Are ETFS a Good Way to Invest? A Handy Guide for Beginners

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Did you know that ETFs have 20 percent of their funds in 18 stocks? They carry a huge weight on the stock market, so it’s time to take a look at ETFs in more detail for your portfolio.

Suppose you’re wondering if there’s a guide for how to investing in ETFs for beginners, then read on! Because we’ve got a handy guide on ETFs for dummies to make sure you’ve got all the tools you need to succeed!

Investing in ETFs for Beginners

If you’re wondering what ETF means, it stands for Exchange Traded Fund. It is an investment fund that trades as stocks and bonds do.

You can buy them through your broker or from companies such as Vanguard or Blackrock. They trade throughout the day based on supply and demand like any other stock.

Investing Strategies

There are many different strategies you can take when investing. Suppose you’ve invested before you’ll know some of these already. But for beginners, here’s an overview of the ones you need to know.

Dollar-Cost Averaging

This strategy involves putting money into investments every month over time. For example, let’s say you want to put $100 per month into your portfolio.

Instead of doing this all at once, you could start by putting in $20 each Monday morning. Then after a week has passed, you’d add another $20 and continue.

Asset Allocation

In this method, your assets are split into different types of investments. You might have 10 percent of your total funds going into equities. But you might choose 20 percent into fixed-income securities and 70 percent into other equivalents.

Swing Trading

You may also hear about swing trading, where portfolios move back and forth. When you sell something, you get paid while you wait for prices to go up again. And when you buy something, you hope prices will fall.

Hedging the Market

Hedging takes swing trading to the next level. It’s taking advantage of market movements to reduce risk. In simple terms, hedges involve selling something while purchasing something else.

When prices rise, you sell off the contract and use the proceeds to pay for the item you bought earlier. And vice versa – when prices fall, you buy back the contract with the profits.

Mutual Funds vs. Index Funds

Index funds represent certain sectors of the economy. An index fund will usually contain several hundred stocks within its category. Mutual funds tend to focus on smaller groups of stocks.

What are the Best ETFs for Beginners?

The best ETFs to invest in for beginners are those with low fees. That means lower costs for you. So it makes sense to look at what kind of fee structure each one has.

It depends on your risk vs. reward. Some have no fees, while others charge up to 0.25 percent per year. But we recommend starting small because that way you won’t lose as much money.

Check out monexsecurities.com.au for some examples of low-brokerage ETFs to help get you started!

Invest in the Best ETFs for 2021 With Caution

Like all forms of investment, there is risk involved. So if it’s your first time investing in ETFs for beginners, make sure you do your comprehensive research.

Know what you’re getting yourself into before proceeding any further. Only invest what you can afford to lose.

Keep reading for more amazing advice on how to boost your portfolio today!

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