Chapter 2

What the Heck Is an ETF, Anyway?

In This Chapter

arrow Distinguishing what makes ETFs unique

arrow Appreciating ETFs’ special attributes

arrow Understanding that ETFs aren’t perfect

arrow Taking a look at who is making the most use of ETFs, and how

arrow Asking if ETFs are for you

Banking your retirement on stocks is risky enough; banking your retirement on any individual stock, or even a handful of stocks, is Evil Knievel-jumping-the-Snake-River investing. Banking on individual bonds is typically less risky (maybe Evil Knievel jumping a creek), but the same general principle holds. There is safety in numbers. That’s why teenage boys and girls huddle together in corners at school dances. That’s why gnus graze in groups. That’s why smart stock and bond investors grab onto ETFs.

In this chapter, I explain not only the safety features of ETFs but also the ways in which they differ from their cousins, mutual funds. By the time you’re done with this chapter, you should have a pretty good idea of what ETFs ...

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