ETFs and Mutual Funds; Investing in Retirement Part 2 – Mutual Funds

ETFs and Mutual Funds; Investing in Retirement Part 2…Mutual Funds.

1. Mutual Funds, much like ETFs are typically made up of stocks, bonds, money market, & other assets.
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2. Mutual Funds are actively managed unlike ETFs which are passively managed by money managers. They allocate specific percentages to produce income for investors.
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3. Majority of the money in an employer based retirement is in mutual funds.
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4. Mutual Funds, unlike ETFs, don’t actively trade throughout the day, but settle the shares at the end of the day.
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5. Mutual Funds often present with stock symbol containing 5 letters, like “FXAIX”. Which ETFs are often seen with 4 letters, like “FDEM”.
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6. Mutual Funds can consist of money market funds, sector funds, target date funds, & equity funds. Each have different assets and volatility.
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7. With Equity based Mutual Funds (stocks), you have Small, Mid, & Large Cap Companies that offer assets of Value, Blend, & Growth.
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8. Mutual Funds do have expenses, called “expense ratios” that can range less than 1% to 3%. These expense ratios are essentially the fees money managers charge for actively managing them. ETFs often have zero fees since they are passively managed.
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Stay tuned for Part 3!