Episode 10 - Mutual Funds, Index Funds vs. ETFs |
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In this episode, I am going to explain what mutual funds, index funds and ETFs are, and which one is recommended and why! Even though I am mostly a real estate investor, I do want to diversify my investment portfolio. In summary:
1. Mutual Fund: A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. 2. Index fund: A type of mutual fund that seeks to track the returns of a market index, for example, the S&P 500 Index. 3. ETF: ETFs offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets, and can be traded like a stock. The recommendation is Index funds due to its low fees and the fact that in the long run it usually outperforms the other types of mutual funds. References: 1. Investor.gov 2. New York Times article: https://www.nytimes.com/2020/07/31/business/mutual-fund-winners-stocks-bonds.html 3. The Balance article: https://www.thebalance.com/how-and-why-john-bogle-started-vanguard-2466413 |