What is the difference between a mutual fund and an exchange traded fund?

A mutual fund and an exchange traded fund (ETF) are both types of investment vehicles designed to help people save for retirement, college tuition, or other financial goals. The two types of funds differ mainly in structure and investment strategy. A mutual fund is a professionally managed investment that pools money from many investors. The fund manager will make decisions about which investments the fund should make, usually stocks, bonds, or other securities. The fund can also invest in real estate, commodities, and other investments. The profit or loss of the fund is shared among all the investors. An ETF is also a professionally managed investment, but it trades like a stock. ETFs are traded on stock exchanges and the price of an ETF can fluctuate throughout the day as the underlying investment rises and falls. ETFs tend to be more cost-efficient and diversified than mutual funds because they are made up of smaller, individual investments. This means that ETFs can offer a lower-cost way to diversify a portfolio. Both mutual funds and ETFs offer investors a way to save for the future. Investors will need to consider their individual needs and the specific goals of their investment when deciding whether a mutual fund or an ETF is right for them.

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What is the difference between a mutual fund and an exchange traded fund?

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