Funds & ETFs

An investment vehicle that pools money from many investors to buy a diversified portfolio of stocks, bonds, or other securities, managed by a professional fund manager. Buying a share gives you instant diversification across many holdings in a single investment. Unlike ETFs, mutual funds are priced once per day after the market closes, and they may be actively managed to beat the market or passively managed to track an index.

A type of investment fund built to track the performance of a specific market index, such as the S&P 500, rather than trying to beat it. Instead of a manager actively picking stocks, it passively holds the same securities as its target index, which keeps costs and fees low. This gives you broad diversification in a single investment and is a core tool of passive, long-term investing.

An investment fund that holds a basket of assets like stocks, bonds, or commodities, but trades on an exchange throughout the day like an individual stock. This gives you instant diversification in a single purchase, while its price fluctuates in real time, unlike a mutual fund that prices once daily after the market closes. ETFs are known for low expense ratios and tax efficiency, and many track an index such as the S&P 500.

An investment fund that pools money from many investors to buy a diversified portfolio of bonds, such as government, municipal, or corporate debt, managed by a professional. Instead of buying individual bonds, you get exposure to many at once, and the fund generates regular income from the interest those bonds pay. Its value moves with interest rates, typically rising when rates fall and falling when rates rise.

A type of mutual fund that invests in very short-term, low-risk debt such as Treasury bills, commercial paper, and certificates of deposit, aiming to preserve capital while earning modest returns. It’s designed to maintain a stable value, typically $1 per share, making it one of the more conservative investment options. It differs from a bank money market account: a fund is an investment that isn’t FDIC-insured, whereas the account is a deposit product that usually is.

The annual fee a mutual fund or ETF charges to cover its operating costs, expressed as a percentage of your invested assets. For example, a 0.20% expense ratio means you pay $2 per year for every $1,000 invested, deducted automatically from the fund rather than billed separately. Because it’s charged every year, even small differences compound over time, which is why lower-cost index funds and ETFs are often favored for long-term investing.

A company that owns, operates, or finances income-producing real estate, letting you invest in property without buying or managing it directly. Many trade on stock exchanges like a regular stock, giving you easy access to real estate with high liquidity. By law, a REIT must pay out at least 90% of its taxable income to shareholders as dividends, which is why they’re known for relatively high dividend payouts.