What is an exchange traded fund? What is an ETF? Why are ETFs so popular? Well this post is for you.
They’re important to understand – not because you should necessarily buy one but because they’re a fundamental part of the jargon.
Here’s a simple explainer.
What is an exchange traded fund and where do I find one?
Well unlike exotic species, an ETF is a type of financial product, specifically an investment product. They’ve been pretty much everywhere lately as everyone’s investing darling.
An ETF is a bundle of stocks. Think of it like a bucket for stocks.
You own tens, hundreds or even thousands of small shares in companies within the ETF.
Why is this beneficial?
Well, the idea is that your risk is spread. Instead of having all chips on black, you have thousands of chips on thousands of different companies.
Where can I research more about ETFs?
This is a great first question! ETF ‘providers’ are companies that create ETFs for you to invest in. They then list these on the stock exchange (hence the ‘exchange traded’ in the ETF name). If you want more information about ETFs, this article with ASIC’s Moneysmart is quite good.
Now the ETFs available on the stock exchange in your country will differ but here are a few names to start with:
Where can I buy ETFs?
As I’ve said, ETFs are traded on the stock exchange. The good news means is that they are relatively easy to buy.
You just need to know the name of the ETF and sign up with any old broker!
Now you can sign up to any broker, but if you’ve read my article about pearler and you want to check them out, you can do so here with my affiliate link and get your first brokerage fee on me.
What does domicile mean? What does NAV mean?
Never fear, I’ve got you. Or, in any case, I’ve already made a post on instagram about it.
Anything else I need to know?
Sure! Plenty! But you’ll learn it in time. Finance can be really overwhelming at first – just start slow and go from there.