An ETF or Exchange Traded Fund, is a collection of single stocks (such as $NVDA$MCD$META$COKE etc). When you invest in an etf, you invest a little bit of your money into each company the ETF holds based off its weighting. For example, if you invest $1000 into an ETF that has a weighting as follows: 10% - $NVDA 9% -$AAPL 8% -$AMZN Then your putting $100 in Nvidia $90 in Apple $80 in Amazon There are two main types of ETFs: Actively managed and passive Actively managed ETFs usually aim to outperform a certain benchmark, usually the s&p500 (top 500 companies in the US by market cap) and usually are in the form of sector ETFs (an ETF that consists of stocks from a certain sector or theme. Ex: Semiconductor related stocks: $SMH$SOXX). These ETFs usually have higher fees than passive ETFs because they, in theory, do better than passive ETFs (not usually the case). Passive ETFs are ETFs that just track an index and usually have lower fees. An example is $SPY$FXAIX$VOO that all track the S&P 500 or $QQQM that tracks the nasdaq. For beginner investors, ETFs are good because they are a simple way to invest your money and usually outperform stock pickers and active ETFs. Some ETFs I would recommend: $VTI - full US stock market $VOO - top 500ish companies in the US by market cap $QQQ - tracks the Nasdaq tech index $VXUS- International stock exposure $SCHD - dividend ETF Hope this helps!
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Stocks
@stocksetfsbonds · 16d
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