What are Exchange Traded Funds (ETFs)?

Investing in the stock market can be an excellent way to build long term wealth. There are many different ways to invest, depending on your financial goals and risk tolerance.

Creating a diversified investment portfolio is one of the best ways to grow your money. Diversification helps you build wealth while lowering the risk of having all your eggs in one basket.

When deciding how to diversify your portfolio, you might consider Exchange Traded Funds (ETFs).

First introduced in 1993, they’re relatively new. Yet, ETFs have become a popular and useful investing tool for financial professionals and individuals alike.

Below we’ll cover the basics of Exchange Traded Funds (ETFs) to help you decide if they’re a valuable investment for you.

What are Exchange Traded Funds (ETFs)?

An Exchange Traded Fund (ETF) is a grouping of stocks, bonds, and other assets combined into one investment fund.

Each share of an ETF represents equal parts of the holdings within the fund.

ETF shares are bought and sold through a broker and most track stock market indexes. In this respect, they are much like mutual funds.