Are ETFs better than index funds?

Some ETFs actually are index funds, so it depends how you look at it. If you're thinking of an index fund as a traditional mutual fund, then both can be advantageous, depending on how you use them. The benefit of choosing an ETF is that you can invest small amounts more frequently and easily via a trading app. With a mutual fund, you often need $500 or more as a minimum investment, and you'll need to go through an application process to add more funds or withdraw.

Can you lose money with an index fund?

Yes. Like all investments, index funds can go down in value, depending on market performance.

Are ETFs riskier than index funds?

Some ETFs are index funds, which can be a moderate-risk stock market investment. However, some ETFs also use leverage or derivatives or track a single commodity, making them very high risk.

What's the main difference between ETFs and index funds?

An ETF is an investment product that trades like a stock. An index fund is a fund strategy that involves tracking a market index, and it can be delivered through an ETF or a traditional managed fund like a mutual fund.

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Alexandra Plesa

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Alexandra Plesa wrote about Internet TV for Finder. When she’s not re-watching The West Wing for the 11th time, she likes to scour streaming services for any fascinating underrated gems they have on offer. She’ll never say no to a romantic comedy and she’ll press you to watch BoJack Horseman until you finally give in.