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Jun 15, 2018

The Simple Reason Many Young Investors Love ETFs

By Stash Team

ETFs, or exchange-traded funds, are becoming more and more popular with millennial investors.

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Buying shares in the latest hot tech company or stock in a marijuana company, such as Aurora Cannabis, may sound like the sexiest investments you can make, but many investors–millennial investors, especially–are rushing toward another vehicle: ETFs.

Dig deeper: Now That’s What I Call an Investment! ETFs explained

What’s an ETF?

ETFs, or exchange-traded funds, are a basket of investments bundled into a fund and sold on an exchange. And they’re becoming the investment of choice for more and more people, according to a recent study:

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Millennials plan to increase their ETF investment
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ETF's are primary investment vehicle for millennials
  • 60% of millennial investors plan to increase their investments in ETFs in the next year.
  • 56% of millennials who have invested in ETFs say they are their “primary investment vehicle.”
  • That’s up from 28% in 2016.

Why are ETFs blowing up?

ETFs offer investors exposure to a wider, more diversified slice of the market than they get with single stocks, and typically at a lower price than many mutual funds. They also tend to have lower associated fees and can be traded just like stocks.

On the other hand, investing in ETFs can limit your investment choices to larger companies, dividends could be limited, and higher trading costs for certain funds.

Read more: What’s the Difference Between a Stock and a Fund?

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