can somebody explain what the difference is between a ETF and a stock.?
the simplest way you can explain it would be great. ive looked up both meaning but they never compare the two. whats the ups and downs of both?
- 1 decade agoFavorite Answer
An ETF is a set of stocks that focus on a particular sector of the stock market or that represent a particular area of the stock market. ETF's are traded just like stock.
Mutual Funds are a portfolio of stocks or bonds that are designed to achieve a predetermined goal with a predetermined amount of risk. They are traded differently than stock and have other rules depending on the fund.
A stock is a share in a companies market value. Multiply outstanding shares by share price equals market value. Some companies pay dividends to shareholders, some don't.
All three of these vehicles of investing go up and down base on their individual performance and the performance of the overall market.
Market performance is affected by the global economy, the national economy, political news, the weather, who makes the playoffs, the price of baloons in disneyland, and whether or not the goat is in heat.
- Gir-eenLv 41 decade ago
you buy them the same way, but an ETF is more like a mutual fund traded as a stock.
i'll give a you a pro/con for each:
ETF - +diversification / -trading and management fees
Stock - +focused investment w/high risk/reward / -not diversified
the real question to ask is the difference between an ETF and a mutual fund.Source(s): http://www.fool.com/etf/etf02.htm
- Anonymous1 decade ago
A stock is shares of ownership in one company.
An Exchange Traded Fund is ownership of all the companies in the fund bundled together.
- 1 decade ago
In simple terms
Stocks are shares traded in stock market.
ETF (Exchange Traded Funds) are like Mutual funds which are traded an stock exchanges.