Cheapest exchange-traded funds available to date


MONEY-SAVING MOMENT: Scottrade has announced a new slate of exchange-traded funds (ETFs) that are the lowest-cost investments of any kind that I know of, be it a mutual fund, an index fund or an ETF.

ETFs are one of the fastest-growing areas of investing. They allow you to own a bunch of companies in a single account, and then you can buy or sell the ETF like you would a stock — minus the same restrictive rules about buying and selling that apply to mutual funds.

In addition, ETFs have an expense advantage over mutual funds. While the typical mutual fund can have an annual management fee of 1.5%, that management fee is more like one-tenth of 1% with an ETF. Over a lifetime, that small discrepancy in management fees could be the difference between having comfort in retirement and just trying to make ends meet!

So you can see why I’m a big fan of ETFs. They were once only reserved for the big money crowd, but Vanguard started offering them commission-free and driving the management fees down across the industry. That really opened ETFs up to the small investor. And then Charles Schwab soon undercut Vanguard and now Scottrade has undercut everybody!

Scottrade offers a nice variety of commission-free ETFs — everything from ones that buy small companies, mid-sized companies or large companies; to one that buys the entire stock market; to ones that focus on certain commodities and industries. This discount brokerage firm’s annual management fees on their ETFs start at 0.05% and go up — that’s so small you almost need a microscope to see it!

Why do annual management fees matter so much to me? Because over time, you will have 12 more years of retirement by going the low-cost route vs. somebody else saving the same amount of money in an average-cost investment. (See the “related” section below for more details.) Costs matter completely.

I want you to save for your future. I want you to invest efficiently and wisely. In just a few minutes, you can build a really Clark Smart kind of portfolio using the strategies in my investment guide. And it’s now possible that it can cost you next to nothing to get it going. Get started with my investment guide below. (Pay special attention to the Advanced page in the guide for more on ETFs.)

  • Show Comments Hide Comments