Nov. 15, First Stock Ticker Debuts
Investing in the stock market can be pretty intimidating for the average American, especially those of use who don’t know too much about it and without the money to afford costly mistakes. But fear not, for there are simple solutions to this common problem. Enter mutual funds and ETFs.
Mutual funds are investment vehicles for portfolios of stocks, bonds, and other assets that are bought into by many small or individual investors and operated by a professional money manager. A good way to think about mutual funds is to view each fund as its own company. The company’s purpose is to make investments in order to profit its shareholders. Because there is a professional managing the fund, mutual funds typically have higher fees than ETFs.
ETFs, or exchange-traded funds, are marketable securities that typically track an index, a commodity, or a basket of other assets. They trade just like stocks on the market, and can be an attractive option for individual and small investors looking to easily diversify but also avoid the higher fees associated with mutual funds.
- What is the difference between a mutual fund and an ETF?
- What do you think are the advantages and disadvantages of each?
- Which fund would you be most interested in investing in? Is there another investment option you prefer?
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