conversation: User (TedToaster22): "Right now I have a basic three-fund portfolio - U.S. Total Stock Market Index, International Market Index, and U.S. Total Bond Market Index. All of these holdings are currently in mutual funds (I'm with Schwab, for those curious) but recently I've been looking more and more at similar investments using ETFs. So far I've found lower expense ratios and generally better returns. I've also read they are more tax-efficient (none of these funds are/will be in an IRA or similar tax-advantaged account).\n\nWhat do you all prefer when it comes to index mutual funds vs. ETFs, and why?"
  Self: "ETFs generally have lower fees than equivalent mutual funds. Also, they are generally more tax efficient because people trade shares of the ETF with each other, which incurs less turnover (that generates capital gains) than mutual funds which have to actually sell underlying stocks when people sell. Note that if you may have to apply for a brokerage account with Schwab if you don't have one already in order to buy ETFs, since they're traded like stocks. The downside is that ETFs may cost your trading fees and don't automatically reinvest like mutual funds do."
  ConnorCG (ConnorCG): "I'm not sure about Schwab, but ETFs at Vanguard can be automatically re-invested. I'm sure Schwab is the same. "
  salmonellas (salmonellas): "Schwab customer here. They can be. I know this because my dividends are set to automatically reinvest."
  