What Are ETFs & How to Invest
Are you considering investing in exchange-traded funds? These products are actually ideal investments for stock market beginners and great for diversifying portfolios.
In this article we’ll discuss the basics of the financial instrument so you can decide if ETF investing is right for you.
What are ETFs?
Simply put, ETFs are collections of securities that are listed and traded on major stock exchanges and are an investor favorite.
ETFs tend to be seen as low risk investments that hold many benefits including diversification, low investment threshold, trading flexibility, and tax efficiency.
There are also thousands of different types of ETFs available in the markets today, giving new and seasoned investors the opportunity to invest in a variety of choices. The following are examples of popular types of ETF categories and themes.
Different types of ETFs:
- Stock ETFs
- Commodity ETFs
- Fixed-Income ETFs
- Inverse ETFs
- Real Estate ETFs
- Bond ETFs
- Currency ETFs
- Leveraged ETFs
- Industry ETFs
How do ETFs work?
Just like normal company stocks, exchange-traded funds are purchased and sold throughout the day at fluctuating prices on centralized stock exchanges. And unlike normal stocks, ETFs are less volatile and better for long-term investing – making them great inexpensive options for beginners and experts.
How to buy an ETF:
- You’ll need to set up a brokerage account
- Then do detailed research and compare ETFs
- Lastly place a trade on the ETF of your choice
What are the pros and cons of exchange-traded funds?
ETFs offer several advantages and disadvantages to investors.
Although considered an affordable approach to reaching your financial goals, ETF investing can also lead to harsh losses. Taking the time to understand the pros and cons can help you decide whether this type of investing is suitable for you.
Pros of investing in ETFs:
- Lower expenses
- Very easy to trade
- Real-time pricing
- Tax efficiency
- Increased diversification
- Higher liquidity
Cons of investing in ETFs:
- Index tracking errors
- Limited control
- Currency risk
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Where can I get ETF data?
You can buy ETF data directly from Intrinio.
Intrinio's ETF data services include widespread and up to date coverage, streamlined data offerings, and industry leading ETF expertise, making them optimal for a variety of fintech platforms and businesses.
Our comprehensive data plans also provide clients with secure access to the critical data points they need, allowing them the opportunity to provide their users with increased insights and awareness of thousands of ETFs.
Why partner with Intrinio for financial data?
We have everything your fintech business needs and more.
Intrinio is recognized for being a full-service financial data and technology partner, that specializes in high-quality data, live customer and technical support, and state-of-the-art tools. We're committed to our clients and are there for them every step of the way – all the way from onboarding to integration.
If you’re interested in learning more about our ETF data services reach out today and a data expert will be in touch with you soon. And for more information on our financial data products visit our website and blog.
