Hi from my earlier question an awesome gentleman suggested to put my money in ETF.
I am not sure what ETF is can someone tell me what it is and how to invest in ETF?
Thanks. LOL!
Nice. WTF...on the ETF. too funny.
An ETF is an exchange trade fund.
Ready for a lesson in securities?
Mutual Funds are actually called "open-ended funds." They are not traded on the open market, so their price is determined solely by their assets undermanagement.
ETFs are just like Mutual funds, in that they are a collection of securities that are managed under the one account. Unlike mutual funds, they are traded openly on the market. So there is a sent amount of shares out there for the ETF. When the ETF's assets undermanagement grows in value, so too does its market worth and demand...pushing the price up. ETFs are close-ended funds, as they have a select amount of shares outstanding. The are traded on the open market just like normal stocks, so they are very liquid.
They are also very cheap compared to Mutual Funds, as they are generally not a large as traditional mutual funds. I prefer to compare them to Mutual Funds using the analogy of the flashlight and the laser.
The Mutual Fund is the flashlight. Lots and Lots of stocks in an given sector, which means you are protected from the big swings in the market...but that also means you are protected from the big highs.
ETFs are like the laser in that they are very focused to specific regions, sectors, goals, etc. So you aren't exposed to the market at large, rather a selected portion of the market. This puts the risk in your court, since you are the one selecting the ETF. If you select a good area, you will reap well, but if you don't you stand to lose money too. So this is also where they are just like an individual stock.
For example: 8 years ago I transfer my 401k into an IRA with all the money going into a Brasil ETF. Now, that same ETF has grown 686%. I close out on that and transfer to another ETF in another area of interest (for me, I am torn between emerging markets like Viet Nam and Malaysia; natural resources or energy). Now this transition will require analysis work just like moving into a stock, but I am willing to take that risk.
ETFs go by several different names as well: iShares, Powershares; etc. They all do the same thing.
I would recommend putting these in a RothIRA.
Hope this helped. ooh ETF= easter tick farm exchange trade funds ???? Exchange-Traded Funds.
Read this book: "Investing For Dummies."
Also look it up at investopedia.com, aol.money.com, Yahoo Finance and a million other financial websites. Exchange-traded funds
Look at this site, might help you... http://en.wikipedia.org/wiki/Exchange-tr... An ETF is an exchange traded fund, more like an index fund targetted for certain sector or geo, whereas mutual funds are stocks that are cherry-picked by managers, ETF's are simpley all of the stocks in that group. Most of the time ETF's underperform the best mutual funds in the same target area, and you can find performance/recommendations for both on morningstar.com for free
The experts typically recommend ETF's when venturing into unknown areas to mitigate risk, ie China (FXI) or say if the overall market is correcting and you have other investments you don't want to get out of and have to get back in again, you can buy ETF SDS which goes up when the S&P goes down......, if I were a beginning investor, I would look at Morningstar.com highest performing either ETF's/Mutual Funds with high star ratings and diversify across some of those.....then as time progresses and you have more money see which ones are performing better and add to those, prune the bad ones and add other ones that look promising....
if you want help deciding which ones, jonathanpond.com offers "Smart Investor" which is based on a detailed questionaire solely tailored to you.... exchange traded funds. They are like mutual funds, but can be nought on the stock market. You might have seen the commercials for "Spiders" that were on a few months back?
There are EFTs for the energy sector, the natural resources sector, medical, etc.
Look at symbol, XLK, XBI, XLB, XLV, XLE, etc. Exchange Traded Fund - its a basket of stocks that tracks various industries, stock markets, regions, etc. They are nice because you don't have to worry about picking which stock goes in it, they are relatively cheaper than mutual funds and you get good diversity. You should definitely do more research but they are a simple way to go to invest your money. Simply put an ETF is an exchange traded fund. Think of it like a mutual fund that trades like a stock. ETF's are passive investments generally tracking an index. Before investing in this or anything else RESEARCH and LEARN.
Here is one online definition: An etf is a security that tracks an index and represents a basket of stocks like an index fund, but trades like a stock on an exchange. Google ETF and you will be on your way to obtaining the information you should have before making an investment. Good luck! An ETF (exchange traded fund) is similar to a mutual fund in that it is like buying basket of stocks all in one shot. The way that it is different from a mutual fund is that with an ETF you buy shares on the open market (stock exchange) just like single company stocks.
ETF's have become very popular and there are now literally 1000鈥檚 to choose from. Origionally their primary purpose was to provide an efficiant low cost way to invest in broad based indexes like the S&P 500.
With all the new ETF's on the market now this is no longer the case, many of them track very narrow slices of certain sectors for everything from biotechnology to house builders or even commodities like oil, gold and timber.
ETF鈥檚 have ticker symbols just like stocks. A few good broad based ETF鈥檚 for you to research are SPY (follows the companies in S&P 500 index), EFA (follows companies in Europe, Japan and Australia) and EEM (follows emerging markets like China and India)
This is just a place to start do some research and good investing. IT stands for Exchange Traded Fund, which is the term used for a financial security which is created more like a mutual fund, where each "share" or "receipt" is traded like a stock, but representative of the ETF's core holdings.
These can be applied to almost any type of investing, and are quite an ingenious financial instrument. For example:
The ETF "OIH" represents the oil-service sector by each share of "OIH" containing a fraction of the 10 or 15 companies that they have chosen to represent the oil service sector (rig/platform construction, undersea geology work, etc for the offshore oil companies.) When you buy a share of OIH you are buying all of these stocks.
But its not limited to acting like a basket of stocks. The ETF "GLD" is the fund that tracks the real time movement of the price of spot gold. To effectively do this, they actually buy and sell gold appropriately and keep it in a vault so that each share outstanding is backed by 1/10th of an ounce of gold, making the ETF tantamount to buying 10 ounces of gold for every hundred shares you buy. If gold goes up, so must the price of "GLD". When gold goes down, it follows.
The possibilities are limitless for an ETF, and this is the reason they are becoming more and more popular for investors who have a belief in an industry or commodity in general, but lack the funding or risk acceptance to trade the traditional financial instruments for that investment vehicle. Or want to avoid the risk of buying 100 shares of Oracle just because they like the tech sector. Tech doing well doesn't mean Oracle is going to. But an ETF representing the overall Tech sector (QQQQ) would track it and a pluimmet in Oracle wouldn't bankrupt a person.
I hope this helps! ETF - exchange traded fund, a collection of stocks traded together. Here is more details:
http://creating-wealth.blogspot.com/2007... |
