What is an ETF?

When you invest in stocks, do you repeat this process every time?

·        Analyzing whether each stock is worth buying…

·        Dealing with uncertainty about when is the best time to trade…

·        Repeating this process again and again and again…

·        Until we build a diversified portfolio.

Of course, this might be considered the "correct" investment strategy, but it can be time-consuming and exhausting.

What if you're short on time or lack expertise? Does that mean you can't invest? Not at all!

In today's video, we'll introduce you to an investment tool ETFs which may help you save time and effort while investing.

We've spent countless hours researching and gathering information to bring you sharper insights in just 10 minutes.

Let's get started.

Just in case someone is still unfamiliar with the concept of an ETF, let's quickly explain.

An ETF (Exchange Traded Fund) invests in a variety of assets like stocks, bonds, and commodities.

·        Unlike traditional mutual funds, ETFs can be traded on an exchange just like stocks, which means their prices are readily visible and trades can be executed quickly.

·        However, this characteristic also means that ETFs can be more volatile than average mutual funds.

It's important to note that ETFs don't always track their underlying index perfectly due to 'tracking errors.'These occur when an ETF's performance deviates from its underlying index or asset due to various factors such as trading rules, fee structure, and margins. In general, higher fees may result in a higher tracking error.

While ETF types may differ across markets, we'll focus mainly on U.S. stock market ETFs in this discussion. The U.S. stock market is one of the most developed and mature markets, with a vast selection of ETFs available and active trading that makes it easier for investors to choose between them.