“To improve is to change. To perfect is to change often.” – House of Cards
In the last lesson, we began our introduction to Exchange Traded Funds. While Lesson #30 got the proverbial ETF ball rolling, there was just too much information to fit into one lesson. So, today we will continue exploring the world of ETFs. ETFs are gamechangers! If you want to be an effective investor, then you have to change your approach to investing. The old way of thinking would suggest that if you like Apple, then buy a lot of Apple stock. Well, that’s great if you can afford it. However, we learned in Lesson #16, that Apple stock was trading for about $500 per share. In Lesson #15, I taught you that you never want to put all of your eggs in one basket. Well, that was true, sort of…
ETFs allow you to bet as if you own the entire basket of eggs, even if in reality, you would only be able to invest in one egg. Said another way, ETFs magnify your ability to generate a posItive returns over the long-term.
Education:
In this lesson, we will get into some of the companies that offer the more popular ETFs that are available to investors like you. Since we learned that ETFs trade on stock exchanges just like stocks, there is a plethora of information to help you select the best investment option to fit your specific profile. The most popular ETF Rankings are in the following categories;
|
Large-Cap |
Municipal Debt |
China Region |
|
Gold Oriented |
Small-Cap |
Corporate Debt |
|
Emerging Markets |
Commodities |
Natural Resources |
|
Real Estate |
|
|
As you can surmise from the table, ETFs provide great investment flexibility. While you wouldn’t know which stock to invest in a Chinese company, a China Region ETF would enable you to invest in many Chinese companies all at once.
Remember that ETFs are best suited for long-term investors seeking low-cost, diversified portfolios.
Some of more popular ETFs are provided from the following firms who offer many options for investors.
- Vanguard
- Powershares
- Ishares
- SPDR (Spider)
MAGNIFY YOUR INVESTMENT RESULTS!
Resources:
SPDR University (http://spdru.com/) – SPDR University (SPDR U) provides online education built exclusively for investment professionals.
Important terms from this lesson:
|
Term |
Definition |
| PowerShares | PowerShares is an investment boutique firm based near Chicago which manages a family of exchange-traded funds or ETFs marketed by Invesco.
|
| IShares | iShares are a family of exchange-traded funds (ETFs) managed by BlackRock. Each iShares fund tracks a bond or stock market index. |
| SPDR | SPDR funds are a family of exchange-traded funds (ETFs) traded in the United States, Europe, and Asia-Pacific and managed by State Street Global Advisors (SSgA). Informally, they are also known as Spyders or Spiders. |
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