What are funds (ETFs)?
Funds are a quick way to invest in a group of companies all at once. Funds you can invest in on the stock market are called Exchange Traded Funds or ETFs.
There are many different types of ETFs that focus on different sectors like clean energy, technology, or even social impact.
When you invest in an ETF, the value of your investment will depend on how the collective group of companies is doing.
So, what’s the strategy?
Most investment experts will tell you it’s important to have a diverse portfolio of investments to help reduce risk.
Diversification means investing in a variety of companies and sectors so that your portfolio’s performance is not tied to one company. This way, if one company or sector is struggling, it doesn’t hurt your entire portfolio.
ETFs are a great way to get instant diversification. For example, the Vanguard S&P 500 ETF (VOO) is a popularly held ETF which allows you to invest in the 500 largest US companies.
You can learn more about risks associated with investing in Exchange Traded Products.