What On Earth is an ETF, Anyway?
While we’re on the topic of investing, it’s important you get to grips with Exchange Traded Funds, commonly known as ETFs. Essentially, an ETF is a fund that is a ‘basket’ of investments - a cross between an index mutual fund and a stock. ETFs track indexes, and can be traded like a stock on an exchange. Find out the benefits of ETFs and how to get some into your portfolio.
One of the many perks of ETFs is that you can buy and sell them online through a broker. Although ETFs come with the cost of commission per trade, they tend to have lower overall costs and are more tax-efficient than mutual funds. You should look out for online brokers that let you trade some ETFs for no commission; you can even find websites that let you compare price quotes for trades.
The price of ETFs fluctuates throughout the day, and they always come with trading symbols.
Investors like ETFs because they’re way more hassle-free than mutual funds; there’s no need to sign up to accounts, or check to see if they’re transaction-free. On the flip side, ETFs offer many of the same advantages as mutual funds, like diversification and intraday trading. ETFs also give you great access to foreign exposure, and offer a range of advanced trading options - something most investors deem to be a huge perk.
If you’re keen to find out more, check out these 7 ETF Trading Strategies for Beginners.
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