Can anyone sum up how much a bid/ask spread actually matters when investing in ETF's?
Like many of you I've got a mix of mutual funds and ETFs in my tax deferred accounts, primarily because they are in a self-directed Schwab platform and so any non-Schwab mutual fund costs me almost $80 to purchase. For this reason, most of my Vanguard holdings within retirement accounts are their ETF offerings (a little under $9 to purchase)...and recently I've added some Schwab ETFs which cost a very nice 0$.
But usually I simply place a "market" order to buy any ETFs, and often wonder whether in my preference to keep transaction fees low I am giving up something equivalent to at least $9 (hopefully not close to $80!!) to get in to these ETF products. Is this true? And it appears that for some ETFs the bid/ask spread is larger than others. Does this matter much? I only have index ETFs in my portfolio if that makes a difference, but my understanding is that most ETFs are index products.
I guess I'm just not really understanding how this bid/ask spread really works since I also don't own individual stocks and so an unfamiliar with their purchase as well.
Like many of you I've got a mix of mutual funds and ETFs in my tax deferred accounts, primarily because they are in a self-directed Schwab platform and so any non-Schwab mutual fund costs me almost $80 to purchase. For this reason, most of my Vanguard holdings within retirement accounts are their ETF offerings (a little under $9 to purchase)...and recently I've added some Schwab ETFs which cost a very nice 0$.
But usually I simply place a "market" order to buy any ETFs, and often wonder whether in my preference to keep transaction fees low I am giving up something equivalent to at least $9 (hopefully not close to $80!!) to get in to these ETF products. Is this true? And it appears that for some ETFs the bid/ask spread is larger than others. Does this matter much? I only have index ETFs in my portfolio if that makes a difference, but my understanding is that most ETFs are index products.
I guess I'm just not really understanding how this bid/ask spread really works since I also don't own individual stocks and so an unfamiliar with their purchase as well.
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