In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss the evolution of investing—from individual stocks to mutual funds to Exchange Traded Funds—and why technology is changing how portfolios are built today. If you’ve ever wondered about Stocks vs ETFs, Stocks vs mutual funds, or ETFs vs mutual funds, this episode breaks down the differences in a way that connects directly to your long-term Retirement Planning goals and overall Investment portfolio strategy.

Listen in to learn about how reducing internal costs, understanding expense ratios explained, and improving portfolio efficiency can make a significant impact on your long-term results. Whether you’re focused on Stock market investing, building an Index investing strategy, or refining your Retirement investing strategy, this episode will help you better understand how the right structure can help you plan for retirement, follow a smart retirement checklist, and ultimately secure your retirement.

In this episode, find out:

• The real differences in Stocks vs ETFs, Stocks vs mutual funds, and ETFs vs mutual funds
• How technology now allows for efficient Stock indexing without high internal fund costs
• Why lowering expense ratios and reducing hidden fees leads to Lower investment fees and better long-term outcomes
• How Portfolio rebalancing and index tracking improve your overall Investment portfolio strategy
• When to use individual stocks, Exchange traded funds, or mutual funds inside a complete Retirement financial plan

Tweetable Quotes:

“Technology has now allowed us to replicate an index using individual stocks and eliminate layers of internal fund costs.” — Radon Stancil

“Our investment philosophy hasn’t changed — but the tools we use to make portfolios more efficient absolutely have.” — Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Welcome, everyone, to Secure Your Retirement Podcast. Today, we’re going to have a, I 

think, a really nice conversation, Murs, where we’re going to talk a little bit 

about kind of some of the changes that are, is evolving with technology when it 

comes around investing. We just here recently were able to do, 

which we do every year. We do a rebalance because basically after you go through a 

whole year of growth or if you didn’t have growth, you still need to rebalance your 

portfolios to make sure that all of your allocations are correct. And one of the 

things that we just did in our balance for the year was we really did a couple of 

things to, with a real specific purpose in mind, and that was to make sure that we 

we’re reducing any internal costs that we could reduce in the portfolio. So, I think 

what would be good, Mers is just kind of maybe talk a little bit about the 

history of where we’ve come from. We were talking about this just a few minutes 

ago. And just to set this up a little bit, you know, you’ve got three main 

categories of what people know when it comes to investing in the stock market. 

You’ve got stocks, individual stocks. You have mutual funds. And a mutual fund is a 

mutual, it’s a company, and inside of that is a stockbroker. Then you got ETFs. 

They originally came out to be really passive index type ETFs where they would track 

an index like the S &P 500, NASDAQ, the Dow, technology, pharmaceuticals, 

all those different things that it would track. And then you now actually have what 

are called actively managed or strategic ETFs where they have a particular strategy 

behind them. But sometimes people might ask the question, what’s the difference or 

why would somebody buy an individual stock versus an ETF versus a mutual fund? So, I 

think that what you talked about earlier, Murs, was kind of an interesting way to 

think about it and kind of the evolution around this and maybe if you could just 

share that that history with us just to kind of make sure that the listeners are 

on the same page. Yeah. So, I think if we go back in time and just think about 

the you know, how people got into investing years and years ago was you would turn 

on CNBC and you look at the ticker tape down below at the bottom of the TV 

and you see all these stocks and the prices associated with them. And then you see 

all the people on the trade floor running around, and it’s all revolving around 

stocks as investments. And so, you know, most people started off investing with just 

buying stocks. And then maybe they start working with an advisor. And that advisor 

now is buying the stocks for them. And over time, what ended up, I think, 

happening is that while stocks are in general a great long -term investment, 

they can become inefficient if we don’t have a good way to manage them and to 

manage the purpose or the strategy behind the stocks. And you would have some 

advisors that would be, you know, stock pickers per se, or day traders or things 

like that. But as this world of needing investment guidance and investment help grew 

and grew and grew, the next iteration of investments that came around was really the 

mutual funds. I think the mutual funds came out of convenience. So that’s the mutual 

fund company creating a fund. And inside of that fund, you’ve got a mutual fund 

manager and you’ve got a lot of things that happen to create that fund and maintain 

that fund. But the underlying investment of that mutual fund in most cases is still 

the stocks, the stocks that we know work well over a long period of time. And so 

mutual funds came a convenient way to get access to a whole bunch of stocks without 

having to manage a whole bunch of stocks. Well, as we started to look more and 

more into the mutual fund space, while they were working to a degree in providing 

that return and providing that simplicity, what the world started to realize and 

decide is that, well, the fund managers are a little bit pricey and the mutual fund 

companies are for -profit companies, and they got to make their money and everything 

like that. So, the cost, the underlying cost of being in a mutual fund started to 

get away from us to where, you know, there’s some funds that we would see that 

were your internal cost, your expense ratios, your turnovers, all those different 

metrics for evaluating costs within a fund, ended up being somewhere in the realm of 

say one to three percent in the earlier days. And that was rather expensive. 

And so, the investing world started to say, well, what can we do next to alleviate 

some of this cost, but still maintain the convenience and still make it easy entry 

to investing? And so that’s where the ETF came into play, the exchange traded fund, 

which like you said was designed to be really a passive investment. So, if you take 

away the mutual fund manager, you take away the mutual fund wrapper itself, and now 

you just create a vehicle that’s basically a basket of stocks that has just a 

purpose of mimicking some type of strategy or index, but it’s pretty passive. All of 

a sudden, the cost started to get lower. And oh, if we can make it trade like a 

stock and just have intraday pricing, unlike a mutual fund, which only trades at the 

end of the day and it doesn’t move throughout the day, now we’ve got have more 

visibility into our investments. We can see it every single minute of the day. And 

we’ve cut our costs because we don’t need that manager making special decisions or 

anything like that. We’re just trying to mimic a passive index like the S &P 500. 

Well, that could be pretty beneficial. So, ETFs really took off when they came into 

the world of investing. And they’re still really important, I think, to the world of 

investing. 

But in this world of paying attention to fees, and we always get asked, 

how do we get paid and how does another type of advisor get paid? And then how do 

the investments make their money and all that stuff? In a world of trying to 

understand fees and fee suppression as well, technology, 

I think, is doing a lot for us today to make our investments for the families that 

we serve efficient. So, in this in this story so far, 

you’ve heard me talk about stocks. You’ve heard me talk about mutual funds. You’ve 

heard me talk about ETFs, exchange traded funds. In all three of those cases, 

the way that these all grow and earn and become an investment is their underlier is 

still the stocks that really started the stock market world. And so, if we if it’s 

tried and true that stocks work, and if we can manage stocks with convenience, well, 

now we can make it a very cost -effective type of investment strategy. And so that’s 

where with this rebounds that we’ve done here recently have shifted towards, and the 

reason it’s possible is because of technology. So today, there’s a handful of 

different strategies that we use, but for our core strategy. We wanted to resemble 

some elements of an index that we want to track. For us, it’s pretty close to the 

S &P 1500 is what we want to be resembling. The 1500 has 1 ,500 stocks, 

but you don’t need to have all of those to get the exposure of the index itself. 

So, we have over time here transitioned out of the ETF world and into a stock 

indexing strategy. Well, how is this possible? And are we going in circles? 

Because now we’re back to buying stocks again, where we’re trying to get away from 

buying stocks. Well, because technology has made things so much more efficient, 

we’re in a place where we can mimic an index with the underlying stocks, and we 

get rid of the ETF that still has to make money to stay in business. And we get 

rid of the mutual fund that had the mutual fund manager and the company itself that 

had to make its own revenue. And so now we can, you know, make a very clean 

strategy towards mimicking some type of index as part of our overall philosophy 

around this growth bucket that we talk about quite a bit. So big picture, why would 

we go back to stocks? I think two things. One, technology has made it more 

efficient to be able to replicate an index. And then the other is if we are able 

to do a strategy with stocks by itself, well, then we start to get more cost 

effective and we get rid of some of those internal costs like expense ratios and 

turnovers and management fees and admin fees and things like that for a portion of 

the strategy. With that said, though, I still think there is a good case for having 

specialty types of investments like an exchange traded fund in your portfolio. 

So, you want to talk a little bit about that rating and maybe anything I missed on 

the stock piece? No, I think you covered it really well. I do want to just 

reiterate though that when we talk about this idea of going toward this this 

balanced or indexed approach on the stocks, that’s just on a part of the portfolio. 

That’s not the total portfolio. So, we do have other parts of the portfolio that we 

will use other investments like ETS. But why would we use ETFs there? Well, 

because, again, ETFs really can be structured to handle certain strategies and to do 

those very, very efficiently. It’s still extremely cost effective to use those 

vehicles for certain particular strategies. So, you’ve always heard us talk about 

really a couple different elements of the portfolio. One, we call it our core 

strategy. What is a core strategy? A core strategy is where we’re saying, hey, look, 

we are just trying to track the market. That’s what we’re trying to do. We’re to 

expose ourselves to the market, make sure that we’re getting the returns of the 

market. That’s where we can use very effectively, very cost effectively, a diversified 

approach of stocks, individual stocks. We get rid of the underlying cost of the ETF. 

But then we’ve got that section that we’ve always talked about, which is called the 

tactical part of the portfolio. Tactical means we are going to want to make changes 

more rapid based on what’s actually happening in today’s market and to hedge 

ourselves against a larger risk. For that part of the portfolio, we still are going 

to use exchange traded funds. And the reason why is because they can be structured 

to do this in a very, very cost -efficient way, and so it still makes sense to do 

that. So, for example, we have a couple of different tactical strategies, but one of 

those is to hedge against risk. And so, what that means is that we can have that 

part of the portfolio design specifically that if we have a significant turndown in 

the market, we’re not going to participate in all that turndown, right? So, we are 

buying that part of the portfolio for that strategic purpose. We’re doing it because 

we get good returns if we have upsides in the market, but we’re protecting ourselves 

from significant downturn. And we’re able to do that very, very cost effectively. If 

you remember, we’ve got a third part of the portfolio, private investments or 

alternative investments. Still, again, to get into that arena, buying an ETF or a 

fund is still the most efficient way to do that. In fact, it’s kind of the only 

way to do that in a diversified approach. And so, you’ll still see in the portfolios 

that we’re managing that we do have ETFs in there and funds in there. But the 

reality is anywhere we can utilize the strategy behind using individual stocks, 

we’re going to do that because it cuts the cost down. So, we get our portfolio 

operating very, very, very efficiently. And we’re able to do it in a very, very 

strategic way. And so, I just think it’s, I mean, we’re excited because you are able 

to really have the best of both worlds. I will tell you when you do this, though, 

you know, you are going to see more positions in the portfolio because if I bought 

an ETF, I could buy one ETF that represents really 500 stocks if I want to or 1 

,500 stocks if I want to. We just know we can do that with 50 to 60 stocks and 

get very good diversification, we are not trying to go out there and saying, hey, 

this is the best stock in the whole wide world, and we’re buying this stock because 

we think it’s got long-term growth. We’re just mimicking an index or mimicking a 

strategy. And we could buy and get out of those or into those simply to track the 

index that we’re trying to track. It has nothing to do with us coming out there 

and saying, hey, guys, we just bought Walmart today because we think Walmart’s the 

best buy in the world. We might own Walmart. We might own Amazon. We might own 

different companies. By the way, that you already owned anyway if you were in a 

mutual fund or in an ETF, sometimes that we had a client said to us, yeah, well, 

I never knew I was in those stocks. Well, now I know. It’s like taking the hood 

up and looking inside the ETF or looking inside the mutual fund, and I just get to 

see it all. And that can be very, very good because you’re kind of seeing, hey, 

how are these companies doing as an individual part of the overall approach? 

Understanding that what we’re trying to do is mimic that index or that strategy that 

we’re trying to do. It’s just with the technology we have the data, there’s just no 

better way to do it. If you’re looking at trying to have a cost -effective 

portfolio, you want to do this. Now, however, if you had to go out there and pick 

all 50, 60 stocks yourself and manage it, that’d be a tremendous amount of work. 

And you would be doing nothing but looking at that all the time. This allows us to 

be able to do that and manage it very efficiently. So, we’re excited. We think it’s 

a great way to go. Yeah, I think big picture, because I talked to someone earlier 

today, and what I told them is that our philosophy on investing has not changed. 

The core, the tactical, the alternatives, this whole conversation of growth bucket and 

safety bucket. None of that has changed, but the world is evolving, and we want to 

try to stay ahead of it, especially as technology just gets better and better. So, 

yeah, are the tools and the tool belt getting, are we changing some of those around 

a little bit? But the answer is, yes, but the philosophy itself is still the same. 

And that’s really what it is. So, I think if anyone has any questions or anything 

like that, we’re always happy to handle them and have a conversation around, well, 

explain this part to me again. Why did you, why did you guys go into stock 

portfolios? And, you know, we’re always happy to do that if you’ve got questions. 

Yeah, it’s really easy to do. Just go to our website, POMwealth.net go to the 

contact us page, reach out to us. We’d love to be able to have a conversation. We 

hope this has been helpful. We always enjoy bringing new concepts and new ideas out 

there to you. As always, we hope you have a great week.