Benefits of ETFs

Avoid excess fees 

Most ETFs are passively managed, which means they track indices—as opposed to paying an expert (also known as a portfolio manager) to pick the stocks. As a result, they have a lower expense ratio than actively managed mutual funds—meaning you pay less money to the managers of the fund itself. 

Lower taxes 

Because of IRS rules and other complex factors related to the way ETFs are structured, the profit you make from an ETF is not subject to capital gains tax until you sell your shares: another benefit of ETFs. By contrast, daily gains in a mutual fund are taxable. 

If your investments are all in tax-deferred retirement accounts such as IRAs or 401(k)s, capital gains tax won't be an issue. But you will need to pay income tax on those withdrawals in retirement, just like with mutual fund earnings.