ETF Your Way to Millions
By TheWild1 at 19 September, 2007, 5:43 pm, Categories : Financial Markets
An Exchange-Traded Fund (ETF) basically tracks a commodity or a basket of stocks like an index fund, but it can be traded like a stock. WHAT?!?! In its simplest form an index fund is a type of mutual fund. There is the ability to invest a certain amount of money (there usually is a minimum) in a fund, which then allocates that money to several different assets; however, you usually cannot withdrawal your investment until the set time is up. This is where the power of ETF’s come in handy…
An ETF can be traded like a stock, meaning that you can buy and sell how many shares you please whenever you want. Because it trades like a stock, the price can vary through the day. This is unlike a mutual fund, where the assets are recalculated at the end of the day. So with an ETF you essentially have the advantage of diversifying, while being able to buy on margin, sell short, or obtain another share. The commissions cost the same like it would to deal with a regular stock, where as in mutual funds you usually have to pay a greater percentage, of what you put in.
I recommend saving at least $1000 per ETF trade.
There are numerous ETF’s to invest in, the most popular ones being Spider (SPY), which tracks S&P 500 index. An advantage of an ETF is the option to invest money globally without having to deal with currency exchanges or weird taxes. So if you wanted to invest in China or India, with the use of ETF’s, this can be done easily through your stock brokerage. With ETF’s, you also have the ability to invest in a basket of commodities like diamonds or energy. If a sector as a whole is booming or you aren’t exactly what to stock in a particular sector to invest in, then an ETF can be your friend.
To get started using Exchange-Traded Funds, perform a search for ETF’s through your favorite finance website, and pick what you like. Sites I recommend include:
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