What are ETFs and The Benefits of Investing in Them

Investing in the stock market is an important part of building your portfolio. There are multiple options: mutual funds, ETFs, individual stocks, bonds, etc. This is all about ETFs (exchange-traded funds).

What are ETFs?

An exchange traded fund is a large collection of stocks, bonds, commodities, or assets that are bought and sold on a stock exchange.

Types of ETFs Available

– Market ETFs – Bond ETFs  – Sector and industry ETFs  – Commodity ETFs  – Style ETFs  – Foreign market ETFs  – Inverse ETF

How an ETF Works

ETFs are a collection of commodities, stocks, bonds, etc.  Shares of each are bundled together and weighted according to fund rules. Your investment is divided up based on this weight!

ETFs vs. Individual Stocks

ETFs carry less risk than stocks. Because an ETF is a mixed collection of stocks and bonds. If one or two don't do well, and then the rest of the fund buffers the loss.

ETFs vs. Mutual Funds

They are both low risk, have low brokerage fees and you can easily find options in both that allow you to invest at home and abroad.

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