The popularity of exchange-traded funds (ETFs) has been on a steady rise over the past years. But due to the current economic landscape where most people prefer to make transactions online, first-time investors consider putting their money on ETFs on the asx. All the necessary activities are handled online.
While ETF investments have been around since the 1990s, not everyone knows all the tricks of the trade. For first-time investors, here are several tips to make your ETFs investment more lucrative.
What is an ETF?
The exchange-traded fund is a kind of low-cost investment that you can trade on a stock market, like the Australian Securities Exchange (ASX). These funds are made by fund managers and ETF issuers and composed of various securities like bonds, cash, and shares.
All ETFs have an assigned ASX code. You can choose to buy and sell it just like how you would in usual shares. With ETFs investments, you may easily create a wide and diversified portfolio and spread it across multiple asset classes such as Australian shares, fixed income, global shares, foreign currencies, debt, metals, and commodities.
How to purchase an ETF?
It is not necessary to purchase an ETF individually. Instead, you can get an ETF as units like what you do in company shares. You may look for ETFs on the asx broker or an online share trading platform.
After signing with a brokerage and finalising the kind of ETF to buy, you may look for the ticker code of the ETF that you want to include in your portfolio. It will also help you determine the unit price of the ETF that you want to purchase.
How to compare an ETF?
The price of ETF units tends to increase or decrease every day. However, most ETFs move with the index that they track. So you have to learn the proper ways to help you get the best profits in your ETF investments.
First, you must learn how to compare the price. The ETF issuers usually provide net asset value (NAV) that you can compare with the buy and sell unit prices quoted by the ETF broker. Then you may start thinking about the limit orders that you can change any time of the day due to the market’s volatility.
Other important factors to think about when comparing ETF values include the amount of the management fees and various markets and sectors.
Why invest in an ETF?
There are countless reasons why ETFs are the best investment. It includes:
Diversifying investment portfolio – Purchasing units in a single ETF lets you invest in plenty of shares and asset types simultaneously. By having plenty of asset investment, you can reduce your risk level.
Investing in an index fund – One of the safest and most popular ways to invest nowadays.
Easy to access – Instead of researching and purchasing individual stocks, you do not have to go through different challenges for this type of investment. Your ETFs issuer will handle all the hard tasks like picking the right investments for you. It will allow you to concentrate on choosing the ETFs and buy the units through a broker or an online trading platform.
Aside from these reasons, you will also appreciate this type of investment because it is relatively inexpensive, and you can easily sell your ETF asset anytime you want.
Investing in ETFs can be a great move if you want to expand your portfolio. But you need to learn more about this investment if you will venture into it for the first time to avoid encountering any failures.
Author Bio: Ester Adams is a farmer of words in the field of creativity. She is an experienced independent content writer with a demonstrated history of working in the writing and editing industry. She is a multi-niche content chef who loves cooking new things
