This video provides a basic explanation of what an ETF or an Exchange Traded Fund is.

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What exactly is an ETF. In simple terms, an ETF (exchange traded fund) is a "basket of stocks." An ETF contains multiple companies, like Microsoft, Apple, Amazon, and Walmart.

Furthermore, an ETF can be bought and sold on an exchange like an individual stock.
An ETF can also be different types of bonds or commodities such as gold or silver or even crypto currency.

They are passively managed and provide a lower expense cost compared to an active managed account.

Just like stocks, they are traded daily on their respective exchange. There are roughly 6,000 different ETFS on over 60 exchanges across the world with trillions in overall assets.

ETF’s are becoming more popular with small and large investors alike because it allows you to lower your risk while being more diversified with your investments.

Here is how it works. Let’s say you have $1,000.00 to invest. You don’t want to risk putting all you money into an individual stock such as Amazon. So, you buy $1,000.00 worth of a SP 500 ETF like Vanguard’s VOO.

Inside that ETF is a wide variety of individual stocks like Apple, Tesla, Wal-Mart, Home Depot and Costco, and Netflix that includes multiple sectors from technology, and healthcare to finance.
It allows you to own a small percentage of individual stocks or companies instead of risking investing in one company.

Another big attraction to ETF’s is they rarely incur annual capital gains tax. You typically only pay taxes on your profit, if you sell your shares.

As of October 2023, the ETF Global market was valued at over 13 trillion dollars. Which is safe to say, this style of investing isn’t going anywhere anytime soon.

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