Mutual Fund
A mutual fund pools money from many investors to buy a diversified portfolio of stocks or bonds, managed as one. You own shares of the fund rather than the underlying holdings, and the price is set once a day after the market closes — the main difference from an ETF.
Mutual funds price once a day after the market closes, so every buyer and seller that day transacts at the same net asset value — unlike an ETF, which trades continuously. For a long-term investor that difference is irrelevant. What is not irrelevant is cost: over 30 years of $500 a month at 7%, a 1% expense ratio costs about $104,000 against a 0.03% index fund, roughly 17% of the final balance. Mutual funds are the backbone of most 401(k) menus, where you cannot choose the provider, so finding the cheapest broad index option in yours is usually the single highest-value decision available inside the plan.
Put it to work
Investment Calculator
Project an investment portfolio's growth with monthly contributions — final value, your money vs market growth, and the year-by-year path.
Retirement Calculator
Project your retirement savings: what your balance could reach by retirement age and the monthly income it could sustainably provide.