New to investing - ETF Liquidity

As salamu alaykum everyone,

I am new to investing and had some questions.

  1. Is it easy to sell shares of SPUS? I am not too familiar with how ETFs work, so wasn’t sure if it’s easier to buy than it is to sell. I have read some of the other posts about low liquidity, so wanted to see if anyone has been able to easily sell their shares.

  2. Would Amana Mutual Funds be a good purchase for a taxable brokerage account? I have read mutual funds can create tax events so it is best to hold them in retirement/tax deferred accounts.

Thank you all for this wonderful resource, it has been very helpful to learn about halal investing!

1 Like

Walaikum Assalaam @NewbieInvestor! Great to have you here. Hopefully, we’ll have you with a new username soon enough haha.

It’s normally pretty straightforward to buy and sell ETF holdings. Unlike Mutual Funds, ETF’s are traded throughout the day so the price changes throughout the day. This is different from mutual funds. You can read more about ETFs here.

I can’t say about Amana specifically, never held it. As for Tax Events, I don’t think those are specific to mutual funds. Where are you based? Taxes aren’t the same everywhere.

Keep on reading and asking questions! Great seeing you here.

I’ve bought and sold practically all of the halal funds (mutual and ETF) including SPUS, and I’ve never had an issue with liquidity. Keep in mind if you see ETF shares thinly traded that doesn’t mean you can’t normally buy or sell any minute of open market hours for small or large numbers of shares (Google market makers).

As for taxes, mutual funds like Amana tend to distribute more capital gains than ETFs. This means you will likely pay more taxes on those mandatory distributions in a non retirement account vs the newer ETFs.

One thing I like about mutual funds is not having to worry about setting a limit price and being able to easily sell or buy an exact amount in dollars. I’m always dealing with odd change in cash in my retirement accounts because of the ETF holdings. I’d rather have 0 cash left over to not have to remember to purify interest. But I’ll take the small hassle because I like to diversify.

Best wishes!

1 Like

Thank you @Frhaann and @Omar for the help.

It sounds like if I want to, investing in Amana mutual funds in a tax deferred retirement account would be better. And stick with ETFs in a taxable account.

Also glad to hear that liquidity for SPUS isn’t too big of a concern.