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  • Writer's picture Leslie Lewis (she/her)

What is an ETF?

What the ETF? lol. An 'Exchange Traded Fund' or ETF for short, is just like a mutual fund, it's an investment that allows the purchaser to invest in many different securities at the same time, but instead of the price changing just once a day, it trades more like a stock, with the value varying with the market.

The first American ETF (an earlier version started in Canada) was created in 1993. It was (and is) an S&P 500 tracking fund, with the ticker SPDR, (pronounced 'Spider' ! ).

ETF's have many of the most important benefits of a mutual fund-- again, the ability to invest in many different companies at once. But ETFs have a couple of unique benefits over mutual funds:

  1. A full share of an ETF can often be bought for much less than what it costs to buy a mutual fund. Mutual funds often have minimums of $1000 or more, where one share of many ETFs can be bought for less than $100.

  2. ETF's are often less expensive than mutual funds, in terms of the 'expense ratio' or cost to the buyer. A typical mutual fund can have a cost of .25 to 1%, whereas ETFs can cost as low as 0%! (although there are fees in there somewhere. Everybody needs to get paid.)

There are other differences and comparisons between Mutual Funds and ETFs that I won't go into here, but for our purposes, these are the main distinctions.

The MGB Investing Starter Kit has an ETF as the core investment.

Have you been tracking any ETFs? Which ones? Let me know in the comments! And as always, thanks for reading this!

Quick Links:

Step 1 in the MGB Investing Starter Kit process is HERE

Step 2 is HERE --Keep a Digit Tally, like You Need A Budget!

Step 3 is HERE

What is Investing? is HERE

What is The MGB Investing Starter Kit? is HERE

Sign up for the waitlist to get an investment account with us HERE

To join for our next MGB Investing Starter Kit Workshop, sign up HERE

Mention of SPDR does not constitute a recommendation.

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