In partnership with

Today’s Headline

🏦 Series 6: Advanced Topics (For Curious Learners)

Day 2: ETFs vs. Mutual Funds — What’s the Difference?

When I first started learning about investing, I remember feeling completely overwhelmed by the number of options out there.
Stocks, bonds, REITs, unit trusts, ETFs, mutual funds — it all sounded like a foreign language.

But after some time, I realized that two of the most common investment tools — ETFs and mutual funds — are actually quite similar.
They both allow you to invest in a basket of assets instead of picking just one or two stocks.
However, the way they work and behave can be very different.

Today, I want to break this down for you in a simple, no-jargon way.
By the end of this, you’ll understand exactly what sets ETFs apart from mutual funds — and which one might fit you best.

Want to get smarter — not just richer? Tap into curated financial wisdom from Money and stay ahead of the next big move in investing.

Could you go from being $50k in debt to $20k?

If you feel you're languishing in debt, debt relief companies can take over negotiations with your creditors and potentially get them to accept up to 60% less than you owe. Sounds too good to be true? Our debt relief partners have already helped millions of Americans just like you get out of debt. Check out Money’s list of the best debt relief programs, answer a few short questions, and get your free rate today.

Find debt relief

Let’s Start with the Basics

At their core, both ETFs (Exchange-Traded Funds) and mutual funds are pooled investments.
That means a group of investors put their money together into one big fund.
The fund manager then uses that money to buy a diversified mix of assets — like stocks, bonds, or commodities.

This allows you to instantly own small pieces of many companies at once, without needing to buy each one individually.
It’s like buying a basket of fruits instead of a single apple — your risk spreads out naturally.

The goal? To make investing easier, more diversified, and accessible for everyone — not just the wealthy.

What Is a Mutual Fund?

A mutual fund is like a traditional investment pool that’s managed by a professional fund manager.
When you invest in a mutual fund, you’re handing your money over to the manager, who decides what to buy and sell based on the fund’s goals.

For example, a “Global Equity Fund” might invest in big companies across the world.
A “Bond Fund” might focus on government or corporate bonds for stability.

Every day, the mutual fund’s total value (called Net Asset Value, or NAV) is calculated after the market closes.
When you buy or sell units in a mutual fund, your transaction happens at that end-of-day NAV price — not instantly.

In short: mutual funds are easy to understand but operate more slowly.
They’re designed for long-term investors who prefer a hands-off approach.

What Is an ETF?

ETF stands for Exchange-Traded Fund.
It’s also a pooled investment, but here’s the key difference — you can buy and sell ETFs like stocks on the stock exchange.

That means their prices move up and down throughout the day, just like any regular share.
If you see an opportunity, you can buy an ETF at 10 a.m. and sell it by 2 p.m. — something you can’t do with a mutual fund.

Most ETFs are designed to track an index, such as the S&P 500, the Straits Times Index, or even sectors like technology or healthcare.
They aim to match the market’s performance, not beat it.

In that sense, ETFs are passive investments — they follow a fixed rule or index rather than relying on a manager’s judgment.

Key Differences Between ETFs and Mutual Funds

Let’s look at the main differences side by side:

This simple table already highlights why many investors are moving toward ETFs today.
They’re flexible, transparent, and cost-effective.

But that doesn’t mean mutual funds are bad — they still serve an important role for certain types of investors.

Active vs. Passive Management

The biggest difference between ETFs and mutual funds boils down to this:
Who’s making the decisions — a person or a formula?

• Mutual funds are actively managed.
  A professional manager decides which stocks to buy or sell, trying to outperform the market.
  The problem? Many studies show that most managers don’t consistently beat the market after fees.

• ETFs, on the other hand, are passively managed.
  They follow a preset index — no guessing, no emotions.
  If the index goes up 10%, the ETF goes up roughly 10% (minus small costs).

In other words, ETFs don’t try to be smarter than the market — they simply mirror it.
And that approach often leads to better results in the long run due to lower costs and fewer mistakes.

Why Fees Matter More Than You Think

At first, management fees might not seem like a big deal — 1% or 2% sounds small, right?
But over time, that small difference can dramatically affect your returns.

Here’s an example.
Let’s say you invest $10,000 in both a mutual fund and an ETF, each earning 7% per year before fees.
The ETF charges 0.2% per year, while the mutual fund charges 1.8%.

After 20 years, the ETF investment would grow to about $37,000,
while the mutual fund would only grow to around $30,000.

That’s a $7,000 difference — just because of fees.
This is why smart investors always pay attention to expense ratios before investing.

"Boost your investment strategy by unlocking the power of CTV advertising with Roku Ads Manager—learn how to maximize returns this holiday season. Click here to explore!"

Find your customers on Roku this Black Friday

As with any digital ad campaign, the important thing is to reach streaming audiences who will convert. To that end, Roku’s self-service Ads Manager stands ready with powerful segmentation and targeting options. After all, you know your customers, and we know our streaming audience.

Worried it’s too late to spin up new Black Friday creative? With Roku Ads Manager, you can easily import and augment existing creative assets from your social channels. We also have AI-assisted upscaling, so every ad is primed for CTV.

Once you’ve done this, then you can easily set up A/B tests to flight different creative variants and Black Friday offers. If you’re a Shopify brand, you can even run shoppable ads directly on-screen so viewers can purchase with just a click of their Roku remote.

Bonus: we’re gifting you $5K in ad credits when you spend your first $5K on Roku Ads Manager. Just sign up and use code GET5K. Terms apply.

Use code GET5K now

ETFs: The Modern Investor’s Tool

Personally, I find ETFs incredibly useful for today’s investors.
They offer the best of both worlds — diversification and convenience.

Here’s why I like them:

1. They’re simple. You don’t have to pick individual stocks. You just pick the theme or index you believe in.

2. They’re cheap. Lower fees mean more of your returns stay in your pocket.

3. They’re flexible. You can buy and sell anytime during market hours.

4. They’re transparent. You know exactly what’s inside your ETF every day.

5. They’re global. You can invest in U.S. tech, Asian markets, gold, or even bonds — all through ETFs.

With ETFs, I can diversify my portfolio across countries and industries with just a few trades.
It’s like building a global investment empire from my phone.

When Mutual Funds Still Make Sense

Despite the rise of ETFs, mutual funds still have their place.
Here’s when they might be a better fit:

1. You prefer a human touch. Some investors like having a professional manager making decisions.

2. You invest regularly through a plan. Mutual funds are great for dollar-cost averaging with automated monthly contributions.

3. You don’t want to monitor the market. Since trades happen only once daily, there’s no temptation to check prices constantly.

4. You believe in the manager’s skill. Certain funds, especially in niche markets, can outperform indexes through deep research and expertise.

So, it’s not about “ETFs are better” or “mutual funds are outdated.”
It’s about choosing what fits your personality and goals.

Common Mistakes New Investors Make

When I first started, I made some classic beginner mistakes.
Here are a few to help you avoid them:

1. Chasing performance.
   Don’t buy a fund just because it had a good year. Look at long-term consistency instead.

2. Ignoring fees.
   High fees eat into your profits. Always compare expense ratios.

3. Not knowing what you own.
   Some funds overlap heavily in holdings. You might think you’re diversified, but you’re just doubling up.

4. Lack of patience.
   Both ETFs and mutual funds need time to grow. Jumping in and out too often hurts your results.

Investing is a marathon, not a sprint.
The goal isn’t to make quick money — it’s to build wealth slowly and safely over time.

ETFs and Mutual Funds Can Work Together

One thing I’ve learned is that you don’t have to choose only one.
You can actually use both to balance your portfolio.

For example:

• Use ETFs for your core, long-term investments like S&P 500 or global equity exposure.

• Use mutual funds for specialized areas where an active manager might add value — like emerging markets or small-cap stocks.

This combination gives you the efficiency of ETFs and the expertise of mutual funds.
It’s about using the right tool for the right job.

How to Choose Between the Two

If you’re still unsure, ask yourself a few questions:

1. Do I want to trade anytime or just invest passively?
   → Choose ETFs if you like flexibility.

2. Do I believe in active management or just want market returns?
   → Choose mutual funds for active management; ETFs for passive returns.

3. Am I cost-sensitive?
   → ETFs usually win here due to lower fees.

4. Do I plan to automate my investments monthly?
   → Mutual funds work better for automatic plans.

5. Do I want transparency?
   → ETFs disclose holdings daily, so you always know what’s inside.

Your answers will tell you which option fits your lifestyle and investing habits better.

A Quick Example

Let’s imagine two friends:

• Sarah prefers simplicity. She invests monthly through a mutual fund that automatically reinvests dividends. She rarely checks prices.

• Tom likes control. He invests in ETFs through his brokerage app, rebalances every few months, and keeps an eye on market trends.

Both are investing smartly — just in ways that suit their personalities.
The best strategy isn’t about what’s “popular” — it’s about what keeps you consistent.

Final Takeaways

Over time, I’ve realized that ETFs and mutual funds are just two sides of the same coin.
Both are designed to help ordinary investors achieve long-term financial growth — just in slightly different ways.

• ETFs give you control, transparency, and cost efficiency.

• Mutual funds offer convenience, automation, and professional management.

What matters most isn’t the type of fund you pick — it’s your discipline in staying invested.
Because in the end, wealth doesn’t come from timing the market; it comes from time in the market.

Call to Action

If you’ve been holding back from investing because you weren’t sure which fund to start with, take today as your turning point.
Look at your goals, your schedule, and your comfort level — then pick the one that fits best.

Start small.
Even $100 in an ETF or mutual fund can grow into something meaningful over time.

The key is to begin — and to stay consistent.
Because every great investor started somewhere.

So, let this be your step forward.
Your journey toward financial growth doesn’t begin when you know everything — it begins when you take action.

Let’s keep learning, building, and growing wealth together — one smart decision at a time.

[Live Life Grow Wealth]

🎓 Free Masterclasses to Unlock Your Investment Potential
Take your money skills to the next level with expert-led workshops designed to help you grow smarter and faster.

/https://register.go-leap.com/tadwebinar?am_id=yongheng6172

/https://superinvestorclub.go-leap.com/superinvestorclub-signup?am_id=yongheng2768

/https://register.go-leap.com/membership-tiers?am_id=yongheng1875

Recommendations Section

“Peek into smart money moves — when big players act, you’re in the loop.”

Learn simple, proven ways to grow your money — straight from real investors who walk the talk.

“Hone your investing edge in just 5 minutes — smart, snappy insights to power your portfolio growth.”

“Stay ahead with one expert-picked stock monthly — clear, no jargon, built for growth.”

DISCLAIMER

I make no representations, warranties, or guarantees, whether expressed or implied, that the content provided is accurate, complete, or up-to-date. Past performance is not indicative nor a guarantee of future returns.

I am an individual content creator and not regulated or licensed by the Monetary Authority of Singapore (MAS) as I do not provide investment services.

All forms of investments carry risks, including the risk of losing your entire invested amount. Such activities may not be suitable for everyone. You are strongly encouraged to seek advice from a professional financial advisor if you have any doubts or concerns.