We Study Billionaires - The Investor’s Podcast Network TIP394: How to invest in ETFs w/ Cullen Roche
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Nov 7, 2021 Cullen Roche, investment expert and CIO of Disciplined Funds, returns to share his ETF investing wisdom. He explains why there's no such thing as truly passive investing, detailing the mechanics of ETFs and their tax advantages. Cullen emphasizes the importance of selecting an appropriate ETF strategy tailored to personal goals and discusses the risks of solely relying on backtesting. He also covers the nuances of ETF costs and the implications of interest rates on investing, offering insights for both retail and institutional investors.
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Finding the Right ETF Strategy
- Start ETF selection by defining clear personal goals, like beating the market or saving for retirement.
- Match these goals with your personality and risk tolerance to find the right strategy.
The Active-Passive Illusion
- There's no truly passive investing; even index funds involve active decisions in construction and management.
- Active and passive strategies are interconnected and codependent, not simply opposites.
ETF Tax Efficiency
- ETFs offer tax advantages over mutual funds through a creation/redemption process involving in-kind transactions.
- This gives shareholders control over tax liability, unlike mutual funds where capital gains can be unpredictable.