🤔 why even bother?

we once only cared about mutual funds… but somewhere down the road, etf’s became cool and now there’s a huge difference in fund flow between mutual funds and etf’s

💡 what’s the difference?

• it's a little more interactive investing in an etf

  • an etf can be bought and sold intra-day just like any other stock

  • i.e. SPLG (buying one share of this, your effectively getting exposure to companies in the s&p500 index!)

  • mutual funds can only be bought at the end of each trading day

• history

  • mutual funds have been around since 1924 (think fidelity, ishares, vanguard, charles schwab, etc.), the first etf was only launched about 30 years ago (i.e. SPY )

• active vs. passive

  • mutual funds are traditionally run by an active manager, making frequent buy and sell actions in an effort to play the market accordingly

  • etf’s are designed to follow a particular index in the market (not just the s&p500 - QQQ follows the nasdaq index)

💰 i am team etf

• vanguard’s VOO (etf) and vfiax (mutual fund) do the exact same thing, but the etf has a slightly lower annual fee since it’s passively managed without much frequent human effort

  • imo: why not pay less fees for investing your money into an etf that does the exact same thing as a mutual fund?

• vfiax requires a much higher initial minimum investment (aka $3k). a share of voo is less than $360 as of writing

  • saving your money early into the s&p500 will have a worldly difference in the amount of returns you’ll have years down the road

  • i don’t like that people have to wait till they save up $3k to get a foot in the door for most mutual funds

💡 something im thinking about

portable mini bonfires yo! waiting for my first one to come…!

all of this is just one ape’s thoughts, but I would love to hear what you want to know about! happy trading!

Ask a Wise Ape is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

as always, i am no financial advisor! (i am no substitute for professional financial services)