What is the difference between an ETF and a mutual fund for a beginner?

Both are baskets of many investments you can buy in one purchase, and for a long-term index investor the practical differences are small. ETFs trade like stocks throughout the day at a live price, often have a low or $0 buy-in, and tend to be slightly more tax-efficient in a taxable account because of how they handle internal transactions. Mutual funds trade once a day after market close at that day's net asset value, sometimes carry minimum investments, and make automatic recurring investing and exact-dollar purchases easy. Inside a tax-advantaged account like a 401(k) or IRA, the tax-efficiency edge of ETFs barely matters, so pick whichever has the lowest expense ratio and is easiest to automate. The fund's cost and what it holds matter far more than the ETF-versus-mutual-fund wrapper. Explore building blocks with our portfolio builder at wealthserene.com/tools/portfolio-builder.