An ETF stands for an exchange traded fund. Think of an ETF like a mutual fund that trades like a stock. The advantages of an ETF over a mutual fund are lower expense ratios and the ability to trade it like a stock. An ETF will consist of a basket of stocks in a particular index or sector. For instance, you can buy the S & P 500 ETF (SPY) or a gold sector ETF (GLD). ETFs can be safer than owning just one stock, because you can lower the risk by buying the whole sector or index in general. That way if one particular stock is having trouble, the rest of the stocks in that sector or index can balance it out. However, if the sector or index is down in general, so will your ETF.