ETF and mutual funds are essential financial products to add in your portfolio diversification at a low cost. Both investments pool money from different investors and are either actively or passively managed. If mutual funds aim to beat the market, the aim of ETFs is often to follow the market. Though there are certain similarities with these investments, there are differences to consider when choosing the best product for you. Also, you must ensure that you understand your investment horizon, risk profile, and your goals before investing in ETF and mutual funds.