Index Funds vs. ETFs: Which Is Right for You?

Published: Feb 19, 2026 | Category: Investing

Both index funds and ETFs offer low-cost, diversified exposure to the market. But they have differences in how they trade and are managed.

Index Funds

These mutual funds track an index (like S&P 500). They are priced once a day after market close. Great for automatic investing and no intraday price fluctuations.

ETFs (Exchange-Traded Funds)

ETFs also track indexes but trade like stocks throughout the day. They often have lower expense ratios and are more tax-efficient.

Which to Choose?

If you want to set and forget, index funds are perfect. If you prefer flexibility and lower taxes, ETFs may be better. Many investors use both.