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Exchange Traded Funds (ETFs) Can Be Wise Investment For Boomers, Seniors, Paul J. Mauro CEO, Legacy
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Added: 01/02/2007
Type: Summary
Viewed: 131 time(s)
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Exchange Traded Funds (ETFs) Can Be Wise Investment For Boomers, Seniors, Paul J. Mauro CEO, Legacy
Exchange Traded Funds or ETFs are getting a lot of attention and their growth far outstrips mutual funds according to Paul J. Mauro, CLU, ChFC and founder of Legacy Financial Advisors in Milford, MA.
For a recent audio interview with Mauro on ETFs, visit: http://www.transworldnews.com/Interviews.aspx?id=71
Simply put, every Exchange Traded Fund or ETF is a separate fund established by a major financial institution that assembles a selection of individual stocks. The stocks are generally chosen to mimic performance of an index such as the S&P 500. ETF shares trade more like stocks than mutual funds. According to the American Stock Exchange (AMEX), a pioneer in Exchange Traded Funds, ETFs may be sold throughout the day, purchased on margin, and investors may issue stop orders to have their shares sold when they reach predetermined prices.
Mauro points out, "Since the actual underlying shares are seldom traded -- capital gains taxes are low. Additionally, the management costs of ETFs are transparent and lower than with mutual funds -- significant for the long-term investor."
Mauro is a Registered Representative of Legacy Financial Services Member NASD/SIPC, adds that ETFs were introduced in 1993 and grew from o $50 billion by 2000. Everyone is talking about ETFs now because they really took off in this decade, soaring to $337 billion last year By contrast, mutual funds grew from $7 trillion to $9.4 trillion since 2000. "Given the number of mutual fund investors and dollars invested, the potential for growth is lower. However, the seven-fold increase in ETF investment is noteworthy," he states.
ETFs trade like a stock throughout the day and can be managed much more effectively because they can be sold at will. ETFs are sometimes referred to as Diamonds that reflect the Dow, and Spiders (SPDR) that track the S+P 500. These are really brand names for ETFs that have become generic -- like Thermos and Xerox.
Mauro explains that ETFs are not well-suited for those who are building a portfolio by making incremental purchases every month. The commissions and other costs on small purchases will outstrip any benefits ETFs offer. Low-cost mutual funds are a better choice. Moreover, for those investing in a tax-deferred account such as an IRA, there are no capital gains tax advantages to an ETF.
ETF portfolios work best for more affluent individuals with over $250,000 to invest as part of an overall portfolio, ETFs can benefit retirees -- again because of their "tax efficiency" -- there are no forced capital gains each year -- ease of sale and professional investment management at low cost.
ETFs are an investment tool like many others that have become available to help consumers reach their goals. Mauro advises, "Before investing meet with and take the advice of a professional who knows you and your particular situation."
Legacy Financial Advisors, Inc. (www.lfsadvisors.com) has over 30 years of experience serving clients with retirement and estate planning. Headquartered in Milford, Massachusetts, Legacy, has representatives throughout Eastern Massachusetts, Rhode Island, and on Cape Cod.
Clients include individuals and families who are planning for retirement and business owners who wish to establish a qualified pension plan, develop an exit strategy or create a workable succession plan. The firm's financial services capability includes expertise in estate planning, financial planning, insurance and investments.
Founder Paul J. Mauro, CLU, ChFC has been featured in the PBS special "And Thou Shalt Honor" a documentary on relationships between children and their aging parents, produced by WGBH-TV. He is an authority on transitioning from: "Investments that grow well to investments that pay well during retirement."
Paul J. Mauro, CLU, ChFC is a Registered Representative of Legacy Financial Services Member NASD/SIPC, Securities offered through Legacy Financial Services, Inc. Advisory services offered through Legacy Advisory Services, Inc. Supervising Branch Office located at 321 Fortune Boulevard, Milford, MA 01757, (508) 482-9336
This information and the related audio interview are for educational purposes only. Before you buy, sell, or act on any of this information, please meet with a financial advisor about your specific situation. Past performance is no guarantee of future results. Read the prospectus before you invest in any security. All information is gathered from sources believed to be accurate, however we do not warrant or guarantee their accuracy.
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