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If you are still in mutual funds, listen up. Because if you’re a reasonable person, you want to run to the login screen of your brokerage online and search for evidence of what I am about to reveal. ETFs offer protection against downward risk no mutual fund can match. It’s a difference that could cost you thousands of your investment portfolio or retirement. Well, maybe you do have thousands of your investment accounts. If you are just starting to invest your money, pay attention especially to my friend. The following page to make your choice between an ETF (Exchange Traded Fund) and a mutual fund clear enough to make an investment decision or take corrective action if necessary. Here are some basics. ETFs and mutual funds are similar in that they both hold baskets of securities. A balanced mutual fund can hold bonds, stocks, Treasury bills and money. The ETF is essentially derived from stocks, but takes many forms. Before you talk about the potential error that could cost you thousands, here are important differences between ETFs and mutual funds: * Mutual funds are actively managed by a person who gets paid by people like us, usually money that we give it to manage. ETFs are bought by us and can be bought and sold throughout the day with few restrictions and virtually no minimum. * Mutual funds charge 2% or more between the loading and maintenance, whereas ETFs typically charge between the two. 5 and 1%. Mutual funds are usually no transaction fees. Brokerage commissions must be paid when buying an ETF. * Mutual funds pay capital gains, even if no distribution business (money to you) takes place. ETFs usually find a way to avoid these taxable events. This is an important advantage for ETFs and worse, it is not always clear to investors how and when this happens. * The mutual funds to mitigate risk by taking some money in anticipation of a stock market down. ETFs are not actively managed, so you the investor and buyer of the ETF must account for this risk when you decide to buy. Position sizing is an important factor with a purchase of ETF to manage this particular risk. Here we go now. The biggest mistake you can make in your decision to allocate to mutual funds or ETFs is neglecting a huge advantage holds an ETF on mutual funds: * Stop-Loss Order: It is a tool you can use to nail down a floor below which the price of your ETF can not fall. You arrange with your broker or click a button if you invest with a brokerage firm online. No such protection is available with a mutual fund. And do not expect your fund manager to point this out. This tactic can stop the bleeding if things go really wrong with the stock market. Better yet, you can set the stop loss and put it on automatic. This is proactive management of your money, not just assets. Whether you are just starting your investment portfolio or are a qualified investor, you want to keep you informed about the risks and strategies associated with each category of personal financial investments. It is now possible to acquire a complete library of knowledge on personal finance in audio format if you know where to look. Carefully consider the perspective of a financial advisor with whom you seek advice: The person is carefully consider your future plans for your work or business before you do? ________________________________________________________________________