# 🥤 ETF

**Published by:** [Let Them Eat Cake](https://paragraph.com/@ltecake/)
**Published on:** 2022-06-21
**URL:** https://paragraph.com/@ltecake/etf

## Content

TL,DR: Like a smoothie, Exchange Traded Funds are the most efficient way to consume a variety of products around a central theme and “eat the rainbow” ETF / SmoothieMade from veggies (bonds) or stocks (fruits)Cheapest way to diversify across product typesTrades in the marketplace as a unitCan be customized to your liking Eatamology “ETF” stands for Exchange Traded Fund. Funds are pools of money provided by investors and intending to consume a diverse set of products without the hassle of handling each product individually. These funds operate as a investable unit, similar to a stock, and are traded at the exchange/marketplace like any other individual product. Similar to buying a smoothie at the market, they are often sold alongside the individual fruits and veggies that compose the combined product. Financials ETFs allow diversification into a particular theme or objective, such as tracking an index. The S&P 500 is an index containing 500 different high performing stocks at varying percentages. Investors can buy SPYDR, an ETF product that mimics the S&P 500 composition and allows them to invest in the performance of the entire index with 1 trade. SPYDR is passively managed and charges a small fee for maintaining the correct composition. Meanwhile, a clean energy fund might be actively managed, as the provider needs to constantly update the companies in the fund based on their success with renewable energy. Passively Managed | Bottled Smoothie Like a pre-bottled smoothie, passively managed funds have preset ingredients and follow a strict formula. Since the management process is automated, consumers get to pay less for these products. Actively Managed | Fresh Smoothie Like a fresh smoothie from a smoothie shop, actively managed funds have variable ingredients based on the managers discretion, which should hypothetically improve the product, and will often cost consumers a premium. Diversity | Eating the Rainbow Diversifying your investments can be the safest way to preserve long term wealth. It’s hard to know exactly what products you need, and just like it pays off to eat a variety of foods in order to get all types of nutritious vitamins and minerals, it pays off to invest in a variety of products. Example Ingredients SPYDR, Clean Energy Funds, Big Tech, Emerging Markets

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