What are exchange-traded funds?
Why investors buy ETFs.
How to purchase ETFs.
Benefits and risks of ETFs.
As an investor, owning ETFs comes with risks and benefits. If the ETF's price goes down, you will lose money and vice versa. There is no certainty that companies whose stocks the ETF holds will prosper or do well. To a large extent, an ETF's NAV is dependent upon the basket of securities (stocks, bonds, cash, etc) it holds. Many factors affect an ETF's share price (NAV), including but not limited to quarterly earning reports of individual companies, regulatory, political, economic or other events.
How investors make money from ETFs
Investors make money in two major ways. First, they earn money through capital gains. A capital gain is essentially the increase in price of a fund to a price higher than the initial purchase price. Second, investors make money through dividends. Dividends are basically free money you get for simply owning the fund or being a fund holder. Dividends are usually paid to shareholders quarterly. Not all companies pay dividends. Exchange-traded funds are meant to be kept for the long-term. Here's a nice overview of how investors earn money from mutual funds. Check out this comparison between stocks, ETFs and index funds.