Investing: ETFs vs. Mutual Funds Cheat Sheet

Overview

ETFs (Exchange-Traded Funds) and Mutual Funds are popular investment vehicles for diversified portfolios. Understanding their differences helps investors choose the best option for their financial goals.

Key Differences Between ETFs & Mutual Funds

Feature	ETFs	Mutual Funds
Trading Style	Traded on exchanges like stocks	Bought/sold at day's closing price
Fees & Expenses	Lower expense ratios, minimal fees	Higher fees, possible sales loads
Tax Efficiency	More tax-efficient due to structure	Can trigger higher taxable events
Minimum Investment	Often low or no minimum	May require a set initial investment
Management Type	Usually passively managed (index-based)	Can be actively or passively managed

Advantages & Disadvantages

*ETFs*

✅ Lower fees
✅ More tax-efficient
✅ Flexibility to buy/sell anytime
❌ May have brokerage fees
❌ Requires self-management

*Mutual Funds*

✅ Automatic reinvestment options
✅ Often actively managed for market strategies
✅ Suitable for long-term investors
❌ Higher fees
❌ Less tax-efficient

Which One Should You Choose?

• Go for ETFs if: You want low fees, flexibility, and tax efficiency.
• Choose Mutual Funds if: You prefer managed strategies and automatic reinvestment.

Tools & Resources

• Investment platforms for ETF and mutual fund research.
• Portfolio analysis tools for comparing expense ratios and performance.
• Financial advisors for tailored investment strategies.