The Smart Investors

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ETFs is a mixture of investments. An ETF (Exchange-Traded Fund) lets you buy hundreds of stocks, bonds, or commodities in one purchase.

Imagine it as a music mixtape with all your favorite songs. In this case, it's your favourite investment or picture it has a buffet where you get a little bit of everything (stocks, gold, real estate).

For instance SPDR S&P 500 ETF (SPY) includes all 500 big U.S. companies (Apple, Amazon, Microsoft).

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One way to manage risk is by holding a portfolio of investments. However, it is usually expensive for an individual to buy those securities at once. ETFs is professionally managed; it is designed to track the performance of equities or bonds by holding a portfolio that is representative of the constituent securities of the tracked index, e.g. S&P 500. By investing in ETFs, an individual investor is able to own part of a portfolio of investments, thereby diversifying his risk.