ETFs Let You Own the Whole Market for the Cost of One Stock
Bottom line
A single ETF can hold 500 companies at once. and you can buy one share for under $100.
In this guide
What it is
An ETF (exchange traded fund) is a single investment you buy that automatically holds dozens or hundreds of stocks or bonds inside it, like a basket you purchase all at once.
By the numbers
If you invest $200 in an ETF that tracks the 500 largest US companies, you instantly own a tiny slice of all 500. instead of needing thousands of dollars to buy each stock individually.
How it works
You buy a share of the ETF through a brokerage account (an account designed for buying investments) the same way you would buy a single stock. the price updates throughout the day, and your money is spread across every holding inside it automatically.
The catch
ETFs and mutual funds both hold many investments, but mutual funds only let you buy or sell once per day at a price set after the market closes. ETFs trade live all day like stocks, which sounds better but tempts people to buy and sell too often, which kills long term returns.
What to check next
Look up the expense ratio (annual fee) on any fund you currently own. if it is above 0.20%, find out if a lower cost ETF option exists in that same account.
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