What is the difference between a stock and an ETF?

A stock represents ownership in a single company — your return depends entirely on that company's performance. An ETF (Exchange-Traded Fund) holds a basket of many securities and can be bought and sold on an exchange like a stock. ETFs provide instant diversification: buying one S&P 500 ETF gives you exposure to 500 companies. ETFs are generally better for most retail investors than picking individual stocks.