Q. I recently sold stocks in my SEP/IRA account with the intention of buying index or mutual funds. It appears that index funds are the better choice and that ETFs are probably the best value. One problem I am having is finding a source for ETFs, a place where they are listed by type and rank. Could you recommend something?

I am 68 years old. My Social Security is about $1500 a month and I have $150,000 cash in my SEP/IRA account. I believe I will need to start drawing from that account at age 70 1/2. Also, I have thought about buying index funds that pay dividend. Do these exist? ---W.G., by email, Fredericksburg, TX

A. The jury is still out on whether exchange traded index funds are superior to index mutual funds. Long term, I suspect the performance differences will be smaller than most people care to measure.

To me, the big difference is access and choice.

If you want an all-index-fund portfolio, the mutual fund world is a pretty limited place. You can go to Vanguard for a wide choice of traditional index funds. You can go to Dimensional Funds, provided you work with an advisor, and have a wide choice of "smart" index funds. After those two, you'll wind up mixing a few core index funds with ETFs. Fidelity, for instance, offers only 10 index mutual funds.

ETFs, on the other hand, can be purchased through any online brokerage account. The commissions will be low. So if you buy to hold, commissions won't be a major consideration. On a $150,000 portfolio, for instance, the cost of commissions would amount to about 0.05 percent a year if you held six funds, rebalanced annually, and commissions were $12 each.

Most people will be able to assemble a multifund portfolio at a total annual cost, including commissions, of about 30 basis points a year. (You can experiment with commission costs as a percent of assets by using the online calculator on my website). Another thing you'll find on my website is a collection of columns about index funds and ETF investing, including columns about the differences between traditional index investments and fundamental index investing.

The Wall Street Journal has a daily listing of ETFs by sponsor, including their ticker symbols. This is a good thing to have as you look for information about different ETFs on the Web.

If you want to learn in bite-sized chunks, I suggest exploring some of the basic informational sites, such as Morningstar. Just click on ETFs and start entering tickers for their standard format reports, with daily updated performance records. You can also find information and articles on ETFs on MSN MoneyCentral.

If you'd like to hold the universe in your hand, do it with a book. Morningstar has produced a book on the 150 major ETFs. It's available on its Website for $35 plus $4.95 shipping and handling.

Another good website for information, analysis and reporting is http://etf.seekingalpha.com/. One of the site's nice features, on its home page, is a listing of ETF categories. Click on a category and you'll have a ticker symbol list of funds in that category. Click on the ticker and you'll get basic information and a listing of articles. The largest single provider of ETFs is Barclays. Its website for ETFs, www.ishares.com, has a nice feature called the "iShares Quick Finder," which will take you to fund descriptions by a variety of categories.

Finally, there is a good selection of ETFs that focus on dividend income. On the Seeking Alpha site you'll find them listed under the category "Equity Income ETFs." ------------------------------------------------------------------------------------------------

Personal finance writer Scott Burns is syndicated by Universal Press. His twice weekly column appears in newspapers from Boston to Seattle. He is the Chief Investment Strategist for AssetBuilder, Inc. Readers can register at www.scottburns.com. Questions/comments can be posted directly. They can also be sent, without registration, to scott@scottburns.com. Questions of general interest will be answered in future columns and on this blog.

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