ETFs vs Mutual Funds

ETF's are created to follow a basket of stocks within an industry or following a popular fund (eg. QQQ, SPY). Its success is tied directly to the performance of the stocks. 

ETF's are great for people who may want to own across a specific industry, but does not have the money to purchase the securities outright (eg. QQQ vs purchasing all QQQ holdings)

In general, ETF's can close if they are no longer profitable to cover their expenses or if investors completely sell off and reduce the price to zero. 

ETFs can also be leveraged (2x or 3x)  to return 2x to 3x the fund it mimics or potentially decrease by 2x to 3x

4 Types of Mutual Funds

• • Money Market Funds (low risk)

  • Bond Funds (higher risk than money market funds in hopes of better returns)

  • Stock Funds (growth, income, index, sector - similar to ETFs)

  • Target Date Funds (mixture of the above that changes as you approach your targeted date for retirement or when you plan to make draw downs)

Mutual Funds can be both passive and actively managed depending on what you select. Typically, managed funds may cost more due to the effort of the people managing the fund; though sometimes those fees are offset by the large number of investors in the fund.

Mutual Funds are great for people who do not want to manage or watch their investments.

Mutual Funds are more similar to your typical ROTH IRA/Traditional IRA set it and forget strategy

With managed funds, it is less likely to close on a actively managed fund since investors will be moving in and out of positions to keep you and the company profitable.