More and more investors are discovering the benefits of adding exchange-traded funds (ETFs) to their portfolios. While these funds have some similarities to the mutual funds that are offered by various investment firms, they are quite different overall.

One big difference is that ETFs trade like stocks, so you can buy or sell them during any trading day in quantities as small as $1. Some ETFs are even structured to mimic index funds (and a few are effectively the publicly traded versions of privately run mutual funds), and they buy the same securities included in the index they follow.

What ETFs are really good at though is helping investors who may not be stock-picking experts enjoy robust portfolio growth. Many an investor these days are funding their retirement simply with some low-fee index-based ETFs. Even famed investor Warren Buffett recommends most investors focus on S&P 500 index-based ETFs.

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Source Fool.com