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Why would I buy an exchange-traded fund instead of an individual stock?
Individual stock prices can be very volatile. Diversifying investments helps lower your risk. You can do that by buying a basket of securities. With ETFs, you can buy and sell baskets of securities either in one industry, such as semiconductors, or all listed on one exchange, with the convenience of a stock. While you still get the diversification benefits of a mutual fund, you are exposed to the sector risk. Return to Questions
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