Part 3/8:
Mutual funds pool investors’ money into a managed portfolio, only tradable at the close of the day and priced based on net asset value.
ETFs, traded like stocks, allow for more flexibility as they can be bought and sold throughout the trading day, with values adjusting in real-time.
Todd emphasizes that index funds typically come at a lower cost, particularly since many aim simply to replicate the performance of established indices like the S&P 500, which represents a broad swath of the U.S. stock market.