A fund that holds many investments and trades like a single stock.
The meaning
A bundle of investments you can buy as one thing. Instead of buying 50 individual stocks, you buy one ETF that holds all 50 at once. You get variety and diversification automatically, usually for a low cost. ETFs are bought and sold the same way individual stocks are.
Example
$100You invest
1 ETFOne purchase
1,000sOf companies owned
One purchase spreads your money across thousands of companies.Walk through the numbers
One share of a total market ETF can hold slices of thousands of companies. With $100 and fractional shares, you can own a piece of all of them at once.
Why it matters
ETFs make variety cheap and easy. They are the building blocks of most beginner plans.
For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.
