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Is an ETF a stock?

An ETF isn’t exactly a stock—it’s like a collection of them. Think of an ETF like a basket of stocks and/or other investments. When you buy the basket, you get everything it contains. You don’t have to choose which individual investments go into the basket, you can just get them all at once. In investment terms, an ETF is a pool of stocks and/or other investments that are available for purchase on the market.

ETFs and stocks are traded very similarly. You can buy ETFs on exchanges like the New York Stock Exchange or the NASDAQ with the help of a broker.

People like to invest in ETFs in addition to—or instead of—individual stocks because it’s an easy way to diversify your portfolio without being too time-consuming.

If you’d like to take a deeper dive into ETFs, check out this Stash Learn article.

 

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