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ETF

Exchange-Traded Fund - a tradable investment fund.

An ETF (Exchange-Traded Fund) is an investment fund that trades on stock exchanges like individual stocks, typically tracking an index, sector, or asset class. ETFs offer real-time pricing, intraday trading, lower expense ratios than most mutual funds, and tax efficiency. They have become the preferred investment vehicle for cost-conscious and tax-aware investors.

Example

A business owner buys shares of a total stock market ETF at $180/share in her SEP IRA, gaining broad market exposure with a 0.03% expense ratio and the ability to sell at any time during market hours.

Why It Matters for Your Business

ETFs combine the diversification of mutual funds with the flexibility of stocks, making them an excellent low-cost building block for business owner retirement accounts.

Related Terms

Mutual Fund

More Investing Terms

Dividend

A distribution of profits to shareholders.

Stock

A share of ownership in a company.

Bond

A debt security where the issuer owes the holder payment.

Mutual Fund

An investment vehicle pooling money from many investors.

Portfolio

A collection of investments held by an investor.

Related Financial Guides & Resources

Accounting 101 GuideFinancial Statements GuideTax Deductions GuideFinancial Reports Feature

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