Lesson 6 of 8
ETFs vs Mutual Funds
Same idea, different wrapper
ETFs
Trade like stocks all day
No minimums (buy 1 share)
SPY, VOO, QQQ
Fees: 0.03-0.20%/yr
Mutual Funds
Trade once at market close
Often $3,000 minimum
VFIAX, FXAIX
Fees: 0.015-0.20%/yr
The ETFs everyone actually uses
Vanguard S&P 500
Cheapest way to own the whole US market. This is the default answer.
Vanguard Total Market
S&P 500 + small and mid caps. Slightly more diversified than VOO.
Invesco NASDAQ-100
Heavy tech. More upside in bull markets, uglier drawdowns in busts.
Vanguard Intl ex-US
International exposure. The US can't lead forever.
ARK Innovation
Famous but down 70%+ from 2021 peak. Active managers rarely beat the index.
Fees compound. 0.03% vs. 0.75% sounds tiny. Over 30 years on $100k, that's a ~$300k difference.
QQQ (NASDAQ-100 ETF). Heavy tech: Apple, Microsoft, NVIDIA, Amazon.
bottom line
ETFs and mutual funds do the same thing. ETFs are more flexible. Pick one and stick with it.
Check yourself
What % of active managers underperform the S&P 500 over 15 years?