Volume 18: The Lockshield Letter
Oct 1, 2026
Episode 21: Stocks, Bonds, ETFs, Mutual Funds Explained
Types of Invesments Explained
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Episode Description
In this episode, we break down some of the most common investment types and explain the key differences between stocks, mutual funds, ETFs, and bonds. Understanding how these investments work is an important step toward building confidence as an investor and creating a portfolio that aligns with your financial goals and risk tolerance.
We start with stocks, which represent ownership in a company. Stocks can provide long-term growth potential through increases in share price and dividend payments, but they also come with risk. We discuss the difference between systematic risk, which impacts the overall market, and unsystematic risk, which is tied to a specific company or industry. Knowing the distinction can help investors better understand diversification and how risk is managed within a portfolio.
We also compare mutual funds and ETFs, two investment vehicles that allow investors to own a basket of investments rather than a single stock. Mutual funds are priced once per day based on their net asset value (NAV), while ETFs, or exchange traded funds, trade throughout the day on a stock exchange just like individual stocks. Although they share many similarities, the way they trade and are priced can create different advantages depending on an investor’s goals and preferences. By understanding the basics of each investment type, investors can make more informed decisions about how to structure their portfolios over time.
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