Book summary “Investing in ETFs for dummies”: summary

Introduction

You face a difficult challenge when you try to build wealth in the modern financial markets. High mutual fund fees, hidden transaction costs, and the temptation to trade emotionally constantly erode your hard-earned returns. Traditional investment products often fail to deliver the performance you need for a secure financial future.

Russell Wild presents exchange-traded funds as a superior solution in Investing in ETFs for dummies. Exchange-traded funds combine the broad diversification of index funds with the low costs and trading flexibility of individual stocks. You can use these instruments to construct a resilient, tax-efficient portfolio tailored to your specific financial goals.

This book guides you through every step of the ETF investment process. You will learn how to select reliable brokers, build a globally diversified equity and fixed-income portfolio, and manage risk through disciplined rebalancing.

• How do exchange-traded funds actually operate behind the scenes?
• Which asset classes deserve a place in your core portfolio?
• How can you minimize taxes and transaction fees while maximizing long-term returns?

1. Understanding Exchange-Traded Funds

An exchange-traded fund represents a basket of securities tracking a market index or sector. It trades on an exchange throughout the day like an ordinary stock.

Exchange-traded funds combine the diversification of index funds with the intraday trading flexibility of individual stocks, offering exceptional tax efficiency and low management expenses.

ETFs mirror indices by holding a basket of company stocks, bonds, or commodities. Their prices fluctuate continuously during trading hours from 9:30 a.m. to 4 p.m. Eastern time based on the market value of the underlying securities. Examples include the SPDR S&P 500 (SPY), the DIAMONDS Trust Series 1 (DIA), and the Invesco QQQ Trust Series 1 (QQQ).

What Is an ETF

ETFs differ fundamentally from mutual funds by trading throughout the day, operating mostly as passive index funds, and carrying significantly lower ongoing fees. Active mutual funds average a 0.63 percent annual fee, while active ETFs average 0.51 percent. Index mutual funds average 0.06 percent, and ETFs average 0.17 percent.

Index ETFs offer complete transparency regarding their holdings, protecting investors from hidden risks like style drift and fund manager dishonesty. Jeffrey Vinik, manager of the Fidelity Magellan Fund in 1996, reduced stock holdings to 70 percent and bet on bonds, causing the fund to seriously underperform.

Comparing Investment Vehicles

ETFs are much more tax-efficient than mutual funds because their structural design and low turnover insulate investors from realizing unexpected capital gains. Mutual fund investors often pay capital gains taxes when the fund manager sells underlying stocks to meet shareholder redemptions, even if the fund lost value.

Potential downsides of ETFs include tracking error, premiums or discounts to net asset value, and the temptation of impulsive day trading. Bear Stearns introduced the first actively managed ETF, the Current Yield ETF, on March 25, 2008, which failed as the firm collapsed.

You can execute trades using flexible options identical to individual stocks:

• Place a market order to buy or sell an ETF at the best available current price.
• Place a limit order specifying the maximum price you are willing to pay or the minimum price you are willing to accept.
• Place a stop-loss order that automatically becomes a market order if the price falls below a specified threshold.
• Execute a short sale by borrowing and selling ETF shares with the intent to buy replacements cheaper later.

You should follow specific guidelines when navigating these investment choices:

• Keep your investment costs low.
• Avoid believing a manager can beat the market unless they have done so consistently for years for understandable reasons.
• Pick a fund company that you trust.
• Mix an index fund or two in with your active fund or funds.
• Choose an ETF over a mutual fund when all else is equal.

2. Navigating Accounts and Providers

Setting up an ETF portfolio requires selecting appropriate account types, minimizing transaction costs, and choosing reliable brokerage shops and index engineering suppliers.

You must use a broker-dealer to purchase and hold ETFs since they cannot be bought directly from suppliers. Account options include traditional retirement vehicles like IRAs and simpler non-retirement accounts. Margin accounts allow borrowing money to purchase securities, which carries severe risks. Beneficiary designations supersede wills, meaning named beneficiaries receive the account assets automatically upon death regardless of will instructions.

The author shares a story of a client who divorced and discovered her ex-husband had been secretly buying stocks and ETFs on margin, leaving her with an enormous debt and putting their home at risk.

You should follow specific steps when creating an account:

• Find a brokerage house, preferably a financial department store.
• Choose whether the account will be a retirement account or a non-retirement account.
• Choose whether to open a margin account or a cash account.
• Designate beneficiaries and set up account titling.
• Answer personal employment, wealth, and risk tolerance questions required by federal securities regulations.

Although many brokerages offer zero trading commissions, hidden costs called spreads still exist when dealing with middlemen behind the scenes. To prevent trading fees from nibbling away at returns, you should limit trading frequency, place orders online rather than calling in, and ensure trade costs do not exceed 0.5 percent of the invested amount.

You should follow specific cost guidelines:

• Don't trade often; practice buy and hold, making no more than a few trades every few months.
• Don't bother with ETFs if the trade costs more than 0.5 percent of the investment.
• Invest at least $1,000 at a pop if a $5 trade fee applies, or use no-load index mutual funds if investing $900 or less.
• Choose no-commission ETFs even if slightly less attractive than commission-based alternatives.
• Shop brokerage houses for the lowest fees and place all orders online.

Charles Schwab acquired TD Ameritrade in 2019 with plans to integrate all accounts, and E*TRADE was purchased by Morgan Stanley in 2020. Federal registration automatically insures investor securities up to $500,000 through the Securities Investor Protection Corporation, abbreviated as SIPC, and most major houses carry supplemental private insurance above that baseline. TD Ameritrade customers received $149.5 million in Lloyd's of London supplemental securities protection and $2 million in supplemental cash protection.

Setting Up Accounts

The ETF supplier market is heavily concentrated among top providers who leverage economies of scale to maintain exceptionally low management fees. Out of approximately 160 ETF providers at the time of writing, the top five providers control 89 percent of the market. BlackRock iShares manages $2.24 trillion with 388 ETFs, Vanguard manages $1.76 trillion with 80 ETFs, State Street Global Advisors manages $0.90 trillion with 130 ETFs, Invesco manages $0.33 trillion with 228 ETFs, and Charles Schwab manages $0.24 trillion with 26 ETFs. First Trust manages $0.12 trillion with 174 ETFs. Mixing and matching ETFs across different suppliers is acceptable for non-overlapping asset classes, but you should keep U.S. value, growth, and market-cap funds within the same provider to avoid inconsistent index definitions.

Selecting Suppliers and Indexers

An ETF's performance and quality depend heavily on the integrity of its underlying index. Primary indexers include S&P Dow Jones Indices for broad market benchmarks, MSCI for global and ESG indexes, FTSE/Russell for market-capitalization tiers, CRSP for academic-derived indexes used by Vanguard, and Bloomberg for fixed-income bond benchmarks. The Russell 1000 index comprises the 1,000 largest U.S. stocks, while the Russell 2000 index comprises the 2,000 next-largest U.S. stocks. CRSP has a 60-year history of creating indexes at the University of Chicago Booth School of Business. In 2012, Vanguard famously dropped MSCI in favor of CRSP for several of its U.S. index funds and ETFs to secure cost savings passed on to investors.

Securities listed on national exchanges can be traded simultaneously across multiple venues like NYSE Arca, Nasdaq, and BATS. The NYSE Arca originated in 1792, lists 8,000 securities, includes 3,000 member companies, and hosts 80 percent of all ETFs. BATS trades approximately 220 ETFs. Meanwhile, you should avoid unnecessary intermediaries such as commissioned salespeople, high-fee separately managed accounts, overpriced variable annuities, and funds of funds that layer multiple management fees.

You should adhere to specific trading and intermediary rules:

• Question the purchase of any mutual fund or ETF featuring other funds among its top holdings if total management fees exceed 0.5 percent.
• Avoid buying annuities unless you completely understand the product structure and fee implications.

You can use market orders for straightforward domestic ETF purchases or limit orders to control execution prices when trading less liquid funds. A market order instructs the broker to buy immediately at whatever price sellers are currently demanding. A limit order requires specifying a precise threshold price, ensuring the trade executes only if the market meets that price, which prevents unfavorable pricing on exotic or thinly traded funds. Regular trading hours for ETFs run from 9:30 a.m. to 4 p.m. Eastern time.

You should follow specific order guidelines:

• Use market orders for domestic ETFs that are not exotic, when the market is stable, and outside opening or closing hours.
• Use limit orders when bid and ask prices differ by more than a few pennies or when trading jumpy, lightly traded ETFs.
• Execute a limit order slightly above the last sale price, such as offering $10.03 when the last sale was $10, to secure execution without risking missed purchases.

3. Equities: Growth, Value, and Size

Research indicates that 90 to 95 percent of a mutual fund or ETF performance is attributable to its asset class. Portfolio performance is heavily driven by its asset class and style grid placement, with specific recommended allocations for large and small caps.

Strategic allocation across large-cap and small-cap stocks, with a deliberate tilt toward value companies, captures historical market premiums and drives long-term portfolio returns.

Large Growth and Large Value

Companies are categorized into distinct capitalization tiers based on the combined value of their outstanding shares. Market capitalization divisions are generally accepted as large caps having more than $10 billion, mid caps between $2 billion and $10 billion, small caps between $300 million and $2 billion, and micro caps from $50 million to $300 million.

Historically, large-value stocks have outperformed large-growth stocks over long periods while maintaining similar volatility. Since 1927, large-value stocks achieved an annualized growth rate of roughly 12 percent compared to 10 percent for large-growth stocks. This occurs partly because growth stocks often become overpriced due to their immense popularity and media hype, whereas undervalued companies can yield profits even with minimal growth.

Value stocks can be identified using multiple criteria including financial ratios, dividend distributions, and industry sectors. Common criteria to recognize value include low P/E and P/B ratios, consistent dividend distributions, lack of media exposure on magazine covers, modest earnings growth, and inclusion in older industries like energy, banking, and transportation.

You should apply these practical steps:

• Keep large-cap stocks separate from small-cap stocks, and growth stocks separate from value stocks.
• Allocate between 50 percent and 70 percent of your total domestic stock portfolio to large companies.
• Invest 40 percent to 50 percent of your large-cap amount in growth, and tilt the rest toward value.
• Check the stock price-to-earnings ratio for low multiples.
• Examine the price-to-book ratio for values well below sea level.
• Look for regular dividend distributions.
• Observe whether the company avoids the cover of Forbes.
• Assess whether earnings growth is less than awe-inspiring.
• Verify if the company operates in traditional sectors like energy, banking, transportation, foodstuffs, or toiletries.

Small Growth and Small Value

Small-value stocks have historically outperformed small-growth stocks and all other equity asset classes over the long term. Over roughly nine decades, small-value stocks delivered an annualized return of about 14 percent, compared to 12 percent for large value, 10 percent for large growth, and 9 percent for small growth, though they carry higher volatility.

Micro-cap companies represent the smallest publicly traded firms and require caution due to higher fees, illiquidity, and interest rate sensitivity. Micro caps have less than $300 million in outstanding stock. Because they are heavy borrowers, their performance correlates more closely with interest rate drops than broader economic trends, but index ETFs in this category often feature higher management fees and lower liquidity.

The iShares Micro-Cap ETF returned nearly 83 percent in the year prior to May 31, 2021, versus 56.3 percent for the iShares Core S&P 500 ETF.

You should follow these rules:

• Allocate anywhere from 60 percent to 75 percent of your total domestic small-cap stock portfolio amount to small value.
• Work micro caps into your portfolio in fund form rather than picking individual companies.
• Invest in micro-cap funds with only a modest percentage of your portfolio.

4. Global, Sector, and Specialized Investing

Investing a portion of your portfolio in international stocks lowers risk and smooths out returns over time due to low correlation between geographic regions.

Cross-border diversification provides better risk reduction than domestic-only combinations because foreign markets move independently. For example, large U.S. growth stocks have a lower correlation with Japanese stocks or Chinese stocks than with other U.S. asset classes.

The FTSE China 25 Index fund ticker FXI moved in the same direction as large-cap U.S. growth stocks only 65 percent of the time, compared to 87 percent between U.S. large growth and large value.

In the decade from mid-2011 to mid-2021, the U.S. stock market grew at 14 percent annually. Developed overseas markets grew at 6 percent per year, while emerging-market nations grew at 3 percent.

Allocating between 40 and 50 percent of your stock portfolio to international equities achieves the highest returns per unit of risk.

While a market-weighted global portfolio suggests 45 percent foreign, many advisors recommend less due to a lemming mentality to avoid standing out if foreign stocks underperform. The total capitalization of the U.S. market relative to the world stock market is 55 percent, and the Vanguard Institutional Target Retirement 2040 Fund holds 40 percent non-U.S. stock.

International Diversification

An optimal international ETF strategy splits holdings into broad developed markets and emerging markets, supplemented by value and small-cap exposure. There are 300 global and international stock ETFs available for you to shop.

You should follow these rules:

• Split international holdings into approximately 75 percent developed nations and 25 percent emerging-market nations.
• Combine core international funds with an international value factor ETF such as IVLU.
• Allocate a portion of international holdings to small-cap funds like VSS or ISVL.

The SPDR Portfolio Developed World ex-US ETF (SPDW) holds 2,320 stocks. The Vanguard FTSE Developed Markets ETF (VEA) includes 4,035 stocks, while the Vanguard MSCI Emerging Market ETF (VWO) tracks 5,200 stocks.

Holding foreign ETFs in a taxable account rather than a tax-deferred account allows you to write off foreign withholding taxes on dividends. Many foreign countries impose a withholding tax of about 15 percent on dividends. If you invest a hypothetical $30,000 in a foreign fund with a 3 percent dividend yield, you lose $135 annually to foreign taxes. Holding the fund in a taxable account lets you write this tax off in full on your U.S. tax return using line 43 of IRS Form 1040.

Sectors and Specialized Funds

Style investing is generally superior to sector investing for the core of a portfolio because it provides broader diversification, lower management fees, and requires fewer funds. Morningstar Direct tracks 471 industry-sector ETFs with an average expense ratio of 0.52 percent.

You should follow these rules:

• Keep no single sector above 20 percent of your stock portfolio if using sector funds.
• Combine sector funds with style funds to ensure adequate value and small-cap tilts.

Sustainable investing using environmental, social, and governance criteria delivers competitive financial returns while promoting ethical and ecological goals. There are 150 ETFs focusing specifically on sustainable investing with combined assets of $100 billion. Globally, $35 trillion is invested in assets employing a moral compass, representing 36 percent of all investment assets.

Studies by the NYU Stern Center show a positive relationship between ESG and financial performance 58 percent of the time, and an inverse relationship in 8 percent of studies. The iShares MSCI USA ESG Select ETF returned a healthy 10.2 percent per year since inception and 19.3 percent over the five years prior to writing, outperforming the total U.S. stock market.

You should follow these rules:

• Decide what asset class you want to invest in.
• Shop for an ESG fund offering that specific asset class with low costs.
• Examine fund sponsor websites and SEC filings to verify proxy voting records and specific ESG strategies.

5. Fixed Income and Alternative Assets

Bonds serve as a crucial diversification and risk-reduction tool, providing portfolio protection and a reliable cash flow during severe economic downturns. Historically, bonds are less volatile than stocks and have a slight negative correlation to stocks, acting as ballast when the stock market drops. During tough economic times, investors flock to bonds for safety, and falling interest rates drive up the prices of already-issued bonds. From 1926 to 2020, the average annualized nominal return of the S&P 500 was around 10.7 percent, while long-term U.S. government bonds achieved an annualized nominal return of approximately 5.6 percent.

Bonds provide essential portfolio ballast during economic downturns, while real estate investment trusts and precious metals introduce noncorrelated return drivers.

During the Great Depression years from 1930 to 1932, the annualized real return of the S&P 500 was negative 20 percent, while long-term U.S. government bonds achieved an annualized real return of 14.9 percent. In 2008, the stock market posted a return of negative 37 percent, whereas long-term U.S. government bonds rallied. Conversely, 2009 brought the worst year ever for long-term U.S. government bonds, returning negative 14.9 percent. Treasury bonds are considered risk-free sovereign debt guaranteed by the U.S. government, coming in conventional and inflation-adjusted forms. Conventional Treasurys pay higher interest rates, whereas Treasury Inflation-Protected Securities (TIPS) pay lower nominal interest but have their principal adjusted twice a year to match the Consumer Price Index (CPI).

You should follow these rules:

• Start with your current income.
• Subtract what you believe you will be getting in Social Security payments or other pension income to find the amount needed from your portfolio.
• Multiply your estimated annual nest egg withdrawal amount by 10 to establish your minimum bond portfolio target on retirement day.

REITs and Commodities

REITs deserve a dedicated asset class allocation because they offer unique benefits that distinguish them from standard industry sectors. The author identifies five distinguishing characteristics of REITs: limited correlation to broad markets, unusually high dividend yields mandated by law, different taxation of dividends as ordinary income, special status among financial professionals, and connection to tangible property. Publicly traded REITs must pay out 90 percent of income as dividends. The Dow Jones U.S. Select REIT Index achieved an 11.4 percent average annual return for the 42 years ending in December 2020.

You should follow these rules:

• Devote 15 percent to 22 percent of the equity side of your portfolio to REITs.
• Keep your REIT funds in a tax-advantaged account like an IRA to avoid high ordinary income tax rates on dividends.
• Split your REIT allocation evenly between U.S. and international REIT funds.
• Purchase domestic REIT ETFs such as Schwab U.S. REIT ETF (SCHH), Fidelity MSCI Real Estate Index ETF (FREL), or Vanguard REIT Index ETF (VNQ).
• Purchase international and global REIT ETFs such as Vanguard Global ex-U.S. Real Estate ETF (VNQI), Xtrackers International Real Estate ETF (HAUZ), or iShares Global REIT ETF (REET).

Precious metals like gold and silver can serve as an inflation hedge and portfolio diversifier, but they carry unique tax disadvantages and high volatility. In early 2006, the price of silver shot up 67 percent within three months in anticipation of the launch of the iShares Silver Trust ETF. Commodity pools that rely on futures contracts for oil and natural gas can severely underperform the actual spot prices of those commodities due to a phenomenon called contango. While an actual barrel of oil rose from about $40 in January 2009 to nearly $100 in June 2011, the share price of the United States Oil Fund barely moved from $35 to $38.

You should follow these rules:

• Allot no more than 5 percent of your total portfolio to precious metals.
• Hold precious metal ETFs in tax-advantaged accounts to mitigate the 28 percent collectibles capital gains tax rate.
• Rebalance your precious metal allocation yearly by buying when prices fall and selling when prices rise.
• Exercise extreme caution before investing in commodity funds that use futures and derivatives.
• Be prepared to account for complex K-1 tax forms and higher tax advisor fees when filing taxes for futures-based commodity funds.
• Limit your exposure to general commodity ETNs to no more than 5 percent of your portfolio.
• Choose ETNs with balanced weightings across sectors, such as the Barclays iPath Dow Jones-UBS Commodity Index Total Return ETN (DJP).
• Split the difference by allocating 3 percent to 4 percent of a portfolio to pure commodities and another 3 percent to 4 percent to broad natural resource funds.
• Select broad natural resource ETFs such as the SPDR S&P Global Natural Resources ETF (GNR) to gain diversified exposure across energy, chemicals, and mining firms.
• Choose active funds with low costs, charging no more than 0.6 percent for stock funds or 0.3 percent for bond funds.
• Ensure any chosen active fund fits your overall portfolio style, focusing on areas like small caps where active management has a better chance of beating indexes.
• Carefully check the manager's long-term track record across both bull and bear markets relative to representative market indexes.
• Build a largely indexed portfolio rather than going overboard with active management.

6. Portfolio Management and Risk Control

Long-term investment returns depend directly on the level of risk taken, but risk should be calibrated to personal financial capacity rather than generic formulas. Avoid simplistic rules of thumb like subtracting age from 110. Appropriate risk depends on a comprehensive view of wealth, age, income, health, financial responsibilities, and psychological tolerance for volatility.

Successful long-term investing relies on matching risk tolerance to personal capacity, maintaining disciplined rebalancing schedules, and placing assets in optimal tax-advantaged accounts.

• Ask how much return the portfolio-holder needs to see.
• Ask how much volatility the portfolio-holder can stomach.
• Take no more risk than necessary to achieve the desired return.

The stock market has delivered a historical average annual return of 10 percent over the past century, or about 7 percent after inflation. A well-diversified portfolio has historically returned 7 percent to 8 percent, or 4 percent to 5 percent after inflation. Investing $20,000 today and adding $2,000 yearly for 20 years at a 7.5 percent return yields $171,566.

Managing Risk and Return

Diversification eliminates nonsystemic risk for free, but systemic risks cannot be avoided and require compensation through higher expected returns. Nonsystemic risks are specific to individual companies and can be entirely eliminated using ETFs. Systemic risks affect the entire market—such as interest rate changes, inflation, and political instability—and offer higher historical returns as compensation.

An 11th-grader starting an internet rumor can cause an individual stock to nosedive, representing nonsystemic risk.

Regular rebalancing of an ETF portfolio caps downside risk and can systematically boost long-term returns by forcing investors to buy low and sell high. Allowing winning asset classes to run unchecked transforms asset allocations into overly risky mixes over time. Rebalancing once a year, or every six months for retirees drawing down savings, resets the portfolio to target risk levels and provides dry powder for future gains.

Joan started with a balanced 60/40 stock-to-bond portfolio in 2011, but neglected it through a market boom, letting it morph into an 80/20 mix by 2021 right before retirement.

• Review asset allocations annually if in the accumulation phase, or every 6 months if in the decumulation phase
• Focus rebalancing first on the bond-to-stock split as it has the greatest impact on risk
• Shoring up losing positions with fresh deposits, dividends, or interest earned before selling winners in a taxable account to avoid capital gains taxes
• Address allocations that are off by more than 10 percent and ignore smaller deviations

Systematic rebalancing can yield a 1.5 percent potential increase in average annual returns. A sample middle-of-the-road ETF portfolio includes a 30 percent municipal bond allocation and a 10 percent taxable bond allocation.

Portfolio Tax Strategies

Strategic asset placement across tax-deferred, tax-free, and taxable accounts maximizes long-term compounding by matching investments to the correct account type. High-yield assets like taxable bonds and REITs belong in retirement accounts, growth-oriented assets belong in Roth IRAs for tax-free compounding, and foreign stocks belong in taxable accounts to capture foreign tax credits.

• Place taxable-bond ETFs, REIT ETFs, and high-dividend-stock ETFs in retirement accounts.
• Keep emergency funds out of retirement accounts to avoid early withdrawal penalties.
• House investments with the greatest growth potential in tax-free Roth IRAs.
• Keep foreign-stock ETFs in taxable accounts to receive U.S. government tax reimbursements for foreign taxes paid.

A hypothetical starting investment of $50,000 in a corporate bond ETF reaches an ending value of $92,680 after 15 years in a taxable brokerage account yielding 6 percent with a 30 percent marginal tax rate. The same investment held in a tax-free Roth IRA grows to $119,828 over 15 years. Maximum annual IRA contributions are $6,000 for individuals under 50 and $7,000 for individuals 50 and older.

Investors can harvest investment losses to offset capital gains or ordinary income while navigating IRS wash-sale rules by swapping into similar non-identical ETFs. Selling a losing security by December 31 allows you to write off up to $3,000 of ordinary income if there are no capital gains. The IRS wash rule prohibits repurchasing the exact same or a substantially identical asset within 30 days, but switching to a proxy ETF that tracks a different index keeps market exposure active legally.

An investor holding the iShares S&P 500 Value Fund (IVE) who sells it at a loss can purchase the Vanguard Value ETF (VTV) for 30 days to avoid the wash rule before potentially switching back.

• Sell losing investments by December 31 to offset capital gains or deduct up to $3,000 of taxable ordinary income
• Leave sale proceeds in cash or purchase a non-substantially identical ETF sector proxy for 30 days
• Consult a tax professional before proceeding with any tax-harvesting plans

10 Key Ideas

1. Exchange-traded funds successfully combine the broad diversification of index funds with the low costs and intraday trading flexibility of individual stocks.
2. Strategic asset allocation across large-cap and small-cap stocks, with a deliberate tilt toward value companies, captures historical market premiums and drives long-term portfolio returns.
3. Allocating between 40 and 50 percent of your stock portfolio to international equities achieves the highest returns per unit of risk by leveraging low geographic correlation.
4. Bonds provide essential portfolio ballast during economic downturns, while real estate investment trusts and precious metals introduce noncorrelated return drivers.
5. Real estate investment trusts deserve a dedicated asset class allocation because they offer unique benefits that distinguish them from standard industry sectors, including exceptionally high dividend yields mandated by law.
6. Successful long-term investing relies on matching risk tolerance to personal capacity rather than generic formulas.
7. Strategic asset placement across tax-deferred, tax-free, and taxable accounts maximizes long-term compounding by matching investments to the correct account type.
8. Regular rebalancing of an ETF portfolio caps downside risk and can systematically boost long-term returns by forcing investors to buy low and sell high.
9. Investors can harvest investment losses to offset capital gains or ordinary income while navigating IRS wash-sale rules by swapping into similar non-identical ETFs.
10. You should avoid unnecessary intermediaries such as commissioned salespeople, high-fee separately managed accounts, overpriced variable annuities, and funds of funds that layer multiple management fees.