When it comes to whether to buy an exchange-traded fund or a mutual fund, financial adviser Jeanette Brox likens it to setting up a will. While you could go it alone and save some money, she says, without professional guidance you might end up with diminishing returns. The traditional mutual funds offered by most financial institutions have come under pressure from ETFs as the low-cost, diversified instruments have emerged as an alternative.
Both kinds of investments take a broad approach to investing, bundling together different kinds of financial products including stocks, bonds and fixed-income securities in order to minimize risk.