Mutual Funds vs. Index Funds vs. ETFs - FUND TYPES EXPLAINED FOR BEGINNERS

#Investing in the #Stocks is a great way to build #Wealth in the long run. Historically, the #StockMarket has proven to be a great long-term #Investment. #Investors that hold stocks long enough can expect an annual return of 8% which is the S&P 500 average for the last 100 years - adjusted for inflation and including dividends.

Today, there are all different types of investment vehicles - known as funds - that help investors to buy baskets of stocks. That’s great news for us, since the aim should be to build a diversified portfolio at a low overall cost. Diversifying your investments will help you avoid betting too much money on any particular company or asset class.

The problem is: With so many different kinds of funds, it’s easy for a beginner to get confused. If you want to invest in a diversified way, then you will come across 3 major #FundTypes: Mutual funds, index funds and ETFs.

A #MutualFund is an investment company that pools money from many investors to buy assets like stocks for example. It means that investors give money to a fund manager who is actively picking stocks or other assets on behalf of investors with the goal to get a return that is higher than the average market.

The second fund type is a passively managed mutual fund - also known as index fund. An #IndexFund is a type of mutual fund that tracks an index like the S&P 500. Instead of trying to pick stocks that could outperform the market, an index fund simply buys all the shares of an index. Therefore, instead of trying to beat the market, an index fund is just tracking the overall market.

#ETF stands for exchange#traded fund and it makes more sense if you read it backwards: It’s a fund that is traded on a stock exchange.The first two fund types were either active - like the traditional mutual fund or passive - like the index fund. An ETF can be both: Active or passive.

In this video, we will look at the 3 different fund types, explain them in a super simple way and look at which one is best for you. Enjoy!

⏰⏰ Timecodes ⏰⏰
0:00 Intro
0:43 Mutual Funds
2:53 Index Funds
4:38 ETFs
7:14 Which One Is Best For You?

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DISCLAIMER: This video is for educational purposes only and merely cites my own personal opinion. In order to make the best financial decision that suits your own needs, you must conduct your own thorough research and seek the advice of a licensed financial advisor if necessary.

#MutualFunds #IndexFunds #ETFs #ETF2021