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Let’s check out some major differences between Index funds and ETFs

The way they’re bought and sold

The major difference between both of them is the way they are traded, ETFs can be traded whenever you want in a day just like stocks but this is not as such with funds as you can buy and sell only for the price which is set at the end of the trading day. People who are considered to be long- term investors don't find it much concerning as for them buying or selling at noon or 4 p.m. will not have a huge impact on the value of the investment which is the effort of the last 20 years. But in case you are interested in intraday trading, ETFs would be more suitable. You can trade them like stocks, yet an investor can still reap the advantages of diversification.

The common thing that can be found here is that the ETFs and index funds are appropriate for long-term investment, however, with ETFs Investors are provided with the option to trade through the day. Even if they are traded like stocks, ETFs are generally a bit risky option in the long term as compared to buying and selling stocks of individual companies.

The minimum investment required

Generally, in most of the cases, ETFs will have a lower minimum investment as compared to the index funds. Usually, all it takes to invest in an ETF is the amount that you need to buy a single one share as well as some brokers. But when it comes to index funds, minimums are often put in a place by brokers that might be a bit higher than a regular share price. For example, some have the least investment of $3,000 for most of its index funds and on the other hand, some come with a minimum initial investment of $2,500.

If you want to find online brokers that don't have minimum initial investments, you can find it easily. In case you don't have much money to invest, you have two options: an ETF having a share price that you can easily afford and an index fund having no minimum investment amount. Also, you have to ensure that your brokerage isn't imposing an account minimum that you can’t meet, though many brokers have lowered their minimums to zero.

It is really important to be aware of the business and finance news which can help you to know about different aspects of the market. In fact, these were just some differences, as the list goes on and on. If you like to know more about index funds and ETFs then you should go online and check more about them. There are not only differences but similarities also that you should learn about.