June 2021
Beginner
304 pages
8h 8m
English
Content preview from Investing in Your 20s & 30s For Dummies, 3rd Edition
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Chapter 10
Fund Investing: Mutual Funds and Exchange-Traded Funds
IN THIS CHAPTER
Matching funds to meet your objectives
Putting together and managing a fund portfolio
Exploring alternatives to funds
This chapter is all about investing through funds — mutual funds and exchange-traded funds (ETFs). Mutual funds are simply pools of money from investors that a mutual fund manager uses to buy a bunch of stocks, bonds, and other assets that meet the fund’s investment criteria.
The best ETFs are quite similar to mutual funds — specifically, index mutual funds. Such ETFs generally track a major market index. Some ETFs, however, track narrowly focused indexes, such as an industry group or small country. Others are actively managed and have a changing portfolio over time, just as you would with an actively managed mutual fund.
The most significant difference between a mutual fund and an ETF is that to invest in an EFT, you must buy it through a stock exchange where the ETF trades, just as individual stocks trade. Mutual funds are typically bought through the fund company and don’t trade during the trading day but instead close out orders received by 4 p.m. EST.
Different types of funds ...
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