JohnV

2 Comments

    • ETFs with the Highest Yields/Lowest P/E Ratios [view article]
      Datalink - I am not trying to argue with you, but that isn't always entirely true. For example:

      REIT's are legally required to distribute 90% of profits to shareholders.
      Some individual companies have shareholder agreements to distribute most of the profits to shareholders (oil transportation sector is a good example of this)

      Of course, these aren't ETF's, but I just wanted to pass that on.       Jan 05 02:04 PM
    • ETF Investing Guide: The 4 Criteria for Picking a Brokerage [view article]
      As I start the new year, I am completely changing my investing strategy, and going with mostly ETFs for my long term growth. This article is a great addition to my research!

      One thing I want to add is that (in my opinion, at least) it is important that the online discount broker, or whomever the investor chooses to handle their transactions have a program for free automatic dividend investment. Think about it. I saw an example of a mutual fund that went like this:

      invest $10k in 1987 -
      long term growth WITH dividend reinvestment: ~$100K by 2006
      long term growth WITHOUT dividend reinvestment: ~$66K by 2006
      (this doesn't include the maintenance fees and capital gains)

      A lot of ETFs distribute dividends, and it's much better to have them automatically reinvested rather than put into a cash account. The reason? Because the investor will incur ADDITIONAL trading commissions as the incoming dividends are continuously reinvested. This can eat up returns. The only time this would not be important would be if the investor plans on taking the cash as the dividends are distributed. Check the broker's policy on withdrawals, some of them charge hefty fees, and/or make it a habit of delaying withdrawals.

      Another good little perk that some of the online brokers offer is the purchase of fractional shares. This allows for the maximum amount of dividend reinvestment, and/or shifting positions, and keeps your cash invested and making money.

      Of the online brokers I have looked at (or have used), these offer a free automatic dividend reinvestment option for ALL positions (including stocks!):

      mystockfund.com
      zecco.com
      tradeking.com (also offers fractional share purchases)
      thinkorswim.com
      sogoinvest.com (not 100% sure if they charge for this or not)

      Surprisingly, Scottrade.com does not. I also believe sharebuilder.com does, but I haven't looked into them. Note: this list is NOT ALL INCLUSIVE. These are just the online brokers I have researched and/or done business with.

      Jan 01 11:07 PM
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