ETF (exchange-traded fund)
A fund that trades on an exchange like a stock.
An ETF is a basket of investments, often an entire index, packaged into a single share you can buy and sell during market hours.
How it works
Each ETF share represents a slice of everything the fund holds. A broad stock market ETF might hold thousands of companies. Prices move all day as people trade, just like a stock.
Many brokers let you buy fractional ETF shares and set up automatic recurring buys, which makes ETFs a natural fit for dollar-cost averaging.
What to look at
Check what the ETF holds, its expense ratio and how widely it is traded. Broad, low-cost index ETFs are the usual building block for long-term investors.