Stocks are pieces of a company. Imagine a company is a large pizza that you can cut into a lot of small pieces. Each small piece represents a part of the company that anyone can buy. That’s a stock.
But how does it work exactly?
Funds are an easy way to invest in a pool of different companies all at once. Exchange Traded Funds (ETFs) are funds that you can buy shares of in the stock market. Different ETFs have different investment strategies. There are ETFs that focus on different sectors like technology, finance or even social impact. When investing in an ETF, the value of your investment will depend on a variety of factors including how the group of companies is doing.
One well known ETF is SPDR, which tracks the US S&P 500 index.
It is one of the largest ETFs with assets of more than US$250 billion.
Investors should consider the investment objectives, risks, and charges and expenses of an Exchange Traded Fund ("ETF") carefully before investing. Before investing in any ETF, you should consider its investment objective, risks, charges and expenses. Contact us at email@example.com for a prospectus containing this information. Read it carefully.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund. Investment returns will fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost. ETFs are subject to risks similar to those of stocks. Some specialized exchange-traded funds can be subject to additional market risks. Leveraged and inverse exchange-traded products are not designed for buy and hold investors or investors who do not intend to manage their investment on a daily basis. These products are for sophisticated investors who understand their risks (including the effect of daily compounding of leveraged investment results), and who intend to actively monitor and manage their investments on a daily basis.
A closed-end fund is like a pool of money from thousands of investors that is typically actively managed by an investment advisor. That way, if you are not an investment specialist, you can know your investment is in the hands of a professional who can manage the money for you.
You can buy shares of a specific closed-end fund on an exchange, because they are traded in the market just like stocks are.
An American Depositary Receipt (ADR) is a way of investing in foreign companies that trade on U.S. markets.
ADRs give you access to companies from around the world that list their stocks in the U.S. to get access to more liquidity and more investors in the biggest stock market in the world. Alibaba (China), Nokia (Finland) and even Petrobras (Brazil) are all foreign companies traded in the U.S. stock market.
A REIT is a company that owns, and in some cases operates, income-producing real estate in the U.S. and worldwide. A REIT portfolio can include many different types of buildings, such as commercial real estate, shopping centers, hotels, among others.
Just like stocks, you can trade shares of REITs in your app and own a specific real estate sector within your investment portfolio - e.g. US residential real estate.