What to know before you invest in ETFs

ETFs can be a good start for you to invest because you’ll stay a lot safer in comparison to equities. Slowly and steadily once you learn more about the financial market, you will be able to dive into other trading securities as well.

etfs invest
ETFs or Exchange Traded Funds contain a group of trading securities instead of just one stock. You get the benefit of diversification by investing in an ETF.

In this article

If you are a new investor looking for great opportunities to invest in but don’t know where to start, ETFs are the answer. At times new investors make one common mistake. They tend to put their money in bigger stocks without any knowledge and sadly end up facing losses. Here Exchange-Traded Funds (ETFs) are useful. 

An ETF contains more than the stock of just one company. Also, it is not limited to stocks, it contains investment in various assets and is less volatile. ETFs are like an umbrella for a variety of opportunities.  So, just in case you’re looking forward to investing in this financial tool, then find out more about how and which ETFs to buy right here in this article!

3 easy steps & buy ETFs in just a matter of time! 

1. Register for a brokerage account

In case you decide to begin investing in ETFs, you need to have a trading account. The registration process is simple, and you could do it online in a few steps. These accounts aren’t too tough to open and have similar formalities to that of a bank. 

Also, if you wish to have some support for fruitful pieces of advice, you can hire a Robo-advisor that charges as little as 0.25% of every investment you make. With this fee, you get detailed insights on every exchange-traded fund that could be beneficial.  

2. Begin fetching potential ETF opportunities

There are some steps that could assist you in sorting ETFs easily. If you hire a broker, they’ll be using exchange-traded fund screening tools, so jot down some options considering your criteria from them. 

In the United States only, there are 2000+ exchange-traded funds listed. So how can you choose the right one if you’re willing to invest by yourself? It’s simple, just keep these points in mind:

  • Transactional fee
  • Administer charges
  • Companies in which the funds invest
  • Charges for trading
  • Trading volume
  • Performing capabilities

3. Start trading

Buying stocks and ETFs contain a lot of similarities. There’s barely any difference in terms of trading, all you need to do is go into the trading section of the platform you use or the brokerage site you have access to, and buy/sell exchange-traded funds. That’s literally it! 

You can also search ETFs using the ticker symbol – a specific identifier symbol or abbreviation that helps you search the ETF. Though recheck the details you’ve filled in so you don’t regret later! 

Best ETFs to buy this year

Here, a great option can be to go ahead and invest in ETFs of bigger companies that promise greater returns for a long time period. But still, don’t just straight away put your money, consider risk points along with the administering charges you need to pay. Below are a few Exchange-traded Funds that promise you amazing benefits as of 2021.

Vanguard large cap

They have an expense ratio of as low as 0.04%, and its inception date was 27 January 2004. Under this ETF, you’ll witness 85% of the top companies whose stocks are listed in several markets. 

SPDR portfolio 

With an expense ratio as little as 0.03%, which is less than quite a lot of other top exchange-traded funds, this fund was curated considering the amount of exposure the investors would be getting from markets in the US. 

iShares core S&P

Their expense ratio is as similar as the Vanguard Large Cap, and also focuses on providing exposure to all the investors. It is a kind of a mix between the above two as it fulfills the criteria based on them. They are present across markets for over 21 years now. 

SPDR S&P

One of the oldest ETFs present in the U.S, they’re dated to as early as 1993 and were first formed as an Investment Trust Unit. SPDR Portfolio was created as a base to this one, and that too several years later. The expense ratio here is as high as 0.0945%. 

Vanguard Mega Cap

This ETF includes 70% of the top-notch companies present in the US Stock Markets and focuses more on CRSP US Mega-Cap Index. The funds go into 261 companies in all, and they have a 0.07% expense ratio. 

Dividends and ETFs 

Now that you know the whereabouts and the best ETFs to buy, you’d be wondering about dividends. As long as these funds have underlying stocks the issuer will be providing dividends to the investors every quarter. You could also sell these ETFs anytime you wish to during trading hours – 9:30 AM to 4:00 PM (ET). Just in case you’re new, ETFs can be a good start for you to invest because you’ll stay a lot safer in comparison to equities. Slowly and steadily once you learn more about the financial market, you will be able to dive into other trading securities as well. 

This page is purely informational. Line does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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