INDEX FUNDS vs MUTUAL FUNDS vs ETF // An explanation of the differences between these 3 types of investments and how to choose the best option for YOU! Watch this video to find out the pros & cons of Index funds vs mutual funds, index funds vs ETFs, ETFs vs index funds, and ETFs vs mutual funds. You’ll also get a beginner-friendly explanation on what is a mutual fund, what is ETF investing, and index funds explained.
Great video on index funds for beginners, ETFs for beginners, and mutual funds for beginners. This is the definitive resource to find out the differences/similarities and pros/cons of index funds vs mutual funds vs ETFs!
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That’s my official account, and I will NEVER message you about investment schemes, so please be careful and block & report any scammers posing as me.
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***THINGS MENTIONED IN THIS VIDEO! 👀***
💫 What is a Stock Market Index (EXPLAINED!)
💫 10 Ways to Invest $1000 (EASY IDEAS FOR BEGINNERS)
💫 Stock Market for Beginners
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***BOOKS I RECOMMEND 📚***
I Will Teach You to Be Rich (hilarious how-to book on personal finance for millennials)
The Little Book of Common Sense Investing (Jack Bogle’s classic advice on index funds)
InvestED (step-by-step, millennial-friendly advice on how to pick stocks like Warren Buffett)
Unshakeable (this book = courage. blast ALL the fears & misconceptions you have about investing)
Rich Dad Poor Dad (#1 selling personal finance book of all time… need I say more?)
Think and Grow Rich (the ultimate book on money mindset and wealth consciousness)
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***MY FAVORITE MONEY TOOLS 🖤***
YNAB (I literally can’t live without this budgeting app, so obsessed)
Wise (like Venmo but for international currencies – I use this app a LOT for my life in Mexico)
High-Yield Savings Accounts (don’t settle for 0% when you can get 3%+ on your savings)
Ledger Nano S (crypto storage hardware wallet, because “Not Your Keys, Not Your Crypto”!):
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DISCLAIMERS & DISCLOSURES ❤
This content is for education and entertainment purposes only. Rose does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.
This description contains affiliate links that allow you to find the items mentioned in this video and support the channel at no cost to you. Investing With Rose is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to www.amazon.com. Thank you for your support!
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Index Funds vs Mutual Funds vs ETFs (Which One is the Best?!)
When it comes to investing in the stock market, there are numerous options available for individuals seeking to grow their wealth. Three popular choices are index funds, mutual funds, and exchange-traded funds (ETFs). Each of these investment vehicles has its own unique characteristics and advantages, making it challenging to determine which one is the best. Let’s take a closer look at each option and consider the factors that can help us make an informed decision.
Index funds are a type of mutual fund that aim to replicate the performance of a specific market index, such as the S&P 500. These funds provide broad market exposure, meaning they invest in a wide range of stocks that make up the underlying index. Index funds are known for their low costs, as they typically have minimal management fees and lower turnover compared to actively managed funds. This makes them an attractive choice for investors looking for a simple and cost-effective way to diversify their portfolios. Additionally, index funds are passively managed, meaning they do not require active decisions on which stocks to buy and sell, which can lead to better tax efficiency.
Mutual funds, on the other hand, are professionally managed portfolios of stocks, bonds, or other securities. Unlike index funds, mutual funds aim to outperform a benchmark index by actively selecting and managing investments. This active management approach involves research and analysis carried out by investment professionals, who strive to identify undervalued or outperforming securities. Mutual funds offer a wide range of investment strategies and asset classes, allowing investors with different risk appetites and goals to find options that suit their needs. However, active management and the associated research and trading costs can result in higher expense ratios compared to index funds.
ETFs are similar to index funds in that they seek to replicate the performance of a specific index. However, unlike mutual funds, ETFs are traded on stock exchanges like individual stocks. This feature allows investors to buy and sell shares throughout the trading day, whereas mutual funds are priced at the end of each day. ETFs offer flexibility and liquidity, as they can be bought and sold at market prices, just like any other stock. Moreover, ETFs often have lower expense ratios compared to mutual funds due to their passive management approach.
So, which one is the best? The answer depends on various factors, such as personal investment goals, risk tolerance, and time horizon. Index funds are an excellent choice for long-term investors seeking broad market exposure at low costs. They are ideal for those who prefer a hands-off approach and are comfortable with average market returns. Mutual funds may be more suitable for investors who want the potential for outperformance and are willing to pay higher fees for active management. ETFs, with their intraday trading and lower expense ratios, can be advantageous for active traders and those looking to make short-term tactical investments.
Ultimately, the best investment option is subjective and depends on individual circumstances. Some investors may prefer a combination of these investment vehicles, utilizing index funds for the core of their portfolio and mutual funds or ETFs for specific asset classes or sectors. It is crucial to conduct thorough research, assess one’s personal financial goals, and seek professional advice if needed.
In conclusion, no single investment option is definitively the best. The choice between index funds, mutual funds, and ETFs should align with an individual’s investment objectives, risk tolerance, and preferences. By understanding the distinctive features of each option, investors can make informed decisions and construct a well-diversified portfolio tailored to their needs.
Thank you
They did research most prof did worse than a parrot
So far, as I learn and understand the basics of investing, I’ve found Herman Jonas to be of great help to me in my investment journey.
You explained very well and you are really good! maybe you should consider doing BTC ETF and ETH ETF, have a look at DeFi this will be new dimension in investing. Thank
Perfect video, thank you so much
Hey. Nice video. Do you actually read all those books behind you ?
Finally a useful video explaining the difference between mutual funds vs ETF!
ETFs are tax advantaged
Very easy to watch and straight to the point thanks !
Best video I’ve seen on this topic!
Thank you for the video. However I think things have changed now. WS actually allowed for auto investment for ETFs now and fractional shares too. As long as we can fight the temptation to buy/sell etf frequently, diversify wisely and reinvest the dividends I think ETF is my choice of investment.
What is a Mutual Fund?
Mutual Funds suck ass
I’m kinda torn between mutual and index funds. Dave Ramsey loves mutual funds and conducted a study of millionaires where normal average Joe’s became millionaires over 20-40 years after consistently putting money in 4 types of mutual funds. However The Millionaire Teacher author Andrew Hallam said index funds are more profitable over mutual funds in the long haul because off all the trading costs and fees that mutual funds accrue over time that eat at your profit. Also he points out how many successful mutual funds are gone in ten to 20 years. Even Warren Buffett said the best investment for owning common stock is the index fund. So which is it, for the 20-25 year haul? What’s the best place to park the remainder of your 15% savings after your 401k match to be a millionaire in 20-30 years? Or should you split your 8% post-match with index and mutual?
thanks Rose for your clear explanation
So helpful! Thank you!
Thank you, Great Info
You can now do automatic payments with ETFs
I've watched so many videos and listened to podcast on this topic and your video has been the easiest to comprehend for a beginner. Thank you so much, im at ease with investing now
Amazing free information on YouTube i love it lol
As a finance major I found this video too clear and informative. Thank you Rose !
Thank you, Rose! Nice job!
New sub thanks
I want to invest in us index fund and European index fund. But how can I invest from India? Please help me if there any website.
Great job…!!