Reinvested dividends increase the number of shares. Fund/stock gains decrease the number of shares sold. The purpose of buying funds/stocks is to sell shares to generate cash as needed.
If a great company had a high dividend yield above 4%, then it would be obvious to everyone. Who would then bid up the stock price, making the dividend yield no longer large. That's what happens in large pullbacks. That's why very large yield stocks trade sideways or downwards for extended periods of time. There's something wrong with the business, and the market knows this.
Why would anyone hold mutual funds nowdays instead of ETFs? I seriously don't get it. I understand you may have limited options in 401K, but outside of that.
I understand why- there are mutual funds exclusive of fees that consistently outperform and are better diversified than many etfs. Personally I own several awesome mutual funds and have used them in client portfolios. ETFs can have their place, but they’ve been oversold as a cheaper better alternative to mutual funds and many are not. Passive funds have a place but there are many active performance funds that out perform
@@YourRichAuntie Thanks. I've been wondering why Dave Ramsey pushes them so much. I assumed it was because they were more profitable for money managers. This might be a good video topic. :)
ETFs can be traded during the day like individual stocks. So they have buy/sell spreads which means there are going to sell for (very slightly) less than net value of the shares. You can also buy partial ETF shares on platforms like Fidelity. Mutual funds have to redeem your shares within 7 days. ETFs do not have that requirement because no-one is under the obligation to buy your shares in open market. Neither of the reasons matter that much if you are holding the shares long term, if we are comparing equivalent ETF and mutual fund like VTI and VTSAX.
Reinvested dividends increase the number of shares.
Fund/stock gains decrease the number of shares sold.
The purpose of buying funds/stocks is to sell shares to generate cash as needed.
If a great company had a high dividend yield above 4%, then it would be obvious to everyone. Who would then bid up the stock price, making the dividend yield no longer large. That's what happens in large pullbacks. That's why very large yield stocks trade sideways or downwards for extended periods of time. There's something wrong with the business, and the market knows this.
Why would anyone hold mutual funds nowdays instead of ETFs? I seriously don't get it. I understand you may have limited options in 401K, but outside of that.
I understand why- there are mutual funds exclusive of fees that consistently outperform and are better diversified than many etfs. Personally I own several awesome mutual funds and have used them in client portfolios. ETFs can have their place, but they’ve been oversold as a cheaper better alternative to mutual funds and many are not. Passive funds have a place but there are many active performance funds that out perform
@@YourRichAuntie Thanks. I've been wondering why Dave Ramsey pushes them so much. I assumed it was because they were more profitable for money managers. This might be a good video topic. :)
ETFs can be traded during the day like individual stocks. So they have buy/sell spreads which means there are going to sell for (very slightly) less than net value of the shares. You can also buy partial ETF shares on platforms like Fidelity.
Mutual funds have to redeem your shares within 7 days. ETFs do not have that requirement because no-one is under the obligation to buy your shares in open market.
Neither of the reasons matter that much if you are holding the shares long term, if we are comparing equivalent ETF and mutual fund like VTI and VTSAX.