Episode 82 - Index Funds vs. ETFs: Which One Should You Choose?
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Episode 82 - Index Funds vs. ETFs: Which One Should You Choose?
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About this listen
Summary:
In this episode of Personal Finance Cat, I’m diving into a common investor question: should you choose index funds or ETFs? They both offer diversification, low fees, and passive growth—but how they operate is a bit different, and that matters.
Index funds are mutual funds that track an index like the S&P 500. You buy them through companies like Vanguard or Fidelity, and all trades happen at the end of the day. ETFs, on the other hand, trade like stocks on the open market, giving you more flexibility and real-time pricing.
If you want low minimums, tax efficiency, and flexibility, ETFs might be for you—especially in taxable accounts or modern apps. If you prefer automatic investing, especially in retirement accounts, index funds are a great fit.
We break down key factors: trading, fees, automation, taxes, and minimum investments. Plus, I share some top picks like VTI, VOO, and VFIAX to get you started.
Ultimately, there’s no wrong choice. Many investors use both—ETFs in taxable accounts and index funds in IRAs. The most important thing is to start investing and stay consistent.
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