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Why baby boomers hold more mutual funds than ETFs

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9 months ago

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Despite ongoing investor demand for exchange-traded funds, baby boomers appear to be bucking that trend, new research shows. Experts say there may be a good reason for it.

Only 6% of surveyed baby boomers — those born 1948-1964 — say they plan to “significantly increase” their ETF investments in the next year, according to a new study from Charles Schwab. That compares with 32% of millennials — those born 1981-1996 — and 20% of Generation X, born 1965-1980.

Boomers are also the generation least likely to say they are open to putting their entire portfolio in ETFs in the next five years, with 15%, versus 66% for millennials and 42% for Gen X.

Schwab’s research study into ETF investing has been ongoing for more than 10 years. In 2025, it collected responses from 2,000 investors: 1,000 who participate in ETFs and another 1,000 who don’t. From that sample, 16% were boomers, 35% were Gen X and 43% were millennials.

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Here’s a look at other stories offering insight on ETFs for investors.

At the same time, baby boomer households were the largest share of mutual fund owners in 2024, at 35% according to a separate report from the Investment Company Institute. The next-largest mutual fund–owning household generations were Gen X, at 28%, and millennials, at 25%.

And therein lies the friction: Baby boomers own a lot of mutual funds — and probably have for a long time, said Dan Sotiroff, senior analyst on passive strategies research at Morningstar. While on the surface it would seem they should sell their mutual funds and buy comparable ETFs because they cost less and are tax efficient, experts say not so fast.

“On the surface, the answer is probably yes,” that they should switch their mutual fund assets to similar ETFs, Sotiroff said.

“But if you dig a little deeper, the answer might be no,” he said. That move may prove unexpectedly expensive.

Why investors favor ETFs

ETFs began gaining traction in the 2000s as a way to invest in a fund with a mix of underlying investments, similar to their cousin, mutual funds. While many mutual funds are actively managed — meaning professionals are at the helm picking the investments — most ETFs are passively managed because they track an index, and performance is based on that of the index.

Generally, the advantage with ETFs is their lower cost, tax efficiency and intraday tradability. As of Sept. 30, ETFs held $12.7 trillion in assets, up from $1 trillion at the end of 2010, according to Morningstar Direct.

While mutual funds’ assets are much higher at $22 trillion, more money is leaving them than going in. 

This year through Sept. 30, mutual funds saw an outflow of $479.4 billion, compared with ETFs taking in $922.8 billion in new money, Morningstar data shows.

A ‘huge capital gain’ for long-term investors

Boomers, who range in age from 61 to 77 and were largely the generation that began using mutual funds in earnest to invest in the stock market, might be sitting on funds they’ve owned for years, if not decades.

If they’ve held those funds in a 401(k) or individual retirement account, selling and buying an ETF is not a taxable event because gains are tax-deferred and any withdrawals generally are taxed as ordinary income (or are tax-free in a Roth) in retirement.

Worldwide Exchange: ETF Flows Week of November 3

But if those mutual funds are in a brokerage account — and have been for a long time — the owner may be sitting on significant capital gains, which are subject to taxation. That means a potential tax bill that has all kinds of repercussions if you’re among the older boomers.

“If you’ve put, say $20,000 into a mutual fund years ago and it’s now worth $70,000 or $80,000, if you go and sell, that’s a huge capital gain,” said certified financial planner Douglas Kobak, the principal and founder of Main Line Group Wealth Management in Park City, Utah.

Assuming you’ve owned the fund for more than a year, the growth would be taxed at a long-term capital gains tax rate of 0%, 15% or 20%, depending on your adjusted gross income. Otherwise, it’s taxed at ordinary income tax rates.

Gains could trigger Medicare surcharge

In addition to a potential tax bill, Kobak said, that gain may push the investor into a higher tax bracket, which comes with implications for retirees enrolled in Medicare. 

Income-related monthly adjustment amounts, or IRMAAs as they’re called, are added to the standard premiums for Part B outpatient care coverage and Part D prescription drug coverage for enrollees with higher income.

In 2025, IRMAAs apply to incomes above $106,000 for single tax filers and $212,000 for married couples filing jointly. (Next year’s specifics have not been released yet.) The higher the tax bracket, the greater the surcharge amount. And, your tax return from two years earlier is used to determine whether you pay IRMAAs.

Additionally, if you would be selling an actively managed mutual fund for a passively managed ETF, remember that its performance will depend on that of the index it tracks, for better or worse.

“It’s really a question of, ‘Do I want that passive approach in [a particular] asset class relative to what’s going on in the economy around me, or am I better off in that active mutual fund?'” said CFP William Shafransky, a senior wealth advisor with Moneco Advisors in New Canaan, Connecticut.

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$20,000 Caution Bond Requirement for US Visa Applications imposed on 50 Countries

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6 days ago

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August 8, 2026

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The United States Department of State has officially implemented a revised visa policy introducing a mandatory posting requirement for caution payments of up to $20,000 on select foreign travel applications. Under the updated regulatory framework, consular officials are authorized to require temporary nonimmigrant visa applicants from targeted foreign countries to post a refundable financial bond of $20,000 as a condition for visa issuance. The policy mechanism is designed to address diplomatic concerns regarding high overstay rates among temporary visitor, business, and educational visa categories.

The caution bond pilot program applies selectively to foreign nationals from designated countries whose diplomatic entities record historical visa overstay rates exceeding established federal thresholds. Under administrative guidelines published by the State Department, the full financial deposit is posted directly to a dedicated federal escrow account prior to final visa issuance. The entire caution payment is automatically refunded to the applicant upon verified proof of timely departure from the United States in strict compliance with the authorized duration of stay. Conversely, failure to depart within the legal timeframe results in full forfeiture of the posted financial bond to the United States government.

Diplomatic representatives and travel policy experts have expressed varying perspectives regarding the operational implementation of the caution bond system. Administration officials emphasize that the measure serves as an effective, market-based incentive to enforce international travel compliance and preserve domestic immigration security standards. However, international trade organizations and foreign diplomatic missions have raised concerns regarding the financial burden imposed on legitimate business travelers, foreign students, and commercial partners from developing nations.

The United States finalized the rule to make the temporary visa bond program permanent, taking effect on August 3, 2026. The updated permanent regulation replaces the prior 12-month pilot, eliminates the lowest $5,000 tier, and raises the maximum required bond amount to $20,000 for specific B-1/B-2 business and tourist visa applicants.

Here is the list of the 50 countries on the list as o August 3, 2026

African Nations (31 Countries)

  • Algeria
  • Angola
  • Benin
  • Botswana
  • Burundi
  • Cabo Verde (Cape Verde)
  • Central African Republic
  • Côte d’Ivoire (Ivory Coast)
  • Djibouti
  • Ethiopia
  • Gabon
  • The Gambia
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Lesotho
  • Malawi
  • Mauritania
  • Mauritius
  • Mozambique
  • Namibia
  • Nigeria
  • São Tomé and Príncipe
  • Senegal
  • Seychelles
  • Tanzania
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe

Asian & Eastern European Nations (11 Countries)

  • Bangladesh
  • Bhutan
  • Cambodia
  • Georgia
  • Kyrgyzstan
  • Mongolia
  • Nepal
  • Papua New Guinea
  • Tajikistan
  • Turkmenistan
  • Uzbekistan

Caribbean & Latin American Nations (5 Countries)

  • Antigua and Barbuda
  • Cuba
  • Dominica
  • Grenada
  • Venezuela

Oceanian Nations (3 Countries)

  • Fiji
  • Tonga
  • Vanuatu

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Next-Generation Retirement Planning: Managing Longevity Risk and Variable Income Streams

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1 week ago

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August 7, 2026

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Retirement planning strategies are evolving in 2026 to address increased life expectancies, shifting dynamic market conditions, and the transition away from traditional defined-benefit pensions. Individual investors and financial advisors are abandoning rigid retirement models in favor of flexible, multi-asset strategies designed to mitigate longevity risk and preserve purchasing power over multi-decade retirement horizons.

Mitigating Longevity Risk with Dynamic Asset Allocation
As average life expectancies extend past eighty-five years, one of the primary financial risks facing retirees is outliving their accumulated wealth. Traditional fixed income allocations—such as the standard 60/40 equity-to-bond portfolio—are being reevaluated to ensure portfolios generate sufficient capital growth alongside reliable income.

Financial planners recommend maintaining a meaningful equity allocation throughout retirement to offset long-term inflation erosion. High-dividend equity funds, global real estate investment trusts (REITs), and inflation-indexed Treasuries are combined to create diversified portfolios that deliver both growth and income stability.

The Transition to Dynamic Withdrawal Strategies
The classic “4% safe withdrawal rule” is increasingly replaced by dynamic withdrawal strategies that adapt annually based on market performance. Under a dynamic withdrawal framework, retirees adjust their annual distribution rates within pre-set caps and floors:
– Market Upside: During strong market returns, retirees can increase discretionary spending or fund family legacy gifts.
– Market Downturns: During market pullbacks, spending distributions are temporarily reduced to prevent sequence-of-returns risk and preserve core investment principal.

Guaranteed Lifetime Income Options and Deferred Annuities
To establish a guaranteed baseline for essential living expenses, individuals are incorporating modern fixed-indexed and deferred longevity annuities into their broader retirement architectures. Modern annuity structures offer competitive return caps, transparent fee schedules, and inflation-adjustment options.

By funding essential expenses—such as housing, healthcare, and insurance—with guaranteed income streams from Social Security, pensions, and annuities, retirees can manage discretionary investment portfolios with greater flexibility and lower emotional stress during market volatility.

Actionable Steps for Future Retirees
1. Calculate Baseline Retirement Expenses: Determine fixed living costs and map guaranteed income sources to cover essential expenditures.
2. Adopt Flexible Withdrawal Rules: Implement dynamic spending rules to protect investment principal against market downturns.
3. Incorporate Inflation-Protected Assets: Maintain exposure to dividend-growing equities and inflation-indexed bonds to safeguard long-term purchasing power.

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Building Generational Wealth: Family Governance, Estate Tax Optimization, and Asset Protection

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2 weeks ago

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August 1, 2026

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As the largest intergenerational transfer of wealth in history accelerates, high-net-worth families, entrepreneurs, and individual investors are placing heightened emphasis on comprehensive estate planning, family governance, and asset protection. Preserving capital across generations requires a balanced approach combining tax-efficient legal structures with open family communication and financial literacy education.

Optimizing Estate Tax Exemptions and Trust Structures
With potential modifications to federal estate tax exemption thresholds on the horizon, proactive estate planning is essential for high-net-worth households. Estate planning attorneys and wealth advisors are establishing multi-generational trust structures to transfer wealth efficiently while minimizing estate and gift tax exposure.

Popular structural strategies include:
– Irrevocable Life Insurance Trusts (ILITs): Utilizing life insurance proceeds to provide liquidity for estate tax obligations without expanding the taxable estate.
– Grantor Retained Annuity Trusts (GRATs): Transferring rapidly appreciating assets to beneficiaries with minimal gift tax consequences.
– Dynasty Trusts: Preserving wealth across multiple generations while providing long-term asset protection from creditor claims and legal liabilities.

Establishing Family Governance and Financial Education
Legal and financial structures alone cannot guarantee long-term wealth preservation without effective family governance. Financial advisors report that a significant percentage of multi-generational wealth dissipation stems from lack of communication and inadequate financial preparation among heir generations.

Families are establishing formal family governance frameworks, including periodic family meetings, written mission statements, and structured philanthropic foundations. Involving younger family members in charitable grant-making and investment discussions fosters financial stewardship and prepares heirs to manage family assets responsibly.

Digital Asset Custody and Legacy Planning
In today’s modern economy, estate planning must extend beyond physical real estate and traditional brokerage accounts to encompass digital assets. Comprehensive estate plans now include detailed inventories and legal access protocols for corporate domain names, intellectual property, digital media rights, and cryptocurrency holdings.

Fiduciaries and estate executors should be provided with secure, encrypted access mechanisms and clear legal authority to manage and transfer digital holdings in accordance with the owner’s estate directions.

Practical Steps for Legacy Planning
1. Review and Update Estate Documents: Ensure wills, revocable trusts, and power-of-attorney designations accurately reflect current family structures.
2. Establish Structured Trusts: Utilize irrevocable trusts to protect assets from creditors and minimize future estate tax liabilities.
3. Create a Digital Estate Inventory: Document access protocols and legal permissions for all online accounts, intellectual property, and digital assets.

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