In Mutual Funds, you can trade (buy or sell) anytime. But in ETFs, you can only trade when the stock market is open.
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When you start earning money, it is important to try and double it by investing in various schemes. While there are many ways to do it, we will be talking about two of them- Mutual Funds (MF) and Exchange-Traded Funds (ETF) which are very different from each other. But which one will be better for you to invest in?
Mutual Funds and ETFs are two of the great ways to invest your money. When you invest in Mutual Funds, you are investing in stocks and bonds that are managed by experts. As the fund makes money from investments, you too will make capital gains. An investment manager deploys the fund’s assets across stocks, bonds and other securities and decides when and how much to invest in. They make important decisions on behalf of the shareholders and investors to increase their returns and at the same time take minimal risk.
On the other hand, Exchange-Trades Funds (ETFs) are a mix of stocks and Mutual Funds. They can be bought or sold when the stock market is open. You can withdraw money whenever you want without paying any fees.
2 Key Differences Between Mf and Etfs-
Trading Time
In Mutual Funds, you can trade (buy or sell) anytime. But in ETFs, you can only trade when the stock market is open.
Minimum lock-in period
Both Mutual Funds and ETFs do not have a minimum lock-in period, but if you withdraw early from Mutual funds, you may have to pay a fee.
Where Should One Invest In?
In Mutual Funds, there is an investment manager who is hired to manage your money. They study the market and keep a close eye on it. They may charge a bit of high fees but end up making you earn more profit if the right investments are made. In Mutual Funds, you can make only one transaction in a day and are also strictly regulated in India.
ETFs, on the other hand, are comparatively simpler and cost-effective. They have lower fees and are affordable. However, they involve slightly more risk.
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So, if you are willing to pay higher fees and earn more profits, Mutual Funds might be the right choice for you. But if you are willing to take a risk while keeping the operating costs low and happy with the returns from the index funds, then you should opt to invest in ETFs.
