“Should I buy a stock or an Exchange-Traded Fund (ETF)?” This is a question many beginner investors ponder over before making their first investment. Both build long-term wealth, but work very differently. Some prefer the simplicity of ETFs, while others relish the control in owning individual companies.

What Is a Stock?

Owning a stock is likened to owning a small part of a listed company. As an investor, your returns can come from capital appreciation and dividends. You probably recognise stocks like DBS Group Holdings (SGX: D05), Southeast Asia’s largest bank, and Singtel (SGX: Z74), Singapore’s largest telco.

What Is an ETF?

An ETF holds a plethora of assets in one fund, allowing investors to gain exposure to many companies instantly. Straits Times Index (STI) ETFs like SPDR Straits Times Index ETF (SGX: ES3) track the performance of the STI, while S&P 500 ETFs like SPDR S&P 500 ETF Trust (ARCA: SPY) track those of 500 of the largest US companies....