First off, ETF stands for exchange-traded funds. It’s a fund that tracks a market index, only it trades like a stock on the exchange. That said; let’s take a closer look at the attractive benefits you get from investing in ETFs.

One of the top reasons that make purchasing ETFs so appealing is there flexibility. For instance, if you’re an investor who’s concerned about getting quick access to your cash, then you can sell ETF shares whenever the need arises. Let’s say you need cash before lunch. Well, if you have ETF shares you don’t have to wait until the market closes at 4p.m. to sell them like you do with stock. You could just call your broker at 9 in the morning and place an order and then your trade will be conducted at whatever the current price is.

Another major advantage to investing in ETFs is their simplicity. ETFs work well for those investors who find the whole process of analyzing and picking the “right” stock confusing, boring, or to big a hassle.

Other advantages of owing ETFs include:

• You can buy a lot. Or just a little. You choose because with ETFs you have the option to buy one share or more than one thousand.

• Remember the never put all your eggs in one basket rule. ETFs give you instant diversification of an index fund.

• Spend less money. ETFs typically have lower expense ratios than mutual funds, generally around 0.3%.

• Variety is near endless – For example, what ever sector interest you—take healthcare for instance—there’s an ETF on the market for it. For this particular example you could check into Vanguard’s Health Care Viper (ticker VHT)

• Advance to the big leagues easily. By owning ETFs you improve your access to commodities and international markets.

• Eliminate unwanted surprises. With ETFs you know exactly what you own before you dish out any money. ETFs give you the opportunity to view individual holdings and see exactly how they’re broken down into sectors.

Next time we’ll take a look at the disadvantages of buying ETFs. Stay tuned.