What an Exchange-Traded Fund (ETF) is
An Exchange-Traded Fund (ETF) is a type of investment fund and exchange-traded product; the shares of an ETF are traded on a stock exchange. ETFs are similar to mutual funds in that they offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets and, in return, to receive an interest in that investment pool. However, unlike mutual funds, which are bought and sold at the end of the trading day based on their net asset value (NAV), ETF shares are traded throughout the day on stock exchanges at market price, potentially offering more flexibility and liquidity to investors.
What is compounding
Compounding is a powerful concept in personal finance, often hailed as the eighth wonder of the world for its ability to exponentially increase wealth over time. At its core, compounding refers to the process by which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This cycle of earning interest on your interest, as well as on the original principal amount, fuels the growth of your investments in a way that can seem almost magical over the long term.
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