So now you know what Index Funds are, what is the difference between Index Funds, ETFs and Mutual Funds?

Index Funds can be structured as ETFs or Mutual Funds.

As we learned in previous chapter, ETFs (Exchange Traded Funds) are baskets of assets (Bonds, Stocks). Some ETFs are Index funds but not all of ETFs are Index funds.

ETFs can be traded just like stocks during market opens!

On the other hand, mutual funds are pool of money from investors often times actively managed by funds. Mutual funds are usually traded once a day after market. Mutual funds also often times require minimum investment.

Given that mutual funds are often times actively managed, fund managers can update the choice of stocks in the fund.

Mutual funds also often times require minimum investment.

To put it into real-life analogy: Mutual Fund = A chef cooking a special meal for you (they choose the ingredients). Index Fund = A pre-set meal box that follows a recipe exactly. ETF = A pre-made meal you can grab off the shelf any time of day.