ETFs offer advantages over stocks in two situations. First, when the sector's stock returns are narrowly dispersed around the average, an ETF may be the best option. Second, if you can't gain an advantage through company knowledge, an ETF is your best option. If you're just starting to invest, you might be wondering if it's better to invest in stocks or ETFs.
Stocks can be a great investment in some circumstances, while ETFs may be better in others. However, for new investors, exchange-traded funds solve many problems and are an easy way to obtain attractive returns, making them an excellent starting point. ETFs usually invest in stocks that have a specific area of focus, for example, large companies, stocks with competitive prices, companies that pay dividends, or those that operate in a specific sector, such as financial companies.