search4answers
  • Finance
    The 3 Best Student Loan Consolidation Companies
  • Finance
    The Best Cash-Back Rewards Credit Cards
  • Finance
    The 5 Best Personal Financing Apps To Help Manage Your…
search4answers
    • Health
      • What Does Your Child’s Stomach Pain Mean?

        What Does Your Child’s Stomach Pain Mean?

      • Spotting the Signs of Depression

        Spotting the Signs of Depression

      • Hidden Signs Of Bipolar Disorder

        Hidden Signs Of Bipolar Disorder

      • 12 Rheumatoid Arthritis Signs and Symptoms

        12 Rheumatoid Arthritis Signs and Symptoms

      • Blood Clot Treatments: Your Best Options

        Blood Clot Treatments: Your Best Options

      • Epilepsy Medications to Treat Seizures

        Epilepsy Medications to Treat Seizures

    • Finance
      • What Are Penny Stocks?

        What Are Penny Stocks?

      • Opening A Business Checking Account: What Not To Do

        Opening A Business Checking Account: What Not To Do

      • Declaring Bankruptcy: The Pros and Cons

        Declaring Bankruptcy: The Pros and Cons

      • The Easiest Ways To Save $1,000 Without Even Realizing It

        The Easiest Ways To Save $1,000 Without Even Realizing It

      • Credit Card Processing Solutions for Small Businesses

        Credit Card Processing Solutions for Small Businesses

      • 5 Signs you’re Overspending, Not Underpaid

        5 Signs you’re Overspending, Not Underpaid

    • Mortgage
      • Home Equity Conversion Mortgage (HECM): Explained

        Home Equity Conversion Mortgage (HECM): Explained

      • What Can you Do to Avoid Mortgage Foreclosure

        What Can you Do to Avoid Mortgage Foreclosure

      • The 4 Best Ways to Spend your Home Equity Loan

        The 4 Best Ways to Spend your Home Equity Loan

      • 5 Ways you Can Boost your Home Equity

        5 Ways you Can Boost your Home Equity

      • Comparing Mortgage Lenders

        Comparing Mortgage Lenders

      • What is Escrow?

        What is Escrow?

    • Auto
      • 5 Previously Expensive Cars You Can Now Buy for Less…

        5 Previously Expensive Cars You Can Now Buy for Less…

      • Look Out for These Problems Before Buying a Used Car

        Look Out for These Problems Before Buying a Used Car

      • Save Money On Your Car Insurance

        Save Money On Your Car Insurance

      • Top Myths and Facts About 2016 GMC Trucks

        Top Myths and Facts About 2016 GMC Trucks

      • Can You Trust Self Driving Cars?

        Can You Trust Self Driving Cars?

      • The Top 5 Minivans With Style

        The Top 5 Minivans With Style

    • Business
      • Small Business Internet Providers: 4 Great Options

        Small Business Internet Providers: 4 Great Options

      • Top 5 Mistakes While Creating A Resume

        Top 5 Mistakes While Creating A Resume

      • All-Natural Pest Control Options You Must Try

        All-Natural Pest Control Options You Must Try

      • How To Save Money With A New Startup Business

        How To Save Money With A New Startup Business

      • The Best Jobs for Great Typists

        The Best Jobs for Great Typists

      • Bankruptcy and Business: How Does it Work?

        Bankruptcy and Business: How Does it Work?

    • Medical
      • Be Pulse Aware About Atrial Fibrillation

        Be Pulse Aware About Atrial Fibrillation

      • Factors To Consider When Buying An Electric Wheelchair

        Factors To Consider When Buying An Electric Wheelchair

      • Your Guide To Metastatic Melanoma

        Your Guide To Metastatic Melanoma

      • To Flu Shot, or Not to Flu Shot

        To Flu Shot, or Not to Flu Shot

      • Living Hep C

        Living Hep C

      • Symptoms and Signs of Bone Cancer

        Symptoms and Signs of Bone Cancer

    • Tech
      • What Is Field Service Management?

        What Is Field Service Management?

      • Cloud security managed service

        Cloud security managed service

      • Best HEPA Air Purifiers for Home

        Best HEPA Air Purifiers for Home

      • Find The Best Cell Phone Plan For You

        Find The Best Cell Phone Plan For You

      • Before Online Dating There Was Video Dating

        Before Online Dating There Was Video Dating

      • The Five Best Online Dating Sites

        The Five Best Online Dating Sites

    • Travel
      • Helpful Tips to Get a Green Card Through Family Members

        Helpful Tips to Get a Green Card Through Family Members

      • 4 Ways to Securing a Green Card

        4 Ways to Securing a Green Card

      • If You Need to Renew or Replace a Green Card

        If You Need to Renew or Replace a Green Card

      • International Travel Regulations for Green Card Holders

        International Travel Regulations for Green Card Holders

      • Learn How To Maintain Green Card Status

        Learn How To Maintain Green Card Status

      • A Summary of Permanent Resident and Green Card Status

        A Summary of Permanent Resident and Green Card Status

      ETF vs. Mutual Fund

      by Stephanie Donnely

      ETF, short for exchange-traded funds, and mutual funds are two more common investment options for individuals looking to diversify their portfolio and increase net worth. Of course, with so many different funds, bonds, and other investment options out there, it can become incredibly difficult to know what the difference is and how one compares to the other. That is exactly why it is necessary to know what the difference is and how one is better than the other in differing ways.

      Fees

      One element early investors tend to not look into (and even experienced investors can forget from time to time) are the fees associated with an investment opportunity. Most mutual funds are going to charge around 1.3% to 1.5% for the investment, although it can change depending on the specific mutual fund, where it is located (overseas mutual funds usually come with a larger fee), and other variables. Some companies even charge an additional 1% for advisers and management services, which can increase the cost of the portfolio to about 2.5%. On the other hand, the average expense of an EFT is 0.44%, and with a possible management fee on top of it of 1%, an ETF generally costs less than maintaining mutual funds.

      Specific Markets

      There are different investment markets for mutual funds. These markets can include international trade (such as China, a booming international business sector), gold and precious materials, and other investment opportunities. With an ETF, however, there are fewer markets available to diversify the account. Essentially, when you purchase the ETF, the ETF is involved with a specific sector. For example, the ETF might be involved with consumer products in Argentina or solely in precious materials. Essentially, the investment fields must be connected in order to be grouped into the ETF. Diversification is always desirable, which is why mutual funds are so popular in terms of investment opportunities.

      Investment Minimum

      When you open a mutual fund account, you need a minimum amount to open the account. Some investments require you to have at least $10,000 or more in order to even open the account. This might not prove a problem for some investors, but for those just starting out, having such a substantial amount of money sitting around is just not possible. On the other hand, an EFT does not have any sort of investment minimum, which makes it easily accessible by anyone. As long as you can purchase one share, you are able to have stake in an ETF.

      Taxes

      Taxes are the main drawback to mutual funds. Even if you are able to afford the investment minimum and the other variations of the account, it can be an inefficient form of investment. There are times where your account, even if it loses money, is charged taxes. This is because the account manager might have sold off winnings earlier in the year, which allows the management firm to showcase a better return on investment in their advertisements, but you end up paying taxes on it. ETFs work like stocks, so unless you made money on your investment, you are not paying taxes.

      Featured Image: Thinkstock/TonyIaniro

      Posted on May 22, 2023
      Privacy Policy | Terms Of Use | Contact