Summary of Are Exchange-Traded Funds Right for You?

Using ETFs as tools for short-term speculation negates two of their best features: low costs and tax efficiency. If you trade frequently, brokerage commissions can add up fast, thereby eroding the ETF’s low-cost advantage. Quick trades also trigger tax consequences, which can be particularly onerous if you hold an ETF for less than a year and incur the higher short-term capital gains rate. So to benefit from ETFs’ best features, avoid the quick-trading crowd and adopt a disciplined, long-term mind set instead.