Stocks vs. ETFs: What are the key differences?

What are stocks?

Stocks represent ownership shares in a publicly traded company. When you buy stock, you’re essentially purchasing a slice of that business – its assets, its brand, its future potential and its earnings. Companies issue stocks to raise capital, and investors buy them with the aim of earning returns through price appreciation or dividends.

How stocks work

Stock prices move based on supply and demand – shaped by company performance, economic conditions, industry trends and market sentiment. Positive developments, like strong earnings, typically push prices up, while negative news can cause them to fall.

Before trading begins, companies go public through an Initial Public Offering (IPO), listing their shares on exchanges such as the NYSE or Nasdaq. Once listed, investors can freely buy and sell those shares on the open market.

Investors can make money from stocks in two main ways:

• Price appreciation, when shares rise in value and are sold for a profit (or a loss if sold below the purchase price).
• Dividends, when companies share a portion of their profits with shareholders.

You can access thousands of US stocks commission-free* with Crypto.com Stocks.

Everything you need to know about stocks and how they work

Pros of investing in stocks

• Ownership and voting rights: Stockholders may participate in shareholder votes.
• Transparency: Public companies must disclose financials regularly, which can help investors make informed decisions.
• Flexibility: You can build a tailored portfolio aligned with personal convictions or sector preferences.

Cons of investing in stocks

• Higher volatility: Individual stocks can fluctuate significantly based on company-specific news.
• Need for active research: Understanding financials, earnings calls and industry trends often requires time and commitment.
• Concentrated risk: Investing heavily in a single company exposes you to its full performance – good or bad.

You can buy full or fractional shares with Crypto.com Stocks, making higher-priced stocks more accessible to new investors.

What are ETFs?

ETFs (Exchange-Traded Funds) are investment funds that hold a basket of assets, such as stocks, bonds, commodities or a combination of these. Instead of purchasing a single company, you buy a share of a diversified portfolio managed by a fund issuer.

How ETFs work

ETFs trade on stock exchanges just like individual stocks. However, every ETF has a specific objective, like tracking a market index, focusing on a theme (e.g., AI-related stocks) or targeting a particular sector (such as healthcare). When you buy an ETF share, you gain exposure to all the assets within that fund. 

According to the Investment Company Institute (ICI), ETFs have grown substantially, with US ETF net assets reaching over $10 trillion² – highlighting their continued popularity among both new and experienced investors.

A complete guide to ETFs and how they work

Pros of ETFs

• Diversified exposure: ETFs hold multiple securities, allowing exposure to a broader group of companies through one transaction.
• Lower fees: Most ETFs have expense ratios well below 1%, especially index-tracking funds.
• Potentially lower volatility: Broad-based ETFs could smooth out market movements across many companies.
• Easy to trade: ETFs are bought and sold intraday, just like stocks.

Cons of ETFs

Despite their strengths, ETFs also come with considerations:

• Less exposure to single-stock moves: Because ETFs spread holdings across many companies, their performance is less affected by sharp gains (or losses) in any one stock.
• Management fees: While generally low, fees can still reduce returns over time.
• Tracking error: Sometimes an ETF's performance can deviate slightly from its benchmark index.

Crypto.com Stocks offers access to thousands of ETFs at 0% commission, giving you exposure to broad indices, sectors, commodities and thematic portfolios.

Example of stock and ETF investing

Imagine an investor who allocates $1,500 into the market – putting $1,000 into a single company’s stock and $500 into an ETF. They buy the company’s stock at $100 per share (10 shares) and the ETF at $50 per share (10 shares).

A few months later, the stock trades at $120 and the ETF at $60. The stock portion is now worth $1,200 and the ETF portion $600. These increases are unrealized gains, since the investor hasn’t sold their positions.

If instead the stock falls to $85 and the ETF to $45, the values would drop to $850 and $450, creating unrealized losses. As with both asset types, gains or losses only become realized once the investor sells their shares.

Key differences between stocks and ETFs

Ownership and control

Buying stocks means owning a portion of a specific company. You experience that company’s results directly. ETFs, on the other hand, offer shared ownership across many companies within a single investment, reducing reliance on any one business.

Diversification

Stocks represent exposure to a single company unless you buy multiple individual shares. ETFs hold baskets of companies, meaning each fund includes many underlying securities.

Risk levels

Single stocks tend to have higher volatility and company-specific risk but also come with higher potential upside. ETFs spread risk across multiple assets, resulting in smoother performance during market fluctuations.

Costs and fees

Stocks typically have no ongoing fees, though brokerages may charge commissions and the SEC charges a small regulatory fee on stock and ETF sales. ETFs charge expense ratios, taken directly from fund assets, though many remain relatively low. Crypto.com Stocks offers zero-commission trading.*

Liquidity

Both stocks and ETFs trade on major exchanges with intraday liquidity. Large ETFs often have high trading volumes, tightening bid-ask spreads.

Investing with Crypto.com Stocks

Crypto.com Stock’s investing experience is designed for simplicity, accessibility and flexibility – suitable for both beginners and seasoned investors.

Zero-commission investing

Buy and sell thousands of US stocks and ETFs with zero commissions.* Low costs mean you keep more of your potential returns, and it’s especially useful for users who use dollar-cost averaging or place frequent orders through the Crypto.com App.

Fractional shares

With fractional trading, you can buy portions of high-priced stocks or ETFs starting from just a few dollars. This makes it easier to gain exposure to assets you’re interested in without needing the full share price upfront, and all trades are executed seamlessly in-app.

Stock lending

Our Stock Lending program enables eligible users to earn additional rewards by lending out fully paid shares. Earnings accrue automatically and you maintain visibility over your lent assets directly within your account – adding an extra earning avenue without altering how you normally invest.

ETF availability

Crypto.com Stocks offers a wide range of ETFs – including index, sector, bond and thematic options – all accessible through the same streamlined trading interface as stocks. Real-time pricing, watchlists and seamless order execution make it easy to explore and trade ETFs within the App.

Ready to start investing?

1. Sign up securely on the Crypto.com App and open a Crypto.com Stocks account.
2. Deposit funds via bank transfer (free)*, credit/debit card, Apple Pay or Google Pay.
3. Navigate to the Trade tab and explore over 10,000 stocks and ETFs.
4. Select an asset and start building your portfolio with confidence.

* Other fees may apply. 

¹ Morningstar, 2025

² ICI, 2025

This is informational content sponsored by Crypto.com and should not be considered as investment advice.

Foris Capital US LLC (“FCUL” or referred to herein as “Crypto.com Stocks”) is a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a Member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). For further information about FCUL, please visit FINRA BrokerCheck.  

FCUL is a subsidiary of Crypto.com. FCUL is a separate entity from Crypto.com, Foris DAX, Inc., and other affiliated Foris companies. FCUL does not engage in the sale, transfer or custody of crypto currencies or digital assets. Crypto.com is a separate entity from FCUL and does not engage in the securities business. Customer balances and crypto holdings held and transacted at Crypto.com and other entities outside of FCUL are not covered by SIPC insurance and are separate from securities transactions and holdings at FCUL.Fractional shares are not available for all equities

Securities lending is subject to certain risks and is not suitable for all investors. Such risks include, but are not limited to, the potential to lose some, or all, of your loaned investments. Furthermore the provisions of the Securities Investor Protection Act of 1970 ("SIPA") may not protect you with respect to loaned securities. Customers are required to review and accept FCUL's Stock Lending Disclosure Statement and Agreement to engage in securities lending.

All investments involve risk, and not all risks are suitable for every investor. The value of securities may fluctuate and as a result, clients may lose more than their original investment. The past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss in a down market. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing.