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ETF’s and Mutual Funds

ETF’s (Exchange Traded Fund)
Exchange traded funds, or ETFs as they are better known, combine some of the benefits of both common stocks and mutual funds. They trade like stocks and are listed on an exchange, yet they usually represent a major stock index, industry group, international country index, or commodity.
As defined on about.com
Mutual Fund:
A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.
As defined on about.com

When you want to start out in the stock market and you don’t have a large amount of capitol (cash) ETF’s & Mutual Funds are the way to go. The reason behind that is, just like in a earlier post we stated, that being diversified is one way to weather the highs and lows of the stock market.
You also don’t have to know too much about any one stock or even knowing a handful of them. ETF’s basically follow indexes like the S&P 500, mutual funds are controlled by a fund manager who will make the decision for you and the other investors in the fund. It would be wise though to do your research on that manager to see how he’s handled other funds in the past.

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