Why I mostly choose to invest in mutual funds instead of exchange trade funds (ETF)? The main reason is a mutual fund is good for investing a set amount of fund at one time, meaning a fraction of a share in a mutual fund can be bought and sold any time with certain restrictions apply. Investing with ETF, I will have to trade in the multiple of shares, instead of a fractional share, in an ETF at a time.
The feature of mutual funds that can be traded in dollar amounts will benefit investors who like to make dollar cost average investments (i.e., a planned periodic investment with fixed amounts) and periodic portfolio rebalancing.
I have found in no other investment products to make pure dollar cost average investments than in mutual funds. By buying into mutual funds at a planned dollar amount periodically, an investor can dollar cost average his/her investments, buying more when the mutual fund share price is lower and purchasing less shares when the share price is higher.
Next I would like to talk about: What is the beauty of dollar cost average?
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