What is the difference between ETFs and mutual funds?

One of the most key differences between ETFs and mutual funds is in how they're traded. With mutual funds, you buy and sell shares directly with the fund provider. Transactions also only occur after trading ends for the day and the fund's manager can calculate the value of a share in the fund. ETFs, on the other hand, trade more like stocks.

Are ETFS a good investment?

This is called active management, and it often translates into higher costs for investors. It can also mean worse performance, as fund managers are notoriously bad at predicting the market. ETFs are usually passively managed funds. These funds automatically track a pre-selected index, such as the S&P 500 or the Nasdaq 100.

Are ETFs taxable?

Investors in ETFs and mutual funds are taxed based on the gains and losses incurred within the portfolios. ETFs engage in less internal trading, and less trading creates fewer taxable events. ETFs generally have lower expense ratios than mutual funds. Mutual funds can be purchased in fractional shares or fixed dollar amounts.