Newbie questions about ETFs

[quarck77]

Hi folks,
I am new to private investments and as I often hear about ETFs I am interested in what those are all about?

[feh]

http://lmgtfy.com/?q=exchange+traded+fund

[MattNY]

Nice link.

An ETF is most comparable to a mutual fund. They both offer you 1 vehicle to own a "basket" of company stocks. How that "basket" is defined will determine what the fund managers put in the basket. Such as all US Large Cap companies or only European Energy- there's so many nowadays.

If you google the difference between ETFs and Mutual Funds you'll find tons of articles. There's a trade-off in their structure, how you trade them, how you get in & out of them, etc.

Warren Buffet reportedly requested that his 90% of his inheritance for his wife go into 1 low fee ETF that follows the entire US stock market. So you can go as broad or specific as you want on your ETFs. And as people get more comfortable they can sometimes start investing in individual stocks too.


-Matt