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Retirement Overview Retirement Planning Asset Allocation Diversify with ETFs  
Asset Allocation using ETFs
Use Asset Allocation in combination with zero-cost ETF trades at Zecco Trading to build a diversified, low cost basis IRA portfolio! You can make 10 trades a month with a $2500 minimum balance (afterwards: only $4.50 per trade), so it could cost you nothing in commissions to set up a diversified portfolio. So let's dig right in and see how a Zecco Trading IRA funded with zero-cost trades in ETFs can work for you...

Below you'll find a table that spells out the differences between investing in a diversified mutual fund portfolio and a portfolio of ETFs built with zero commissions. The portfolios were built using a standard asset allocation model for a 25 year old retiring at 69, with maximum annual contributions adjusted for inflation and compounded annually. For more information on asset allocation models, click here.

Comparison Chart
Exchange-Traded Funds(ETFs)  Ticker   Asset Classification   Portfolio (%)   Expense Ratio (%) 
Vanguard Large-Cap Index Fund W Large Company Equity 45% 0.07%
Vanguard Small-Cap Index Fund VBR Small Company Equity 35% 0.12%
Shares MSCI EAFE Index Fund EFA International Equity 20% 0.35%
Weighted Expense Ratio 0.14%
Mutual Funds Ticker Asset Classification Portfolio (%) Expense Ratio (%)
Legg Mason Value Prim LMVTX Large Company Equity 45% 1.68%
Fidelity Advisor Small Cap T FSCTX Small Company Equity 35% 1.51%
Templeton Growth C TEGTX International Equity 20% 1.79%
Weighted Expense Ratio 1.64%
Difference in Expense Ratio: 1.50%

1. Expense ratio data obtained from the ETF Screener at www.smartmoney.com, as of December 19, 2006.

2. Expense ratio data obtained from the Mutual Fund Screener at www.smartmoney.com, as of December 19, 2006.

***All securities are offered through ZeccoTrading, Inc., a fully disclosed broker/dealer and member of the FINRA and SIPC.

As you can see, the difference in expense ratios between this actively managed mutual fund portfolio and a low cost ETF portfolio is 1.5%. Because expenses are subtracted directly from the underlying fund returns, the underlying mutual fund portfolio holdings would have to outperform the underlying ETF portfolio holdings by 1.5% to achieve the same total returns. That's a tall order.

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Zecco.com is a financial portal of Zecco Holdings, Inc., which also provides access to Zecco Trading. Zecco Holdings is not a securities broker/dealer. All securities and investments are offered by Zecco Trading, Inc. Member FINRA/SIPC. At Zecco Trading, you can make up to 10 free stock trades in any one month that you maintain a $2500 minimum account net equity. After that, you pay only $4.50 per stock trade. Options trades are $4.50 plus $.50 per contract. Only the first account of any account type is eligible for the Zecco Trading, Free Trading program. Any multiple accounts of the same type with the same registration are not eligible for the free trading program. Free Trading Program is only available through Zecco.com. $0 minimum to open cash and IRA accounts. Margin accounts require a $2,000 minimum balance for opening and trading on margin.

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No information on this web site should be considered a recommendation or solicitation to invest in any particular security or type of security. Margin trading involves incurring interest expense and risks, including the potential to lose more than invested, or the need to deposit additional funds/collateral in an adverse market to your positions. Our margin agreement is available on our web site under the Forms tab, and contains the Margin Disclosure Statement and information on our lending policies, interest charges, and risks associated with margin accounts.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.

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