Are ETFs safer than individual stocks?

ETFs that hold many securities can reduce the impact of any single company's poor performance on your portfolio. That diversification is a key reason many investors prefer ETFs over picking individual stocks.

However, diversification doesn't eliminate risk. A broad market ETF will still fall if the overall market drops. And some ETFs are concentrated in a single sector or theme, which can be as volatile as individual stocks.

The practical question is whether you want broad exposure (where ETFs shine) or targeted bets (where individual stocks may fit). Many investors use both, with ETFs as a diversified core and individual stocks for specific ideas.