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What is the difference between a mutual fund and an exchange-traded fund?

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      Distinguishing between a mutual fund and an exchange-traded fund (ETF) is akin to choosing between a cozy book club and a flexible magazine subscription. Mutual Fund: Think of a mutual fund as a collective book club. Investors pool their money into a fund managed by a pro (like a book club leader).‫اقرأ المزيد

      Distinguishing between a mutual fund and an exchange-traded fund (ETF) is akin to choosing between a cozy book club and a flexible magazine subscription.

      Mutual Fund: Think of a mutual fund as a collective book club. Investors pool their money into a fund managed by a pro (like a book club leader). The fund buys a diverse collection of stocks or bonds, providing members (investors) a share of the returns.

      Exchange-Traded Fund (ETF): Now, picture an ETF as your flexible magazine subscription. It’s like buying a bundle of articles (stocks or bonds) that you can trade on the stock market. It’s more flexible than a mutual fund because you can buy and sell it throughout the trading day at market prices.

      In essence, mutual funds are like book clubs with a manager, while ETFs are flexible bundles traded on the market. Both offer ways to diversify your “reading” (investments) but in slightly different formats.

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