Why You Need to Learn ETFS Yesterday

I’ll never forget the time I was looking to learn more about the stock market, stumbled upon a YouTube video that changed my life forever.

About 15 years ago I was feeling stuck and uninspired about stocks imagining there was a way to make more money in a simple and diversified way.

Enter ETFS, available on brokerage platforms like Vanguard, Fidelity, Charles Schwab, E* Trade, Robinhood and more.

An ETF (Exchange-Traded Fund) is a type of investment fund that is traded on stock exchanges, much like individual stocks. It holds a collection of assets such as stocks, bonds, commodities, or a mix designed to track the performance of a specific index, sector, or asset class.

You can buy ETFs focused on specific sectors (like tech, energy, or green energy), regions (like emerging markets), or Exchange Traded Funds that focus on specific strategies (like dividends or growth).

What makes the offering great is its diversification. One ETF can hold dozens or even hundreds of stocks, spreading out risk. For example, buying an S&P 500 ETF gives you exposure to 500 companies.

ETFs often have lower fees than mutual funds, and you don't pay for active management if it's passively managed. Plus, ETFs trade like stocks during market hours, allowing real-time pricing and easy buying and selling.

Many people have strategic approaches to building wealth through ETFS.

You can buy those with the lowest risk, those that have experienced the most extreme dip (to turn a profit) or track the top performing companies in a variety of sectors based on what you deem high performing in valuable. Here’s a chart to track the performance of all ETF’s on Vanguard.

Often, looking at an ETF’s percentage returns YTD, 1 year, 5 years, 10 years or since inception is a great approach. When reviewing a list of funds you can analyze what type of assets the ETF invests in (such as U.S. stocks, international stocks, bonds, real estate). Performance sheets will also show you the annual income (dividends) as a percentage of the ETF’s price.

When reviewing a performance list your brokerage will show the annual cost to own the fund, expressed as a percentage of assets. Wealth Elf recommends funds with lower management percentages, especially in passive index ETFs.

From scalping, momentum investing, to swing trading - consider what strategy fits your comfort level with risk. If you’re looking for clarification on investment words check out our list of finance definitions.