What is the difference between an index fund, ETF, and also mutual funds? And which one should I invest in and which one is cheaper

🎁ACORN FREE $5🎁
Link: https://acorns.com/invite/38EYSU

🎁SOFI FREE $75🎁
Link: https://www.sofi.com/share/invest/2652618

🎁ROBINHOOD FREE STOCK🎁
Link: https://share.robinhood.com/tommyt172

1. Index Funds
- Is basically a type of mutual or for example a type ETF or Exchange-traded funds
- Don't worry I'm going to break down ETF’s and mutual funds in details later

Index Fund
- Imagine something that basically tracks performance or data points or profits. That’s an index
- And when you add the word index fund, it's basically a fund trying to replicate the performance of something

For example:
- Some index funds track the top 500 companies, s&p 500
- Or for example some track the entire stock market
- Or some track-only tech stocks, real estate stocks, or even the performance of all bonds.

Overall: The way I think of Index Fund, is an Index that tracks somethings.


2. Mutual Funds: actively and passively
- The idea is to imagine if you started a mutual fund
- And you manage the entire fund, the investment, the money coming in, and the money going out, and also revealing everything
- However, the price of each share of your mutual fund is the underlining value of the assets you guys have, and you only price it once during the day, not like the stock market ( but different manager do things differently )

For example:
- Manager A: charges you 1-2% every year ( this is called an expense ratio ), he says, I promise you that I'm going to beat the market every year.
- Manager B: says I'm going to charge you .20% a year, we won't make trades we just want to track the S&P 500 so we created this type of index fund. We won't try to beat the market we just want to track the returns.

Results: ( which manager to pick)
- With a $10,000 investment for 40 years here's how much you would make with 7% return annual
- Manager A: (2%) = will cost you $79,344.69 ( just in fees, not including taxes)
- Manager B: (.20%) = will cost you only $10,797

Tip: Because that 1.80% would have been compounding, it would actually cost you more than 100k in potential gains

Tip: Btw I was nice in this example, history shows that mutual funds held actively barely if manage to outperform the market of the long term.

Oh: Overall if you did, you would have 149k

Cons:
- Taxes
- Liquity
- Entry level is high also $500-$10,000

3. The new Kid on the block - ETFs
- Its fund that traded in the stock market
- And that’s why its named Exchanged traded fund
- And this is mostly what I currently invest in
Here are the Pros:
- Since its trade in the Market: you can buy and sell quickly
- You only get taxed when you actually sell your investments

But Overall:
- ETF’s also have Index that they actually track, for example, the s&p 500, bonds, international companies
- But my favorite thing is that because it's in the stock market and the price fluctuates
- You can potentially buy at a discount

Pro:
- Sofi Money or Acorns: you can invest in ETFs with $5

4. The Entire idea is
- Index Fund: are funds that are tracking something
- Mutual Funds: are just funds made out of people money, that are managed by a passive investor or active investor
- And ETFs are just traded in the stocks market

If you want to start investing:
- The app I currently use is Acorns

* PRO TIP*
INFORMATION IS EVERYTHING

👕Merch👕
https://teespring.com/stores/tommybryson

✅2 FREE AUDIOBOOKS✅
https://amzn.to/2Enayo8¬¬¬

⚡FREE KINDLE UNLIMITED⚡ (traditional reading)
Link: https://amzn.to/2VGbxt9

👨🏽‍💻DISCORD PRIVATE GROUP👨🏽‍💻
https://discord.gg/EcZEHpA

My Camera Gear: https://amazon.com/shop/tommybryson

✔ Help Us Reach 250,000 Subscribers: https://goo.gl/0wvm6w

😎All My Social Media😎
Link: https://linktr.ee/tommybryson

*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.