What are the differences between index funds, mutual funds, and ETFs (exchange-traded funds)? What is an index fund vs. a mutual fund? Mutual fund vs. ETF? ETF vs. index fund? What makes these fund types similar, and what makes them different than picking stocks? Index funds, mutual funds, and ETFs are the 3 main fund types you can invest in in the stock market. All 3 of these fund types refer to a collection of professionally managed individual stocks or bonds. By investing in an index fund, mutual fund, or ETF, you are investing in a tiny sliver of a bunch of different stocks, usually in one category or sector of the stock market. The main benefit of investing in an index fund, mutual fund, or ETF is the diversification. There is less risk to the investor when one stock or company declines, because there are many other stocks driving the performance of that fund. This video discusses the similarities and differences between mutual funds, index funds, and ETFs. ~~~~~~~~~~~~~~~~ 🔴 Subscribe for more personal finance videos: https://www.youtube.com/alexraepersonalfinance?sub_confirmation=1 👉 Follow me on Instagram! https://www.instagram.com/alexraefinance ~~~~~~~~~~~~~~~~ ✔️ WATCH NEXT! ✔️ ► Roth IRA at Charles Schwab: How to Open, Contribute, and Invest (GUIDE) - https://youtu.be/W-xIL2SVdbs ► Why It's So Expensive to be Poor // Poverty Explained - https://youtu.be/HJLaYrau2sE ► What School Doesn't Teach You About MONEY - https://youtu.be/mKnUtAH8_Ps ~~~~~~~~~~~~~~~~ 🕒 TIMESTAMPS 🕒 0:00 - What are index funds, mutual funds, and ETFs? // Similarities 2:11 - Mutual funds vs. index funds // Differences 5:42 - ETFs vs. mutual funds and index funds // Differences 8:09 - Summary // Conclusion ~~~~~~~~~~~~~~~~ Disclaimer: I am not a financial advisor nor a tax professional. The content presented in this video is for entertainment and educational purposes only.