Brokerage commissions - A draw back to ETFs - Exchange Traded Funds

Brokerage commissions are probably the biggest disadvantage to ETFs. Since you have to buy them through a broker, you must pay a commission.

According to CNN Money.com:

Even with the low fees available at discount and online brokers these days, brokerage commissions can seriously erode ETFs’ low-expense advantage, especially when investing small sums of money.

For example, if you were planning to invest, say, $100 a month in ETFs, even a cost of just $10 per trade would mean 10 percent of your investment is being siphoned off. So your ETFs’ price would have to rise 10 percent just to recoup your buying cost — and you’ll have to pay a commission when you sell too.

For this reason alone, ETFs are generally better suited for investors who are socking away larger amounts of money — as in 401(k) and IRA rollovers. If you’re more likely to be dollar-cost-averaging with small sums or you tend to invest sporadically with modest amounts of money, you’re probably better off in a regular mutual fund.

So, one thought I have is to have my automatic deposits go into a no load fund that I can then move into an ETF after the dollar amount is up high enough? or when it is time to balance?