The Tax Questions Blog

Question: Is it a good idea to hold ETFs in a taxable investment account?

If not, what securities are the best for this type of account (not IRA)?
I consider buying index ETFs. Or is it better to buy index mutual funds for this kind of acount?

Answer: Yes.
ETFs are very tax efficient, and provide a low cost way to build a diversified portfolio.

Because ETFs are traded like stocks, there is a commission every time you buy or sell. For this reason, if you are adding money monthly or quarterly, a mutual fund may be a better choice.

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