So what is eft investing? When first introduced into the world of investing I was way overwhelmed by the amount of investment type vehicles available. I was being told about municipal bonds, cash deposit receipts, government bonds, corporate bonds, etf’s, options, futures, penny stocks… The list seemed to never end. I didn’t know where to start and almost just walked away. Thankfully I just said to myself. Try and learn something new everyday about investing for a few months. Big or small just as long as I read, watched or learned something related to investing in particular longer term investment options. Then I would look back after those few months and see how far (knowledge wise I’d come). Simple, If I was beginning to really understand things and things were starting to click then Id stay in for the long hall. Only then would I start to practice by implementing myself. If I was just as confused about the stock market then this would obviously be no place for me.
Opps, sorry I rambled on off topic. I am supposed to be talking about etf investing but I hope you found my words comforting if you are struggling from information overload like I and so many others were when we started out.
ETF’s are Exchange Traded Funds. At a high level they are simply a pool of stock all in one fund. The usually represent a sector of a market, e.g and etf might consist of 50 stocks in the health related industry. The EFT tracks the index of all these stocks averaged performance. If has similarities to mutual where a fund manager buys and sells stocks and is constantly maintaining the municipal bond. EFTs on the other hand are passively managed. They have little or no input from your fund manager. EFTs are just like stocks in the sense that hey can be bought and sold like stocks and you can even buy as little as one share in an EFT.
There are several thousand EFTs on the markets today so they have become very popular. Exchange traded funds are rarely a sole investment by and investor. They are usually part of a diversified portfolio. Some advanced investors use them for tax and some other complicated reverse swing etc bets.
You can read much more about eft investing in investopedia. I personally don’t use exchange traded funds in my portfolio but I suspect that will change soon as I’m beginning to understand better how the can be used cleverly to increase yearly returns on investments. I currently have interests in municipal bonds but am quite disappointed by their performance. My 2019 and 2010 earnings from these bonds was pretty pathetic. I feel I could have done a much better job of managing the fund myself. My fund manager made some buying and selling decisions that I thought was really odd at the time. Just goes to show that you start to develop an instinct for investing after a short time.
If you are just beginning I wouldn’t get hund up on efts and other investment types as If may just leave you feeling more confused. My advice is just learn enough about them, a highl level overview like so that if they appear in reading material you will at least know what they are without being knocked off track in whatever you are reading. That’s one of the major hurdles when reading up on investing, initially it seems like there are thousands of unfamiliar terms to be learned. Take your time and thins will gel, you will be etf investing in no time.
