ETF

An ETF, or exchange-traded fund, pools money from many investors and holds a portfolio of stocks or bonds. One share represents a slice of the fund's holdings. Its shares are listed on a stock exchange and trade between investors throughout the day, so the price moves during trading hours. A mutual fund, bought from the fund company, is priced once a day, after the market closes.

You usually buy shares through a brokerage account, an account that can place orders on an exchange. If shares trade at $50, $1,000 buys 20 shares. The fund charges an expense ratio, an annual fee taken from its assets and disclosed in its prospectus, the legal document describing the fund. No government agency insures an ETF or guarantees its value: when the investments it holds lose value, your share price generally falls too.