ETFs versus mutual funds versus single stocks
| ETF | Mutual Fund | Individual Stock | |
|---|---|---|---|
| Diversification | High (one share = many stocks) | High | None (one company) |
| Trading | All day at market prices | Once per day at NAV | All day |
| Fees | Index ETFs 0.03-0.20%; active ETFs 0.5%+ | Index funds 0.02-0.20%; active funds 0.5-1.5% (the driver is index-vs-active, not the wrapper) | None (just commissions) |
| Tax efficiency | High (in-kind creation) | Lower (capital gains distributions) | You control timing |
The three most popular ETFs
The three most popular ETFs: SPY (S&P 500), QQQ (Nasdaq 100), VTI (total US market). Together they hold trillions in assets.
Explore an ETF's holdings and fees
Look up SPY and notice how the platform shows holdings, sector breakdown, and expense ratio. This data is unique to ETFs.
Why a broad, low-cost ETF suits most investors
The key difference between an ETF and a mutual fund
An ETF and a mutual fund both track the S&P 500. What's the MAJOR operational difference?
Check your understanding
Sit with the ideas.
What is a key advantage of ETFs over mutual funds?
Why:
Try this in paper trading
Build a 3-ETF starter portfolio
Allocate $25,000 of your paper cash across three ETFs: a broad-market index (e.g., VTI or SPY), an international fund (e.g., VXUS), and a bond fund (e.g., BND or AGG). Pick the weights you'd actually hold for the next decade.
Open paper portfolio →Practice mode — simulated trades, not investment advice.