The Case for ETFs

The Case for ETFs

Exchange-traded-funds (ETFs) are very powerful investments for those who don’t want to think too much about what they invest in. They normally contain many stocks and provide diversification (meaning they have equal holdings in multiple industries) , something that is very helpful to anyone that wants the returns of the market without spending hours researching stocks. ETFs are usually focused on certain groups of stocks, such as technology or real estate. Many of them are based on stock market indices, which are groups of stocks that are meant to "track the market", meaning that they generally rise at the same rate as the market as a whole.  ETFs also normally pay a good dividend, which is money distributed to investors, usually once every quarter (3 months). They are very attractive to passive investors who want to see  their money grow without having to micromanage it.

While ETFs do not require a lot of attention, you still have to choose one that fits your needs (disclaimer: I am not a fiduciary, take everything I say with a grain of salt). I would recommend well established ETFs, such as SPY or VOO. These have been around for years and are quite popular because they are consistent and reliable. These ETFs are based on the S&P 500 stock market index, which contains some of the best stocks in the entire market. Other ETFs are based on industries, such as VDE, a fund that focuses on energy companies. There are many different ETFs to choose from, and what one you choose depends on your preferences and risk tolerance.

ETFs are an excellent investment for any serious investor. They provide the right amount of financial security and give you the returns that you are looking for. I would recommend starting out investing in total market or index-based ETFs, and then moving on to more specialized ETFs (based on certain industries). ETFs are outstanding investments that are guaranteed to boost the value of your portfolio.


How to Budget Properly

How to Budget Properly