I'm 65, still enjoying full time work, and have around US$900 in cash and mutual funds, following fixed asset allocation.

In March 2023 I may start drawing $3000/month in social security and investing all of it.


1 Answer 1


The main advantage of an ETF is that you can trade it during the day like stocks, where Mutual Funds only trade at one price at the end of the trading day. So you have slightly more control over what price you buy/sell at.

With ETFs, you buy a number of shares (typically whole shares, though some brokers may allow fractional shares), while with mutual funds you invest a specific amount and fractional shares are tracked by the fund. So if you want to invest a particular amount each month, mutual fund would be slightly more efficient since you wouldn't be forced to have a cash remainder.

That said, most long-term investors should not care as much about the intraday price than the composition of the fund, the historical performance, and the fees.

ETFs are more common for passive (index) funds, while Mutual Funds are more common for active funds that try (sometimes unsuccessfully) to outperform an index. Active funds (whether ETFs or traditional) tend to have higher fees as well, so be careful that you're not picking too many overly risky funds.

ETFs also do not require a minimum investment, while mutual funds might. There can also be differences in how much capital gains are distributed since ETFs tend to have lower turnover (buying and selling) based on how they're managed.

There are other differences regarding fees, commissions, etc. But the differences should be minimal in general.

I would be concerned more about what you're investing in than the vehicle you use. If you're drawing $3k per month you should have no trouble finding mutual funds with minimums low enough for you to invest in.

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