Guide
Three words you hear constantly - here's what they actually mean, and how risky each one is.
A stock is a slice of one company. Buy Apple and you own a tiny piece of Apple. Upside: a great company can grow a lot. Downside: a single company can also fall hard, so you carry concentrated risk.
An ETF bundles many investments into one. An S&P 500 ETF holds 500 companies, so one purchase spreads your money widely - instant diversification, lower risk, less homework. The most beginner-friendly option.
Crypto (Bitcoin, Ethereum and others) is the most volatile of the three - it can swing double digits in a day. Exciting, but only sensible as a small slice of a diversified portfolio.
| Type | Risk | Diversified? | Best for |
|---|---|---|---|
| ETF | Low-Med | Yes (built-in) | Beginners, core holdings |
| Stock | Medium-High | No (one company) | Conviction picks |
| Crypto | High | No | Small high-risk slice |
A common starting point: a broad ETF as your base, one or two stocks you believe in, and a small crypto position for upside. Then rebalance occasionally.
Related: How to start investing with $100 · Learn the stock market without risking money.