Clarification on wording

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Hi,

I was wondering if someone could clarify the difference between an Index Fund and a Mutual Fund?

And the difference between an ETF?

I was under the impression that an Index Fund and a Mutual Fund were the same thing; that the wording was interchangeable? But I don’t believe this is the case.

I know what an Index Fund is. I believe my understanding of the markets is very good; this request is more to check my understanding.

Thanks,
Toby

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The main difference between index and mutual funds is that the latter is usually actively managed. As they are just tracking an index, the fees for index funds are generally cheaper than mutual funds.

The difference between funds and ETFs is that the latter can be bought and sold immediately during trading hours on the stock market like individual stocks, whereas funds can only be bought/sold at the end of the trading day.

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That’s interesting. I tend to buy outside of trading hours every month and wait for the markets to open, so I haven’t noticed it myself. Good to know.

I have invested in both the Vanguard S&P 500 and the iShares Dow Jones Global Sustainable, as well as two independent holdings: JP Morgan and Constellation Energy. Jim Cramer was right about Constellation Energy being a newcomer in the energy sector; the company has now matured with its growth.

I am saving to add to my retirement, so I prefer to be conservative rather than a high-risk player.

Investing is enjoyable when you know what you are doing and hold for the long term, but it’s also essential to recognise when you need to sell. If a stock is shrinking, there’s usually a good reason - find out why and make the decision to sell if necessary. Too many retail investors deceive themselves and hold on when it’s clearly the wrong call.

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