Inverse exchange-traded fund

An inverse exchange-traded fund (ETF) is a type of fund that allows you to invest in the opposite direction of a particular market index. In simpler terms, it's a financial tool that lets you make money when the value of the market drops – or when the stock market goes down, your money goes up.

To understand this better, let's imagine a game of hopscotch. When you hop forward, your position moves ahead. When you hop backward, your position moves backward. An inverse ETF works like the hop-backward move where you make a profit when the market moves backward.

In the stock market, investors buy and sell shares of different companies, and the overall value of these shares determines the value of the market index. An inverse ETF tracks this index and allows you to earn money when the market index goes down.

Let's say you invest in an inverse ETF that tracks the S&P 500 index. If the value of the index falls by 10%, your inverse ETF's value will rise by 10%. When you sell your inverse ETF shares, you make a profit.

But it's important to remember that inverse ETFs involve higher risk than a regular ETF. If the market index goes up, the value of your inverse ETF will go down, and you will lose money.

In summary, an inverse ETF is a tool that allows you to make money when the market goes down, but be careful and do your research before investing in one.