Which is Better a Stock or an ETF? Performance Wise


A stock has more risk than an ETF ( exchange traded fund ). An ETF tracks an index. An index has many stocks. The index gets
the average of all stocks that belong to it. So some of these stocks go up. Others go down and others trade sideways.
You always get the average of all stocks inside this index. So the ETF just represents the index.
For example, you can not buy an index, but you can buy an ETF that tracks it. For example, the ETF DIA tracks The Dow Jones
Industrial Average index. Now let say you buy only one stock from the index. What will happen? This stock will have three
options. Either it will perform better than the ETF. Or it will do the same as the ETF. Or it will do worse than the ETF.
So in the future if you want to buy a stock or an ETF, you should think about all these possibilities. But understand that
an ETF is good for those who dont want to take more risk.
Any questions, just write back to istockmoney@yahoo.com
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