What are ETFs?

We don't buy individual stocks, but invest in a representative index fund per country. An index represents the value of the largest companies in a country. In Germany, the German share index is called DAX. The DAX includes the 30 largest German companies, such as Adidas, Deutsche Bank, Lufthansa and Siemens. In the USA the index is called e.g. Dow Jones which summarizes the value of the 30 largest US companies like Apple, Coca-Cola, McDonalds or Nike.

For this we buy so-called index funds. A fund bundles the money of many investors. Thus we do not have to buy the shares of all 30 DAX companies, but only once a share of this index fund. In addition, index funds are very cost-effective, because there is no need for an expensive team of experts to select the shares. These funds can be easily bought and sold on the stock market at any time, which is why they are called exchange traded funds (ETFs).