Ep #30: Mutual Funds or ETFs

What is the difference between ETFs  (Exchange-Traded funds) and Mutual funds?  Similarities :Both are professionally managed group of stocks or bonds. Both carry less risk than buying 1 stockBoth offer a variety of investment optionsBoth can follow an index funds, e.g. the S&P 500.  Differences :Can buy an ETF for the price of 1 share. There is a  minimum investment requirement for mutual funds, around $2-$3k. For ETFs you can purchase them at market price. However, mutual fund price is determined at the end of the day. No automatic investing or withdrawal option available for ETF. ETFs might be better tax efficient, because the capital gains tax is realized when you sell the ETF. ETFs are more passively managed. For Mutual funds, they are rebalanced, managers buy and sell securities, generating higher capital gains.  Example of top performing ETFs and Mutual funds :ETFsMutual FundsVOO. Follows the S&P 500 index. Expense Ratio : (.04%). Current share price : ~$305. VFINX. Also S&P 500 index. Expense Ratio : (.14%). Minimum Requirement: $3k.FZROX. Fidelity total market index fund. No trading fee, no minimum requirement. 2. FDFAX. Fidelity select consumer stapler. Minimum requirement: $2k. (ER : .77%)VHT. Tracks health care index. No minimum requirement. 3. VGHCX. Vanguard Health Care index fund.Minimum investment : $3k. Expense ratio: .34%.  Please subscribe, rate, and share the podcast.  :)