ETFs vs Mutual Funds Comparison for Kids and Teens
This video evaluates Exchange Traded Funds vs Mutual Funds in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about ETFs vs MFs, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Elementary School
- Middle School
- High School
The topics covered are:
- ETFs vs Mutual Funds: Basic Differences
- ETFs vs Mutual Funds: Additional Differences
- MFs vs ETFs: Which one is Better
ETFs vs Mutual Funds (ETFs vs MFs): A Comparison
Howdy Wall Street Willy.
We have talked about Mutual Funds and ETFs, but they sound very similar. Is there a difference?
Yes, there are many differences.
Can you tell me about the differences?
Yes, of course.
First of all, the way they are bought or sold is different. Because ETFs, just like stocks, they are bought and sold through stock brokers. But Mutual Funds can be bought from Mutual Fund companies or from brokers.
The second difference is in the way their prices change. For ETFs, they change throughout the day, just like stocks. But for MFs, the price is set at the end of each day based on its Net Asset Value or NAV.
Click to Tweet
The third difference is that the costs associated with them are different. Because for ETFs, they have commission & fees, but for Mutual Funds, they have loads & fees.
Are there any other differences between Exchange Traded Funds and Mutual Funds (ETFs vs Mutual Funds)?
Yes. The tax treatment, or how much tax they are charged, is also different. ETFs are more tax efficient, which means they incur less taxes. But MFs can incur capital gains taxes when investors buy and sell them, because of mandatory distribution of the capital gains at end of the year.
Also, there are holding restriction. Holding restriction is basically how long you have to hold ETFs or Mutual Funds before you sell them. For ETFs, there is no holding restriction. But for Mutual Funds, some may impose a penalty if they are sold before 1 or 6 months – depending on the MF.
And another thing is that their minimums are different. For ETFs, there are no minimums – you can invest any amount you want. But for Mutual Funds, you usually have to invest $1,000 or $2,000 – depending on the Mutual Fund.
MFs vs ETFs: Which One Should You Invest In
Whoa, that’s a lot of differences! But which one to invest in – like, which one is better?
Generally speaking, you should invest in ETFs – but it depends.
If you buy and sell them frequently, or you want the costs to be lower, then choose ETFs or Exchange Traded Funds. But if you invest monthly for Dollar Cost Averaging, then some low cost Mutual Funds might be better.
Okay, thank you very much for telling me about the differences between mutual funds and ETFs (mutual funds vs ETFs).
You’re welcome Sooper Cooper. Remember, finance is your friend!
ETFs vs Mutual Funds (ETFs vs MFs): Conclusion
Do you invest in mutual funds (MFs) or Exchange Traded Funds (ETFs)? How has your experience been?
And do you prefer one over the other? Which one is better according to you – MF or ETF? Let us know by leaving a comment below!
Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens
Podcast: ETFs vs Mutual Funds (Exchange Traded Funds vs MFs)
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Ever wondered what the similarities and differences are between Mutual Funds and Exchange Traded Funds (MF and ETF)? Find out the similarities and differences in terms of how they are bought and sold, how their prices change, their fees commissions and loads, their income tax implications, their holding restrictions, their investment minimums, and more. Also find out which one is better – whether you should invest in Mutual Funds or Exchange Traded Funds!
Show notes and transcript at: https://easypeasyfinance.com/comparison-mutual-funds-vs-exchange-traded-funds-mf-vs-etf/
2 thoughts on “Comparison: ETFs vs Mutual Funds – Exchange Traded Funds vs MFs for Kids”
My daughter like to invest in ETFs through fractional shares. Would you tell the best ETFs in the market now.
I can’t recommend an ETF – in fact, I would recommend not investing in ETFs. Please check this out: https://www.easypeasyfinance.com/nfts-yay-or-nay-rishis-money-tip-35/