<prompt> Human: Ive been investing for about a year and have a taxable brokerage account, Roth IRA, and 401k. The Vanguard 401k is set to the default target 20XX fund while my other two are self managed and are all in total stock market and sp500 mutual funds Schwab. I see many people mentioning buying ETFs instead of mutual funds so Im wondering if Im doing something wrong. I understand ETFs carry commission fees when buying and selling while mutual funds do not, and mutual funds tend to have higher expense ratios. The fact that I make lots of small purchases by investing a portion of my biweekly paycheck makes it seem like I would get hit with a lot of commission fees buying ETFs, which makes mutual funds look more attractive. Another thing that I recently read was that I may have to pay capital gains taxes on my mutual funds even if I dont cash them out, since the equities that back them are being bought and sold, while I wouldnt have to this with an ETF. I have a few thousand invested in mutual funds. Should I switch over to investing in ETFs instead? I dont want to get billed with huge capital gains taxes in the future when my investments are worth much more.  <response>: ETFs have lower minimums and can be bought and sold during market hours like stock. You have the ability to buy options on ETFs as well. Cost wise, it is almost identical. The expense ratio on the total market vanguard etf is identical to the vanguard total market index mutual fund admiral shares. Your overall future capital gain consequences will virtually be identical too. For example, you paid 1k and later sold for 2k, you will have realized a capital gain of 1k. Both the index mutual fund and etf are fairly tax efficient, so minimal capital gains as you hold. Your article references actively managed mutual funds. The trades that generate capital gains throughout the year are passed onto the shareholders. These capital gain implications only exist outside of a qualified account. Not sure where you custody your assets, but you should call and speak to a licensed professional for additional guidance as it pertains to your situation. 