Back to School Basics: ETFs

What are ETFs and how are they like hockey cards? Find out with Nathan Brown and Ian Tam.

Ruth Saldanha 29 August, 2023 | 3:02PM
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You can watch the entire series here.

Nathan Brown: Hello, my name is Nathan Brown, and today, I'm with Ian Tam. My mom works at Morningstar, and she is always talking about ETFs.

Ian, what is an ETF?

Ian Tam: Hey, Nathan. That's a great question. So, an ETF stands for an exchange-traded fund. Now, I understand you're into hockey and baseball, and you just told me you have some hockey cards, right?

Brown: Yeah.

Tam: So, think about an ETF as kind of like not just one hockey card, but like a whole collection of hockey cards. And sometimes those hockey cards, if they're good players and they're good cards, they might be worth more in the future, and you can trade them. So, an ETF is basically like a collection of hockey cards that you can trade with other people on what we call a market. So, you can trade them anytime you want. And the hope is that you buy an ETF for cheaper than when you sell it. That way, you make a bit of money.

Brown: Ian, what ETF should I buy? How many ETFs are there?

Tam: Yeah, that's a great question. So, in Canada, there's about 1,300 ETFs, so quite a few. All around the world there's actually about 24,000 ETFs according to Morningstar. In terms of which ETFs you should buy, there's a couple of things you want to keep in mind. So, the first thing is, what's your goal. Maybe you're saving up for something big like a new bike or maybe a new car. Who knows. So, depending on what your goal is, there might be a different ETF for you to buy and hold on to. The second thing you want to think about is how much it costs to buy that ETF. You don't want to overpay. And then, there's a special feature with all investments, ETFs and mutual funds, where they charge you a fee for you to be invested. And that fee over time can actually take away from how much money you have at the end. So, you want to keep in mind how much the fees are as well. And then, finally, you also want to make sure you ask for help. So, if you don't know a lot about ETFs, you can certainly ask your mom and she will tell you all about them. Or you can ask a friend as well.

Brown: Thank you, Ian. I'm Nathan for Morningstar.

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Ruth Saldanha

Ruth Saldanha  is Editorial Manager at Follow her on Twitter @KarishmaRuth.


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