ETFs vs. Mutual Funds: Which One Fits Your Investment Goals?
Choosing the right investment vehicle can feel overwhelming when both ETFs and mutual funds appear to offer something similar: access to diversified portfolios through a single purchase. But they don’t work the same way — and understanding those differences can help you decide which approach fits your goals, preferences, and investing style.
And while Inter gives you access to a wide range of ETFs, it’s still useful to understand how they compare to traditional mutual funds so you can make informed decisions.
“The Investment Guide by Inter: Explore All the Ways to Invest in the U.S. Market.”
Understanding the Basics
Before comparing them, it helps to look at what ETFs and mutual funds have in common:
Both pool money from many investors to buy a diversified mix of assets such as stocks, bonds, or other securities. From there, the experience and mechanics differ.
What Are ETFs?
Exchange-Traded Funds (ETFs) trade on stock exchanges just like individual stocks. Their prices move throughout the day, and you can buy or sell them at market value whenever the market is open. Many ETFs track specific indexes, making them transparent, cost-efficient, and easy to follow.
What Are Mutual Funds?
Mutual funds do nottrade during the day. Instead, they are priced once after the market closes, based on their Net Asset Value (NAV). Orders placed during the day are all executed at that single end-of-day price. These products are often actively managed and may involve higher fees or minimum investment requirements.
This is a key detail to keep in mind if you’re just beginning to invest: you can monitor an ETF’s price and choose exactly when to buy or sell — but with mutual funds, you won’t know the final price until later.
Key Differences at a Glance
Why ETFs Are a Flexible Option for Modern Investors
ETFs generally have lower expense ratios compared to actively managed mutual funds, though costs can vary by product and provider.
Here’s why ETFs stand out:
● ETFs provide exposure to multiple assets, which may help spread risk but does not eliminate it.
● ETFs generally have lower expense ratios compared to actively managed mutual funds, though costs may vary.
● Real-time pricing and full trading flexibility
ETFs trade on exchanges throughout the day, just like stocks. You always see the market price, and you decide when to buy or sell — no end-of-day pricing surprises like with mutual funds.
● Start small with fractional shares
You don’t need a large upfront investment. For example, with Inter, you can buy fractional shares and start with just a few dollars.
● Adaptable for different strategies
ETFs work for many kinds of investors. You can use them to build a long-term, diversified portfolio or to focus on specific ideas you’re interested in, like a sector or theme.
This combination of flexibility, transparency, and accessibility is exactly what makes ETFs so popular among today’s investors.
Easy Invest vs. Traditional Investing: Key Advantages Explained
Common Types of ETFs
ETFs cover almost every corner of the market, allowing you to customize your portfolio based on your goals, interests, or risk tolerance. Here are some of the most common categories you’ll see:
Index ETFs
These track major indexes like the S&P 500 or Nasdaq-100. They’re known for their simplicity, diversification, and low costs — ideal for long-term, buy-and-hold strategies.
Sector ETFs
Want targeted exposure? Sector ETFs focus on specific industries such as technology, healthcare, energy, or financials. They’re useful when you have a particular view on a segment of the market.
Bond ETFs
These provide access to fixed-income investments, ranging from government bonds to corporate or high-yield options. They can help balance a portfolio with more stability or predictable income.
Dividend ETFs
Built around companies that consistently pay dividends, these ETFs can offer a potential income stream while still providing diversification.
How to Invest in ETFs Through Inter
Inter offers tools that help you approach ETF investing in a transparent and accessible way.
With Inter, you can:
● Start with as little as $5
No large minimums — just begin at your own pace.
● Access U.S.-listed ETFs with real-time data
See prices as they move, read key details, and invest at the moment that feels right.
● Buy fractional shares
You don’t need the full price of a share — invest the exact amount you want.
● Track everything easily
The app gives you an intuitive dashboard where you can monitor performance, diversify your holdings, and stay on top of your goals.
Conclusion
There’s no single “best” investment product for everyone. Mutual funds can work well for people who prefer a traditional structure with end-of-day pricing or actively managed strategies.
ETFs may provide flexibility, lower fees, and real-time transparency; however, whether they are appropriate depends on individual circumstances and objectives.
If you would like to learn more, you can view available U.S.-listed ETFs through the Inter app and check for upcoming mutual fund options.
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Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results.
Fees and commissions may apply. For the full fee schedule, please visit:
For more information, review the following disclosures from Inter&Co Securities LLC:
- Form CRS
- Regulation Best Interest Disclosure
Securities brokerage services provided by Inter&Co Securities LLC (“Inter Securities”), member of FINRA/SIPC. clearing through DriveWealth, LLC and Pershing LLC. Inter Securities is a wholly owned subsidiary of Inter US Holding Inc.
Inter Securities provides United States securities brokerage services to customers of Inter Distribuidora de Títulos e Valores Mobiliários Ltda. (“Inter DTVM”), a Brazilian securities dealer authorized by the Brazilian Securities Commission and the Central Bank of Brazil. As per CVM Guidance Opinion nº 33, dated 09.30.2005, Inter Securities entered into an agreement with Inter DTVM through which Inter DTVM intermediates the services of Inter Securities to investors resident, domiciled, or incorporated in Brazil (“Brazil Investors”). The CVM jurisdiction is limited to the Brazilian territory and its supervisory power is limited to Inter DTVM. Inter DTVM’s services should not be understood as an offering of securities directed to Brazil Investors. Brokerage services for assets listed in the United States are provided exclusively through Inter Securities, without interference from Inter DTVM.
