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Bottom Line Up Front

  • Stocks and ETFs both provide investors with a variety of options to choose from, but ETFs generally include a group of stocks, bonds and other securities. 
  • Both stocks and ETFs can be traded throughout the day and may pay out dividends. 

Time to Read

3 minutes

May 18, 2022

Considering investing in stocks and/or exchange-traded funds (ETFs)? Understanding how they work will be important in your decision-making process. 

First, let’s break down their differences:

  • Stocks: A stock symbolizes a share of ownership in a single company. 
  • ETFs: An ETF is a “basket” (group) of individual stocks, bonds or other securities. Since an ETF includes multiple securities, it‘ll have a good mix of different types of industries and sectors, which diversifies your investment portfolio.

Your investment in a single company can have major benefits if you choose a company on the rise. But your investment in an ETF can offer protection because your money’s growth is dependent on many securities, rather than one. 

How are they alike?

  • Both can be traded throughout the day at prices that reflect real-time supply and demand.
  • They also provide investors with a variety of options, since you can choose to invest in different companies or markets based on your risk tolerance and values.
  • They also may pay dividends periodically to investors.

You Can Get Started Today

Navy Federal Financial Group Digital Investor offers a mix of more than 1,000 carefully preselected common stocks and ETFs. You can buy whole or partial shares, some for as little as $1. Plus, you can try it out for 30 days free.

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Navy Federal Financial Group, LLC (NFFG) is a licensed insurance agency. Non-deposit investments, brokerage and advisory products are only sold through Navy Federal Investment Services, LLC (NFIS), a member of FINRA/SIPC and an SEC-registered investment advisory firm. NFIS is a wholly owned subsidiary of NFFG. Insurance products are offered through NFFG and NFIS. These products are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of Navy Federal Credit Union (NFCU), are not offered, recommended, sanctioned or encouraged by the federal government, and may involve investment risk, including possible loss of principal. Deposit products and related services are provided by NFCU. Financial advisors are employees of NFFG, and they are employees and registered representatives of NFIS. NFIS and NFFG are affiliated companies under the common control of NFCU. Call 1-877-221-8108 for further information.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.