Big idea: You don’t need to pick individual companies to invest well. ETFs make investing simpler by giving you instant diversification in one single investment.

If choosing individual shares feels overwhelming — great news: you don’t need to do that. ETFs allow you to invest broadly without researching every company.

What is an ETF?

An ETF (Exchange Traded Fund) is a basket of investments — usually hundreds or thousands of shares — bundled into one product. You can buy ETFs on the ASX (Australian Securities Exchange) or on the US exchange ( NYSE & NASDAQ) .

When you buy one ETF, you instantly invest in every company inside it. Instead of trying to pick a single 'winning' company, you spread your money across all of them — which helps reduce risk and smooth out the ups and downs.

Why people love ETFs

ETFs are a favourite of many investors because:

• You’re usually instantly diversified
• You don’t need to choose individual companies
• They’re usually low cost
• They can track entire markets
• They suit beginners and long-term investors

A simple example

If you buy an ETF that tracks the ASX 200, you’re buying a tiny slice of 200 of Australia’s largest companies — including Woolworths, Telstra, BHP and CSL.

If you buy one tracking the S&P 500 on the NYSE or NASDAQ, you’re buying small pieces of Apple, Microsoft, Google, and hundreds of other large companies.

It’s nearly impossible to predict which company will win over time, so buying them all through an ETF is a simple way to hedge your bets, diversify your risk, and still stay fully invested.

Passive vs active

Many ETFs are passive — they simply track a market index, like the ASX 200 or the S&P 500. Because they aim to match the market rather than beat it, their returns generally reflect the average performance of that market.

Some ETFs are active — a professional fund manager selects the investments. Their goal is to outperform the market by making educated decisions about which companies they believe will do well over time.

Both approaches can work depending on your goals, but passive ETFs are often cheaper, simpler, and more predictable because they follow the index instead of trying to outguess it.

A famous example of this comes from Warren Buffett (the world’s most well-known investor). He made a million-dollar bet that professional fund managers wouldn’t outperform a basic S&P 500 index fund over 10 years. In the end, the index fund won — by a lot — showing that low-cost index investing often outperforms expensive, actively managed funds over the long run.

Why should I care?

Because ETFs take the pressure off choosing individual shares.
They give you broad exposure, long-term growth potential, and fewer decisions.

Basically, they make investing easier by being diversified while having to spend a lot of time tinkering with your investment portfolio.

Try this today

Search for any broad-market ETF (like one tracking the ASX 200 or S&P 500) and look at its top holdings.