November 1, 2016

Investing from the Ground Up

Building a solid foundation for your portfolio is critical, and while mutual funds have long been a popular way to invest, exchange traded funds (ETFs), are increasing in popularity for their low cost and better tax treatment.

What are Mutual Funds? A mutual fund is an investment containing a pool of different shares of individual stocks and/or bonds. Buying and selling occurs at the end of each trading day when the price, based on the value of the individual investments in the fund, is set.

Mutual funds can carry sales loads and redemption fees, and always have internal expense ratios ranging from 0.1% to 3% per year. Those expenses include management expertise and miscellaneous items such as advertising or operational costs. Expenses are not itemized on monthly statements, and can affect your overall return. Because the price is set at the end of the trading day, it doesn’t vary during the day, limiting flexibility and liquidity.

What are ETFs? Like a mutual fund, an ETF is a pool of investments. However, thereare several features of an ETF that can make it a more favorable investment choice over mutual funds.



At PEAK, we pay close attention to what sets different investments apart when building your portfolio. While we predominantly favor ETFs over mutual funds, it’s important you are aware of the differences between these two popular investment vehicles so you can fully understand our recommendations and know we are exercising sound financial practices in your best interests.