Tuesday, 4 April 2017
Are ETFs right for you?
Trading is a tough thing, especially if you are working in stock markets. That’s right, thousands of companies stocks available in just a single click.
Buying or selling single stocks is not as easy as it seems, not when you intend to make some real money out of it. Yeap, we all agree that it’s pretty simple to do it in modern times, when everything is done online, instantaneously and without messy paperwork, but don’t be fooled, you would still need to keep track of each entity, earnings, management decisions and more.
Quick advice? Unless you are not a full-time trader, focus on the larger picture. Thanks to ETFs you can do so, but still trade in stock markets and profit from best performers.
But wait a minute… What’s is an ETFs? Sorry. My mistake. Let’s recap. ETFs stand for Exchange Traded Funds, which are products that combine a series of assets that better represent the performance of a certain index. For instance, you can pick up a NASDAQ 100 ETF, which will be integrated by stocks that reflect the actual performance of the NASDAQ 100.
So… By trading ETFs you are not buying or selling stocks, you are buying or selling many of them at the same time, all in one single product. So, if you are betting on a rally of technology stocks, you can simply buy tech sector ETFs instead of buying stocks from single companies.
An ETF leaves you time enough to focus on a larger scale, rather than get lost in details. If you are giving your first steps in trading, the advantage is clear. You need time to understand how things work, how to identify trends and ETFs sound just right for it.
Pros and Cons: Your choice
At FortFS we encourage you to take your own decisions. As any asset, ETFs are also exposed to substancial market risks. For example, keep in mind that ETFs are designed to reflect the performance of a combination of assets, but those are not necessarily part of the ETF itself. Also, ETFs can be overpriced or undervalued due to speculation.
But remember, ETFs offer great flexibility, less human effort, diversification, and overall, big opportunities to profit from financial markets.