ETFs : Beginning Roadmap
So, we’re always told to diversify our investments in the market . The downside is that handling many positions with stocks is tough for first-time investors. However, there is another option and it’s a very good one . It’s called exchange traded funds and you will grow to love them once you realize their financial investing potential.
Depending on what survey you look at, only a fraction of investors know what exchange traded funds are , even to this day. I will assume you’ve maybe heard the phrase but are unsure of how they work and how to take action.
Perhaps Mutual Funds comes to mind , and ETFs are kind of similar, but much better. You see, exchange traded funds trade just like stock. You can trade them as you wish . But they are far more powerful .
When you invest in an ETF , you invest in a collection of stocks . For instance , you might buy an ETF that’s an indices . Rather than researching lots of companies and having many investing positions, you could buy a single ETF you control a segment of that market. Again, you can buy and sell them exactly like stock. It’s great.
I have used ETFs for years and I used them to diversify in the gold, oil & gas, etc markets. You can even invest in entire indices, like the Dow 30 , with a single exchange traded fund .
What I like most about ETFs is that “basket affect.” With a single trade , you will get a plethora of related stocks. Imagine you want to profit on real estate boom . What stock do you select ? Hope you don’t pick the wrong one. Confused? Scared? Simply pick a good exchange traded fund that has multiple stocks in it and you’re all set. It’s that easy.
Honestly, I didn’t think about trading ETFs initially . I thought of mutual funds, and I don’t like those. But then I discovered what they were and how they worked . Being able to trade them like stocks at my leisure was a huge selling point. No load fees, management fees and other nonsense . It’s a standard stock trade.
And what really sold me on them was the ability to control market segments and profit from it. Gold was heating up so I quickly sunk part of my portfolio into a good gold exchange traded fund and enjoyed watching it go up and up.
After you start investing with exchange traded funds , you possibly could not want to buy regular stocks again. I do both however. If stocks are very important to you , exchange traded funds can be used to quickly control a market segment without taking on several positions , which can free up your capital for other opportunities .
Permit me to say one more time, exchange traded funds can be traded just like stocks. You can place stop-loss, market and limit orders with them. And yes stock enthusiasts , you can short them! I hope you see how great ETFs are now! Before jumping in, I’d encourage to keep reading up on ETFs and then go out there and enjoy your newfound investment option.
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