ETF vs Mutual Fund — Key Differences Explained
| Feature | ETF | Mutual Fund |
|---|---|---|
| Trading | Like stocks (anytime) | Once per day (end of day) |
| Minimum Investment | Price of 1 share | $500-3,000 typically |
| Expense Ratio | 0.03-0.20% | 0.10-1.50% |
| Tax Efficiency | More tax efficient | Less tax efficient |
| Auto-Invest | Manual (or fractional) | Easy auto-invest |
Which to Choose?
Choose ETFs if: You want lowest fees, trade flexibility, and tax efficiency. Great for taxable accounts.
Choose Mutual Funds if: You want automatic monthly investing, do not want to worry about share prices, or your retirement account offers them.
For most people, the difference is minimal. A low-cost index fund or ETF tracking a broad market index is the best choice either way.