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Want niche exposure-Some ETFs focus on specific industries or commodities.Trade actively-Shareholders can sell short, buy on margin, and set stop or limit orders.Investing in ETFs might be a good choice if you: ETF shares typically have higher liquidity than mutual fund shares. With an ETF, you can buy or sell shares at any time during the trading day (like a stock) in some cases, a commission for each purchase or sale is charged. Many ETFs track an index, or a basket of assets such as an index fund, and are traded on a public stock exchange. Want to limit fees-Look for mutual funds that have low expenses, do not charge transaction fees, or sales commissions.Look for unique investing strategies-Mutual funds may follow unique investing strategies, such as actively managed target-date funds.Rather, they're automatically invested to track an index.) (Index funds, on the other hand, are not actively managed. Seek active management-While many ETFs passively track an index, mutual fund managers of actively managed funds typically aim to beat a benchmark index through strategic stock selection.Investing in mutual funds might be a good choice if you: With a mutual fund, your order to buy or sell shares is processed at the end of the day and, unless there is a sales load or transaction fee, there is no cost for the trade. Just like you, a mutual fund can choose to buy stock in companies, invest in bonds or cash, or select a combination. Understanding mutual fundsĪ mutual fund is a company that pools money from many investors and invests in a broad range of securities, depending on the goal of the fund. They're also professionally managed, so you don't have to spend time following the day-to-day happenings in the stock market. Mutual funds and ETFs provide automatic diversification, so you can be invested in several companies or industries without having to choose individual stocks.
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Rather than investing in an individual stock or bond, many investors choose to invest in mutual funds or exchange-traded funds (ETFs). Charles Schwab Financial Literacy Survey.Special Guidelines for Loss of a Spouse.Managing Your Finances as You Change Jobs.The Importance of Monitoring and Rebalancing.