. Here are tips and tools to make sure you achieve them. More

Special Offer