Chapter 11. Finding and Buying Exchange-Traded Funds

In This Chapter

  • Finding out how exchange-traded funds (ETFs) differ from mutual funds

  • Locating ETFs that fit your needs using online tools

  • Understanding how ETFs are bought and sold online

  • Working with Web sites that recommend premade portfolios using ETFs

  • Uncovering ways to research exchange-traded funds

Arelatively new type of fund called an exchange-traded fund, or ETF, is exploding with popularity. Like index mutual funds, ETFs invest in baskets of stocks tied to a stock market index. But ETFs differ from mutual funds in that they trade during the day just like an individual stock. This important difference gives ETFs an edge over mutual funds for some investors. ETFs have lured $531 billion of investors' cash since they started to catch on in the early 1990s. In this chapter, I explain how online tools can maximize your success investing in mutual funds and ETFs. I help you use online tools to pick the right investments for you and show you how to set up an account to buy or sell the funds.

Getting to Know the Newcomers: ETFs

Exchange-traded funds have been one of the biggest developments in the world of finance since banks started giving away free toasters to customers.

ETFs are baskets of stocks, much like mutual funds, that trade like stocks. You can buy and sell them using your online broker just like you would with other stocks. All ETFs have trading symbols and qualify for the low commission rates from online brokers. Several ...

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