Introduction to Exchange Traded Funds or ETFs for Kids and Teens
This video explains the concept of ETFs in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about ETFs, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Kindergarten
- Elementary School
- Middle School
- High School
The topics covered are:
- What is an Exchange Traded Fund (ETF)
- What do Exchange Traded Funds (ETFs) invest in
- Investing in an ETF versus investing directly in stocks and bonds
- How to buy and sell ETFs
- Commission and fees for investing in ETFs
- How to make money using ETFs
- How much money is needed to invest in an ETF
Howdy Wall Street Willy. I have a really big question for you.
What is an ETF?
Well, an ETF is basically an Exchange Traded Fund, which pools money it gets from investors, and invests collectively.
Do ETFs only invest in stocks?
No, they can invest in stocks, bonds, and other securities like mutual funds.
Why would you invest in an ETF, and not directly in stocks and bonds?
Well first of all, you have diversification, which means if you buy one stock of the ETF, then Itโs equivalent to buying all of the stocks it invests in.
And the investing is also managed by experts that manage the ETFs.
But how do I buy and sell ETFs?
Well, they’re treated just like stocks. You can buy them through stock brokers.
But do I pay any extra money (commission or fees)?
Sadly, you do pay a commission, just like for stocks.
But the good news is that after you buy it, you do not have any loads, or percentage of the money thatโs invested, as a fee.
Yay!
But how do I even make money from ETFs?
Well, you can make money from ETFs with appreciation in price. If the price goes up, and you sold it for more money than you bought it for, then you could make money with ETFs.
And also, any dividends that are paid by the stocks that are held by the ETF company are paid to you as well.
Well, how much money do I need to invest in an ETF?
Well, there’s no minimum amount that you need to invest in an ETF. You could buy one ETF, or a million ETFs.
Wow, a million ETFs is a lot!
Yes, it is.
And one more thing super Cooper โ remember, finance is your friend!