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One of the most important rules of investing is to always diversify your portfolio. Mutual funds and exchange-traded funds (ETFs) both provide a great source of diversification, but at first glance it can be hard to tell the difference between these two types of funds.
While there are more than a few similarities between mutual funds and ETFs, there are also key differences that investors should be aware of before taking the plunge.
Understanding Mutual Funds and ETFs
Both mutual funds and ETFs are pooled investment funds that sell shares to investors. The proceeds are invested in a basket of stocks, bonds, or other assets, and every fund has stated investment objectives and takes on different levels of…
