Investing is one of the fundamental aspects of a free-market, capitalistic society. However, the opportunity presented in investing, and the plethora of options to partake in are often grossly underexaggerated. Some of these options may, for example, be concerned with investing in stock for technology related companies, while other investment options may concern placing an investment in a plethora of different fields. In this article, we are going to cover two of those options, ETFs and Mutual Funds, and compare them head-to-head, breaking them down as simply as possible so that you can understand each conceptually, and know which one is right for you.

So what are each of these types of investments? Well an ETF is somewhat comparable to an index fund in the sense that it possesses a plethora of different stocks across multiple different fields. However, ETFs also contain bonds and other assets to complement the stocks included in them. ETFs are traded throughout day time hours similar to stocks with lower expense fees and the ability to be bought through popular brokerage firms.

Mutual funds on the other hand is an accumulate sum of money that comes from multiple investors, and is managed by one lead investor to ensure what they have invested in yields good return. Often times, in exchange for professional investment assistance and passive management, mutual funds have a minimum buy in price to help raise the revenue of the fund.

Now which is better and why? Well, that answer is rather subjective and varies based off of what you are looking for in an investment plan. Often times, an ETF have lower investment fees since they are actively managed by you. They also don’t have buy-in fees and are able to be purchased throughout the day. Mutual funds on the other hand are beneficial since you have professional management that often yields higher returns. They are great for long term opportunity, but often have buy-in fees, higher investment fees, and can only be purchased at the end of the day.

Overall, the answer to the question of which investment option is better is subjective and tailored to the needs of said individual. So, it is important to evaluate your portfolio, assets, and liquid value in making the optimal decision for you.