Investment basics: what is an ETF?

In the previous sections, we discussed what is a stock, dividend, growth and value stocks. But for many people, the actual buying of individual stocks can still be unnecessarily complicated (and as the numbers show, it really is). Thus, thanks to many public appearances by investors and marketing by big brands, many beginners have probably heard of so-called ETFs. One of the most passive, common and simplest ways to invest. But is everything as rosy as it is presented?

Investing can bring in money in many ways. But some are somewhat less time-consuming.

What is an ETF?

As always, I'll start with the English name to help you navigate foreign information sources. An ETF is an Exchange Traded Fund. In Czech, it is an Exchange Traded Fund.

An Exchange Traded Fund (ETF) is actually something like a stock, but it incorporates a larger number of "chunks" of other stocks. Sort of like a mutual fund, but publicly traded on an exchange. ETFs usually track an index (Typically like the S&P 500, so…