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BMO ETFs
An exchange traded fund is a package of investments that a professional has put together to fit a specific investing goal or interest—so they can be a great fit for new investors and DIY veterans alike.
If you want to think about it in really simple terms, an ETF is like a meal kit. How’s that? Well, if you’re someone who enjoys good food, but doesn’t necessarily consider yourself a good cook, you might pick up a meal kit, because it contains all of the pre-selected elements you need to prepare a tasty dinner.
ETFs may sound a bit like mutual funds—but there are important differences. First, ETFs are traded on stock exchanges, so you can buy or sell them through an online brokerage, if you prefer to DIY. And second, ETFs are generally way cheaper. That’s because rather than actively trying to beat the market, like mutual funds do, ETFs are designed to track a specific index. That requires a lot less of a professional fund manager’s time, and those savings are passed on to you, when you buy an ETF.
In this video, MoneySense’s Editor-in-Chief, Sandra Martin, explains how those fees compare, and more.
Watch: What are ETFs
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