Why to invest in ETF?
Primary reason behind investing in ETF is almost zero brokerage will be charged by the broker firm. This will help you in getting better return on your investing comparing to other mutual funds.
In general, mutual funds will charge 1-2% of the total amount invested in the fund. In a good year where we might make more than 15-20% per year, we will not mind giving the charges. But during bad years giving the charges might further burden the funds. On an average, primary ETF performs 12% and brokerage charge of 0%-0.1% will give you 12% return per annum. So investing for long time ETF will be helpful for you.
What is ETF?
ETF – Exachange traded fund is created the stock exchange itself. It is a fund consisting of group of stock and every stock will have its weightage in the overall fund. In case 50 stocks are avaialble. Every stock will not have 2% of the weightage. Every stock based on its market cap will have their own weightage.
Why ETF are necessary?
ETF are used to measure the standard return for an year or 5 years. This will help you in comparing the market return with the return of your fund. Since every stock market is having more than thousands of stock. It will help you in providing the standard return on investment and provide an overall view of the market.
Why ETF has no brokerage?
Since brokerage houses invest based on the weightage set by the exachange. They dont have to spend on analysis of anything. They can just invest the many with the weightage set by the exchange.They dont need to have a brillant asset manager to maintain this fund.
How to invest in ETF?
Almost all the brokerage houses will have the access to buy ETF fund. Even charging 0.1% will be good profit has there is no expense what so ever and they can sell their other products to the customer.
Invest 30-40% of your asset in index fund for safe return on your investment than investing in the stock which you don’t know.