Funds are a quick way to invest in a group of companies all at once. The funds you can invest through the stock market are Exchange Traded Funds (ETFs).
There are many different types of ETFs that focus on different sectors such as technology, energy, social impact and many others.
When you invest in an ETF, the value of your investment will depend on the value and performance of the group of companies that compose it.
What should I do then?
Most experts often recommend having a diversified portfolio to help reduce risk.
Diversification means investing in a variety of companies and sectors so that the performance of your portfolio is not tied to a single company or sector. In this way, if a company or sector is going through a bad time, it doesn’t harm the performance of your total portfolio.
ETFs are a great way to have instant diversification. For example, the Vanguard S&P 500 ETF (VOO) is a popular ETF that allows you to invest in the 500 largest US companies.
If you want more information about ETFs you can visit the SEC website here., or the FINRA website here. and here.
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Please note this information is presented for educational purposes only and isn’t intended as a recommendation, advice, or a solicitation to buy or sell a security.