Teeka Tiwari

Stocks vs. ETFs: What's the Better Investment?

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In my "8 Easy Ways to Boost Your Profits" series, I've been tackling various topics designed to make you a better investor.

In sharing with you what I've learned on my 20-year stock trading journey, these articles are the distilled knowledge of hard-won experience that can save you a lot of time and capital.

You aren't going to "get" all of this stuff overnight, but if you are serious about becoming a real student of this game, you absolutely will learn how to be a better trader and investor through reading this series.

Now that we've talked about narrowing your focus to specific strategies and dollar amounts, along with how much to buy and where to set your stop-losses, we're ready to tackle the very-important next step of reducing your risk in the markets.

Kick Your Single-Company Stocks to the Curb

This week, I want to cover one of the greatest risk-mitigation tools of our era. I am referring to exchange-traded funds (ETFs).

ETFs, as I am sure many of you know, are securities that represent entire sectors, usually by mimicking a particular index.

They are somewhat similar to a sector-focused mutual fund, but they offer some tremendous advantages over mutual funds. (Learn 5 ETF Advantages.)

ETFs trade just like stocks -- you can buy them, you can short them, and you can buy and sell options on them. Plus, they are typically very liquid and often have much lower fees than mutual funds.

When faced with the choice of owning an individual stock or an individual ETF, I will pick the ETF almost every time.

Why?