Investing Basics

ETFs: What Are They?

Let's break down one of the most popular investment vehicles out there: the ETF, or Exchange Traded Fund. Think of an ETF as a basket of stocks, bonds, or other assets that trades on a stock exchange just like a regular stock. SPY, for example, is an ETF that tracks the S&P 500. When you buy one share of SPY, you're essentially getting a tiny piece of all 500 companies in the index. That's instant diversification. ETFs are popular because they're low cost, tax efficient, and easy to trade. You c