Reinvesting ETF Dividends

I like the flexibility and tax advantages of Exchange Traded Funds
(ETF's), but one disadvantage they had is that reinvesting dividends
meant another brokerage commission. Not reinvesting dividends has a
pretty dramatic impact on total return, so holding ETF's for a long
period wasn't such a great idea for many investors, even with their low
expense ratios.

I am happy to report that this is not true anymore for many of the
popular ETF's. I just checked with Fidelity about SPY and VTI, and
they confirmed that both of these ETF's could have their dividends
reinvested without brokerage commissions. The expense ratio for VTI is
currently a dirt cheap 7 bps. (0.07%), and you get a fund that mimics
the return of the total US stock market, managed by the Vanguard
indexing genius, George Sauter.

If you would like to learn more about VTI, go here



or



Sorry, don't mean to be an advertisement for Vanguard VIPER's, but I
thought this info about reinvesting dividends is pretty important
stuff, and VTI seems like a great way to start.