ETF (Exchange-Traded Fund)
Definition
A basket of stocks, bonds, or other assets bundled together and traded like a single stock. You buy one share of an ETF instead of buying 50 individual stocks. It's instant diversification at a low cost. ETFs trade throughout the day, unlike mutual funds which trade once daily.
Why It Matters
ETFs are one of the easiest ways to own diversified investments. A single ETF tracking the S&P 500 gives you exposure to 500 companies. Low fees (often 0.03-0.20% annually) mean more of your money grows instead of going to fund managers.
Example
Buy one share of VOO (Vanguard S&P 500 ETF) for ~$400-500 and you own a piece of Apple, Microsoft, Google, and 497 other companies. If the market returns 7% that year, your investment does too.
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