Saving for Retirement: Should You Use ETFs or Mutual Funds?

Both ETFs and mutual funds can be helpful in saving for retirement, but which is better?

May 18, 2014 at 9:50AM

In saving for retirement, mutual funds have been around for decades, while exchange-traded funds are the relative newcomer to the scene. But with both at your disposal, which is better for your retirement strategy?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at this question and goes through the differences between mutual funds and ETFs. Dan notes that mutual funds can be simpler and less expensive, with no-load funds carrying no commission and index funds often having rock-bottom expenses. But he also points out that you can only trade mutual funds once daily, while ETFs allow you to buy and sell whenever the market is open. The downside of ETFs, though, is that you have to pay a commission. But Dan urges anyone interested in ETFs to check with their broker to see if they offer commission-free ETFs, which have gotten more popular. In general, Dan concludes that you should look at total costs and that either ETFs or mutual funds can give you a successful retirement.

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Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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