A Case For ETFs vs. Mutual Funds

Somebody besides me making a case that investing in Exchange Traded Funds is a better investment discipline than investing for the most part in common stocks or mutual funds.

ETFs: Clearly Better Than Mutual Funds
November 25, 2008
by Alexander Green

With the stock market’s historic drop this year, some investors have fled to cash. Others are cautiously buying. Most, however, are sitting on their hands - but they shouldn’t be.
Even if you lack the cash - or the willpower - to buy into this market, there is still a very smart move you can make: switch.
Switch from your poor-performing, high-cost, tax-inefficient stock and bond mutual funds to index funds or exchange-traded funds [ETFs].
Why Choose Exchange Traded Funds Over Mutual Funds?
Compared to exchange traded funds, most mutual funds are a lousy deal, here’s why:
Each year more than three-quarters of them fail to match the performance of their benchmarks.
Many are loaded with front-end or back-end loads, 12b-1 fees, high management costs and other expenses.
Moreover, even when these actively managed funds fall sharply, they still often distribute annual capital gains to shareholders, in effect handing shareholders a paper loss and a tax bill at the same time.
Don’t stand for it. Now is your chance to fight back.
Switching to Exchange Traded Funds Will Save On Taxes
Switch from your underperforming mutual funds to index funds and exchange-traded funds - and save yourself thousands of dollars in taxes in the process.
The IRS allows you to take losses each year to fully offset any realized capital gains, and also allows you to take capital losses to offset up to $3,000 in earned income.

Source: http://seekingalpha.com/article/107857-etfs-clearly-better-than-mutual-funds?source=article_lb_articles