You can think of an ETF as a basket of securities. Instead of buying individual stocks or bonds, an ETF allows you to own a stake in a fund that may hold many stocks, bonds, or other types of investments.
Depending on the ETF, it could hold hundreds of individual stocks or bonds. These stocks or bonds can reflect specific industries, indexes, or geographical locations.
An ETF’s diverse make up of stocks and bonds is another benefit. If one or two securities go down, the others in the “basket” could help hold its value.
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