Skip to content
Home » Finance » Page 2

Finance

Mutual fund, ETF or Index fund?

Funds basics: part 2

There are mainly four main types of funds. These are mutual funds, exchange-traded funds or ETFs, index funds, and hedge funds. We will learn how these three funds are similar and how they differ from each other. I think it is good to know their characteristics because often people don’t know the distinction and use them interchangeably.

What are funds?

A fund is a collection of money from many investors. This pool of money can be invested in stocks, bonds, in a specific sector, or a combination of them. The main advantage of investing in a fund is the diversification it provides to us by spreading our risk.

Where do I invest and when do I start?

In my previous post, I wrote about the various types of assets you can use for investment. To have a diversified portfolio, you should invest in a variety of assets.
Diversification can mean two things -The first is diversifying within the same asset class. The second is having different asset classes in your investment portfolio.