Mutual Funds and ETFs Help New Investors Get a Head Start on the Stock Market

When you’re new to investing, finding that first stock to buy can be really difficult. Your friends might tell you to invest in Apple because “they’re never wrong.” Your family might try to steer you in the direction of a value stock, or something they think is undervalued but might be big in the future. Online investors have millions of opinions on thousands of stocks, and you won’t know where to start.

That is why mutual funds and ETFs exist. These two ways to invest take the pain out of picking stocks by doing it for you. Yet that is where their similarities end. They are two very different ways of investing, and knowing the difference could save money. Luckily, The Wall Street Journal created this brilliant cartoon on how to tell the two apart — and how to get started investing in them today.

If you’re more comfortable doing things your way, then investing in ETFs might be a good idea. If you feel better giving someone else your money and letting them take care of things, then mutual funds are best bet. Both methods are guaranteed to give you a diverse portfolio, letting you invest in more companies than you could with just your resources.

Share this video with your friends below, and consider picking up SPY while it’s still down.