The stock market has made more people wealthy than any other method of investing. To get in on this wealth creation vehicle, beginning investors typically try their hand at investing in individual stocks, but don’t think much of investing into baskets of stocks to reduce their risk. Investing in a basket of stocks is an average investor’s best bet to see consistent returns. An investment of this type is called an ETF.
ETF stands for Exchange Traded Fund. When you own an ETF, you don’t own the stocks within the ETF. Instead, you own the ETF itself. There’s a fund provider that owns the underlying assets in the ETF and ensures that they’re allocated properly so the investor gets the best return. ETFs can mirror markets and even industries.
Listening to the news and experienced investors, you’ll hear a lot of talk about “beating the market.” This is typically in reference to beating the returns of the S&P 500 and the Dow Jones Industrial Average. With ETF’s, instead of beating the market, you have the opportunity to invest into an ETF that mirrors the S&P 500 (“the market”). Investing into an asset like this, you can expect to see a 5%-8% return. This type of investment vehicle provides a much more stress-free way to investing your money and growing your wealth.
https://www.nerdwallet.com/article/investing/what-is-an-etf
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