An ETF holds a basket of investments — often tracking an index — but trades on a stock exchange at fluctuating prices during market hours, unlike a mutual fund that prices once a day. ETFs are usually low-cost and tend to be slightly more tax-efficient than equivalent index mutual funds in taxable accounts.
A total-market ETF can be bought or sold any time the market is open, like a single share.
Both index funds and ETFs track market indexes. But they work differently in ways that matter for taxes, trading, and minimum investment amounts.
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