What's going on all you cool cats and kittens i'm matt, and in this video i will be explaining one of the most important asset classes in the stock market etfs. If you're new to trading this video will be perfect for you, i will be explaining what they are, why they're so popular but, most importantly, the main ones. You should be aware of. If you're interested in content related to financial education subscribe to the channel, i put out new videos every week.

If there's something specific you want me to cover, don't be shy. Reach out to me in the comments below i know, the technical definitions of financial terms can be pretty boring so i'll make this quick etf stands for exchange traded fund and you can best think of them as a basket of stocks. Etfs trade like a normal stock, but they don't represent just one company. Instead, they represent the overall movement in a group of companies, for example, the dow is a stock market index that measures the performance of 30 large u.s companies.

Dia is an etf which you can buy and sell that tracks the dow. If, for whatever reason you want to own stock in these 30 companies, you could buy each one individually or you could simply buy dia. There are many technical specifications that define what etfs are and aren't, but i find it easiest to think of them as a basket of stocks over the past few decades. They have exploded in popularity because many traders and investors like having the diverse exposure in a sense etfs lessen the risk involved in owning one specific stock.

Now that you have a better understanding about what etfs are, i want to share a few of the major ones. These are important to know because they often represent the overall health and direction of the stock market. Let's start off with an etf you've, most likely heard of spy or spy. This etf tracks, the s p 500, which is an index of 500 of the largest companies in the u.s, because it includes many notable and diverse companies.

It's commonly considered to be a good depiction of the current market, voo or vu is extremely similar to the spy vue is an etf managed by the mutual fund, giant vanguard, and it also tracks the s p. 500, when comparing vu and spy out of the 500 companies being watched in each there's, only a few differences you can expect. Essentially the same returns from both next on the list is iwm. This etf represents the russell 2000, which is an index of 2000 small cap stocks like spy or vu.

Iwm can be considered to be indicative of the overall market, but it has a much stronger emphasis on smaller companies. The vanguard equivalent of iwm is vtwo once again out of the 2000 stocks being watched, not many differ between the two. The nasdaq 100 is represented by the etf qqq, which is commonly referred to as the qs. This index tracks 100 of the largest companies and has an emphasis on the technology and consumer service sectors.

The technology sector has seen incredible growth over the past couple decades, which has made the qs a fan favorite. Now that we covered the major indices, let's switch gears to a commodity etf gld allows you to invest in gold without physically buying it. This is important to know because gold is used as a market hedge. All this means is that investors move their money into gold when they think the market's going to decline.

This increase in demand causes the price of gold and thus gld to rise. If you personally think that there's a time of economic turmoil ahead, you might want to consider buying this gold-based etf if you're interested in dividends you're going to love this next etf, sc schd is an etf managed by charles schwab and is composed of roughly 100 of The largest dividend-paying stocks, if you're looking to generate passive income from your portfolio, schd, is an excellent option. Vanguard's vig is also a dividend-paying etf, but it holds many more companies about 180. because of this vig is considered to be lower risk and has a smaller dividend yield when compared to schd.

Both are great options, but the better one depends on your specific investment goals. Now that we've discussed some of the most well-known etfs i want to share one of my personal favorites. A orkw is branded as a next generation internet etf. It tracks companies that work on things such as artificial intelligence, big data and cloud computing.

It's one of my favorites because it includes what i consider to be some of the most innovative companies such as tesla, facebook and roku. There is an etf for pretty much anything. You can imagine. Market indices, commodities, entire business sectors - you name it etfs, allow you to invest in or trade a specific area of the market with less risk, because you're dealing with a group of stocks rather than a specific one.

If you're interested in investing and don't have a trading account, both robinhood and weibull are great ones to get started with the sign up. Links are in the description below. When you sign up for ether, you will be rewarded with a free stock. It's not often in the world of trading that you get something for free take advantage of it while it lasts thanks for watching.

If you found value in this video, let me know by hitting the like button. If you enjoy this type of content subscribe to the channel best of luck in the markets, i hope you have a great day. You.