I'm new to the field of investment and would like to understand ETFs, they have not been clear to me even though I tried a bunch of YouTube tutorials. Also, how is it possible for a European resident to trade U.S. ETFs?

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    Do you know what a Mutual Fund is? It's the same thing, just traded during the day instead at the end of each day.
    – D Stanley
    Oct 25, 2019 at 13:13
  • I know funds like government funds. Don't know clearly about any kind of funds. Looking forward to learning. Could you provide me some easy links.
    – iamsumitd
    Oct 25, 2019 at 13:26
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    Mutual Fund, ETF
    – D Stanley
    Oct 25, 2019 at 13:42
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    @iamsumitd - Any time you want an explanation, Google your topic and add either WIKIPEDIA or INVESTOPEDIA. Those two sites will provide basic explanations of pretty much anything. Oct 25, 2019 at 14:21

1 Answer 1


An ETF is essentially just a package of funds. It can include stocks, bonds, or other commodities. ETF shares can then be purchased in the same manner that you would purchase individual stocks. This is similar to a mutual fund. The main difference between a mutual fund and an ETF is that you need to purchase individual shares/units of an ETF, whereas mutual funds can be purchased in a continuous manner. e.g. If you have $500 to invest and an ETF costs $120 you can purchase 4 units of the ETF and have $20 left over. Comparatively with a mutual fund you can buy $500 worth of mutual funds. Some people may choose ETFs over mutual funds if their banks or brokers don't allow for the purchase of specific mutual funds.

I would suggest reading JLCollins's Stock Series, which will give you a primer on stocks, bonds, ETFs and Mutual Funds. It's mostly focused on index funds, but you'll gain a better understanding of how everything works.

For information on investing in US equities as a European resident I'd refer you to these questions:

Do I need a brokerage account to invest in ETFs?

Steps for openning an investment account and start investing in the UK

  • Nicely elaborated. Could you go a little deeper to explain the difference between mutual funds and ETFs with an example? Thanks.
    – iamsumitd
    Oct 25, 2019 at 15:22
  • Sure, but there are so many different types of mutual funds and ETFs that any example will be incomplete. At the end of the day they're just packages that funds can be placed in. Example (1) VTSAX is a Vanguard mutual fund, while VTI is a Vanguard ETF both are index funds that track the total US stock market. VTSAX you can buy as much or as little as you want while VTI is currently $153.66 per share and you can only buy whole units.
    – Dugan
    Oct 25, 2019 at 15:37
  • Example (2) VTTSX is a mutual fund that contains a mixture of stocks and bonds, it's a fund that's designed for people who plan on retiring in 2060. It re-balances the contents of the fund every year to ensure that there is the appropriate balance of stocks and bonds (more stocks when you're younger, and then more bonds as you get older). There's probably an equivalent ETF version of this too.
    – Dugan
    Oct 25, 2019 at 15:40
  • Okay, and how does the value of mutual funds change and how do we receive interest returns?
    – iamsumitd
    Oct 25, 2019 at 15:45
  • Example (3) SOCL is an ETF run by Global X which pools together stocks from various social media companies. If you think social media is likely to be profitable in the future but you're unsure of which social media company to invest in you could buy this ETF which pools most of the big players together. Basically using an ETF or Mutual fund gets you a more diversified portfolio than you would have if you bought individual stocks.
    – Dugan
    Oct 25, 2019 at 15:45

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