Welcome back dear loyal readers of Invest in The Stock, we are always very happy and satisfied to have you here with us again and in ever greater numbers. In today’s article we are going to talk about how to invest in ETFs.
We’re going to understand what Exchange Traded Funds are, why it’s convenient and how to invest in short-term ETFs. In today’s financial markets, this type of investment is becoming increasingly popular.
ETFs: what are they and how do they work?
Let’s begin to see concretely what ETFs are, also known as Exchange Traded Funds.
Basically, it is a Listed Index Fund; all in all, they are funds that are based on and track an index, commodity, bond and various products.
So ETFs can basically be considered as groups of securities.
Difference between ETFs and funds
The difference between ETFs and canonical funds is that the former are sold and purchased directly on the stock exchange, given that the performance of these ETFs follows the trend of the movements in value and the quotations of the products present within the funds themselves, for example :
An ETF tracking the S&P 500 will be made up of shares of company stocks, contained within the same index
As many assets of a specific product are present within these ETF investments, they allow you to easily diversify your portfolio at competitive prices.
These types of activities can be, for example:
- A selection of shares belonging to a single specific sector
- A selection of bonds or
- The value of the raw materials inside
So, the level of differentiation between ETFs can also vary widely.
ETFs and stocks
When you buy a stock, you automatically become a co-owner of a publicly traded company.
Instead, when you opt to buy ETFs online, you buy a product that follows the performance of the assets included in it.
Therefore, to minimize the deviation of the latter, the ETF must be constituted by a portfolio with similar positions.
Furthermore, the most important function of those who decide to buy ETFs in the bank is to control the weighting of the products within it.
The manager will also take care of monitoring the variations that may have consequences for the ETF portfolio.
Invest in Italy ETFs
Let’s now go and see what are the various types of ETF brokers that are present on the market.
Because there are different versions of ETFs that differ in:
- The type of use e
- The different investment strategies in ETF funds
- Index ETFs
Let’s start with index ETFs, they are the most common.
Simply put, index ETFs basically track and track a pre-established index, such as, for example, the S&P 500.
Bond ETFs
Then we find the type of bond ETFs, which deal exclusively with investments in bonds.
On the other hand, bonds dealing in these types of ETFs can be:
- Government bonds
- Corporate Bonds
- Municipal bonds
- Commodity ETFs
Another type of ETF broker are those focused on commodities.
These ETFs are designed to track the performance of materials such as:
- Gold
- Diamonds and
- Crude oil.
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Sector ETFs
Sector ETFs, on the other hand, monitor a sector as a whole, that:
- Technological
- Oil and
- Pharmaceutical
They are the most followed and inflated ones.
Currency ETFs and Inverse ETFs
Finally, we find ETFs that invest in currencies.
They deal with betting on currencies, such as:
- U.S. dollar
- Hong Kong dollar
- EUR
And inverse ETFs that profit from falling stocks by selling them.
Investing in ETFs guide
Now let’s see how to invest in ETFs yourself and where to buy.
These best ETF funds are bought and sold in the same way as traditional stocks, i.e., on the stock exchange.
But it is obvious that you cannot go directly, so these ETFs can be purchased comfortably using one of the following ways.
Buy ETFs at the bank
The first and perhaps the most common is to contact your relevant banking institution, indicating to your trusted advisor the ETF in which you want to invest.
Frankly, we would like not to recommend this solution to you because the consultant in question will usually push for the purchase of the bank’s products instead of offering you to invest in ETFs that are safe.
Buy ETFs online
Another popular option is to buy ETFs online through the e-banking of these institutes.
Definitely a more appropriate choice, since you don’t have to talk to any financial promoter, you won’t be influenced and you will do everything from home, in complete autonomy.
Before proceeding to buy ETFs in the bank, check that your e-banking system has the possibility to purchase financial products and stock portfolios.
Now let’s see the times in which these ETF funds can be bought and sold.
When to buy ETFs?
As such, the ETFs are sold on the Stock Exchange and movements can be made from 9:00 to 17:25, and the ETFs are received on Monte Titoli of your e-banking within 3 days.
We remind you that to start investing in ETFs, you can buy even a single unit/share.
It is therefore possible to invest in ETFs, starting from 10 euros, which are perhaps the best choice for those who have just entered this financial market.
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Best ETFs to invest in
Now let’s see which are the best ETF categories to invest in, currently on the market.
A booming sector is certainly that of technology and innovation.
Artificial Intelligence ETFs
In this large macro-area we can find interesting branches such as:
- The automation
- The development of artificial intelligences
- Robotics and
The development of online security
In recent times, these companies have been listed on the stock exchange, and their presence has allowed the sector of robotics ETFs and artificial intelligence ETFs to acquire several funds in parallel.
Commodity ETFs
Another classic, present on the market for quite some time, are the ETFs on commodities, a great variant of Exchange Traded Funds, considered among the most fruitful by experts and market analysts.
These commodity ETFs are a unique basket of their kind, because they are based on the presence of several historical assets, for example, we are talking about gold, oil and precious stones such as diamonds.
They have determined and specific factors of influence with respect to other financial instruments which are particularly linked to natural events, extraction processes and fluctuations in the markets of these raw materials.
Well dear Invest In The Stock readers, now you know all about how to invest in ETFs. Finally, we would like to always advise you to study financial markets and start with prudent investments to practice as much as possible.
Invest In The Stock, The Editorial Staff
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