To be candid, when I was offered a review copy of Natalie Pace’s new book: Put Your Money Where Your Heart Is, I considered turning it down. It sounded like advice for people only interested in investing in stocks and bonds and this topic really isn’t that interesting to me.

I’m not against the stock market’¦ rather   I depend on a financial advisor to handle this part of my investment portfolio. But I took Pace’s people up on the offer because even if I didn’t enjoy it, another Queercents reader might get something out of it… plus it was another free book to give away – which I do at the end of this post. All that aside, I finally did read it and realized (by about page 76) there was something in this book for me.

You see, I like real estate. I liked real estate before the bubble. I liked it during the bubble and I still like it today. And while I love investing in real estate, I’m not stupid and have learned over the years, that asset diversification is important for long term wealth. For this reason, I have money invested in the stock market, although I don’t actively participate in the management of these investments.

Pace’s book pushed me to look at this part of my portfolio differently. Here are my two takeaways and why you might want to read her book too – especially if you’re passive when it comes to this type of investing:

1. Understand that brokers are salespeople.

2. Learn the difference between Exchange-Traded Funds (ETFs) and Mutual Funds.

I love my financial advisor and have used her for years. And of course, she makes money off the services she provides me. She manages my IRA and I always roll over the funds from my 401K to this account (more here about why this happens often). She also manages the money that I have invested in mutual funds.

But Pace says: know what you own! And that’s my problem. I really don’t know what I own. Of course, I get the statements and I log into my account regularly, but I don’t really pay attention to the details about the funds. Pace writes:

The top mutual fund holdings in the U.S. in 2007 included some of the most poorly run companies, including General Motors, AIG, Fannie Mae and Phillip Morris Tobacco Company.   ETFs allow you to target sections of the stock market by size (small, medium and large), style (value and growth), industry (gold mining, clean technology, international, biotechnology, etc.) and more.

That makes sense, but why would I want to start buying ETFs ‘“ and perhaps doing this on my own without the help of my advisor? Here are a few reasons:

ETFs and mutual funds are essentially the same thing in this regard. The difference between ETFs and mutual funds is that ETFs select their companies by using computers and preselected screens, instead of having a professional actively manage the fund (as mutual funds do). Since ETFs typically have a much lower cost structure, pay lower commissions and have lower fees attached to them than mutual funds, they’re more popular with investors than they are with brokers. Many brokers rely upon the commissions paid to them by mutual fund companies for their bread and butter.

If you’ve found a great broker who is doing a bang-up job on your nest egg, it’s hard to make a case for cutting their pay by insisting on ETFs instead of mutual funds. But for the ‘œmass affluent‘ (as TD AMERITRADE Chairman Joe Moglia calls investors with under a million in their stock portfolio), who are really managing their nest egg themselves, ETF’s have almost all the benefits of mutual funds while being less expensive and part of a growing new trend on Wall Street’¦   Online discount brokerages are more proactive about offering ETFs instead of mutual funds and many have designed a compensation plan that rewards their associates for assets under management instead of mutual fund sales.

I don’t have more than $1 million in my stock portfolio and I suspect that most Queercents readers are in the same boat. Pace’s book provides people like us with a guide and the confidence to become more active and less passive in this type of investing.

For the last couple of years, Jeanine and I have included on our list of goals, ‘œOpen an online brokerage account.’ It’s one of the goals we haven’t been able to check off as accomplished – partly because I wasn’t that interested. Pace has changed my mind and this goal has been added to the list again ‘“ but this time it comes with the plan to learn more about and buy ETF’s.

There are plenty of other things to learn from her advice, but that’s what spoke to me. Buy the book and find out for yourself! As usual, I’ll be giving my review copy away to the best comment. Tell me about one financial goal that you’ve come up short on and how Pace’s book might help. I will select the winner by Saturday morning.

Image credit: nataliepace.com.