What are ETFs?
ETFs, or Exchange Traded funds are a collection of different types of stocks and financial derivatives that can be directly bought as a single unique share. In simple terms, An ETF is a type of share that has various type of shares in it. Think of ETF as a middleman that helps the investor to invest in certain sectors that it feels like are good to have in a portfolio. The following diagram explains how does an ETF work practically(In simple terms). Are ETFs Risky? Yes, everything has some type of risk associated with it. ETFs can also be risky depending on what constitutes them. If the ETF consists of some high-performance and dividend shares, then surely it would reap positive results for the investor. Think of ETF as a fruit basket (what they are often referred to as) and you are a hungry human who wants it to gain some level from them. If the basket consists of fresh and tasty fruits, you will be more satisfied. However, if the fruits are rotten and bitter, they will make you ...