Index funds vs. ETF’s
Index funds and Exchange Trade funds [ETF's] are two very similar and very popular ways to invest money nowadays. Although they are similar, they are not identical.
Index funds are fairly simple. An index fund manager just aims to get and does get the exact return that a certain stock market index gets. There is a wide variety of index funds these days. They are popular because of their low costs, around .1% a year. Most individual investors lose to the market because they do not have the patience or the logic necessary to do well in the stock market so index funds are a great option.
Exchange trade funds can target an individual sector. For instance there are ETF’s for gold, oil companies, technology companies, energy companies, retail companies… There are hundreds of different ETF’s. Exchange trade funds also have low fees as well.
Both options are great choices for an individual investor to make. However it is important to remember to stay diversified if you do decide to invest in Exchange trade funds. Imagine if you put all of your money in a financial ETF before the crash of many banks, you would be in trouble. As long as you stay diversified, patient, and logical you will win in the long run no matter what.