ETFs combine the diversification of a mutual fund with the trading flexibility of a single stock. A single ETF can hold hundreds or thousands of underlying securities. The most popular ETFs track broad indices like the MSCI World, the S&P 500 or the SMI.
Costs are the ETF's biggest advantage. Most index ETFs charge 0.05–0.30% per year (total expense ratio), versus 1–2% for actively managed funds. Over 30 years, that fee difference can eat 30% or more of your final wealth.
ETFs are domiciled mostly in Ireland or Luxembourg for European investors, for tax reasons. Pay attention to replication method (physical vs synthetic), distribution policy (accumulating vs distributing) and tracking error when choosing one.
EUR 10,000 invested in a 0.15% MSCI World ETF for 25 years at 7% annual return grows to about EUR 52,000. The same money in a 1.5% actively managed fund grows to about EUR 37,000.