Index Fund vs ETF: Which Should You Choose?
Both let you own the whole market at low cost. The differences that actually matter for a beginner: minimums, how you buy, and what happens at tax time. Enter your starting amount to see which fits — the comparison uses real, current fund data.
Result
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Side-by-side
| Index mutual fund | ETF | |
|---|---|---|
| How you buy | Dollar amounts (e.g. exactly $100) | Whole shares |
| Typical minimum | $0 at Fidelity (FXAIX); $3,000 at Vanguard (VFIAX) | Price of one share |
| Expense ratio example | 0.015% (FXAIX) | 0.03% (VOO) |
| Can you buy partial shares? | Yes, always | Depends on broker |
| Tax efficiency | Good; capital gains may distribute | Generally more tax-efficient |
| Auto-invest | Easy (dollar amounts) | Harder (whole shares) |
Figures verified August 2026: FXAIX 0.015% (Fidelity), VOO 0.03% (Vanguard), VFIAX $3,000 minimum (Vanguard). Sources listed on the methodology page.
Education, not advice: This tool is for education only and is not personalized financial advice. Investing involves risk, including loss of principal. Past performance does not guarantee future results.