What is an ETF investment?
Exchange traded mutual funds, also known as ETF investments, are baskets of securities that you trade on the open exchange like you would any other stock. There are tons of benefits with very little downside if you are looking to do stock market investing in entire sectors and industries.
For example, if you want to invest in the gas industry, you can find a natural gas ETF list somewhere and invest in those. There aren’t a ton of ETF’s for each sector, unless it’s a popular sector. Many industries have at least one you can invest in.
When it comes to ETF vs mutual funds, ETF’s wins hands down. Compared to traditional mutual funds, ETF’s are a lot cheaper and more flexible.
With many traditional mutual funds, you have to pay some kind of a management fee. It can not only add up, it can really eat into your gains and profits. ETF’s are relatively cheap. The only fee you have to pay is the normal trading commission you would pay to buy or sell any other stock on the market. You just pay your stock broker their normal fee.
Also, ETF’s are a lot more flexible. There are a lot of ETF investment strategies that you can use which take advantage of this flexibility for increased profits. With exchange traded funds, you can buy or sell them at anytime during normal trading hours. You can’t do that with mutual funds. With mutual funds, you are only allowed to invest or divest once a day, at the end of the trading day.
That means you can’t take advantage of major, breaking news and events during the day. You have to wait until all of the investors and traders have already priced it into your mutual fund before you can do anything about it. By then, it’s often too late.
That means that you can use exchange traded mutual funds for stock index trading as well. It was unheard of to be able to do day trading with mutual funds, but now you can with ETF’s. With the right ETF investment advice, tips, and strategies, these funds can become a great asset to your financial portfolio.