What are the benefits of investing in ETF? What are the disadvantages? When investing in ETFs, which factor to consider?

 

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Past article we have learn about in Introduction of ETF. which are called Exchange-Traded- Fund.

ETF are as a simplified different range of some specific sectors.  

  

In article know about What is ETF.  

  

investment like index, sector specific commodity.  

  

It is a list on stock exchanges like as stocks share investors to buy & sell same or any time in trading day.

  

ETF. What are the basics of investing in ETF?  

  

1.Diversification   

  

2.Liquidity  

  

3.Low-Cost  

  

4.Scalability  

  

5.Flexibility  

  

6.Dividends & Reinvestment.  

  

  

  

1.Benefits of buying ETFs  

  

2. Some kinds of Exchange-Traded Fund disadvantages??  

  

3. Types of ETFs  

  

4. Factors to Consider When Investing in ETFs  

  

Some of Benefits of buying ETFs’  

  

Today's ETFs or exchange-traded funds are popular.  

  

There are many more options to invest like index, sector, commodity, or another asset class.  

  

To help investors as a bosket of asset  

  

  

  

Here is Some of Benefits of buying ETFs’,  

  

1.Diversification.  

  

2.Low cost.  

  

3.Liquidity  

  

4.Flexibility  

5. Dividend reinvestment 

   

  

1.Diversification.  

  

ETFs or exchange-traded funds are popular for different kind of Diversification of investment.   

  

As an Invester, allow to choose of their investment. As a Invester access to a wide range of indexes, difference of sectors likes It, Banking, some kind of commodities, likes Gold, silver or other asset classes.  

  

  

  

2. Low cost.  

  

ETFs are one of the low-cost assets.  

  

There are some reasons for the low cost of whether invest or trading of ETF.  

  

ETF are tread on stock exchanges as a regular stock in treading days. In these treading days people can choice to buy their bit own price and it also sell their own price of ETF  

  

ETF list on stock exchanges treader and Invester one of benefit of ETF because its buy and sell same day.  

  

There are some stockbrokers, it allows there to be no brokerage for intraday trading.  

  

There are some stockbrokers more benefits from investing in ETF. There is delivery & investment brokerage zero ‘0’  

  

  

This are proving benefit of Invester some of country, like India, etc.  

  

3.Liquidity  

  

As a Liquidity one of factors of investment of ETF.ETF are buying & selling on the time to working day on tread.  

  

Invester can bit their good price and fastest in order execution, which are helping to buy on their fair rate of ETF, selling the ETFs as a good price. Significant of bid-ask size of their gaps.  

  

This is the one of the Benefits of buying ETFs for Liquidity.  

  

  

  

4.Flexibility  

  

Invester can be Flexibility for getting to access for their investment wide of range for option active along with passive investments.  

  

Growth of their price, both domestically and internationally, with many more.  

  

ETFs can also be used for portfolio rebalancing the income generating and with on hedging etc.  

  

  

 5.  Dividend reinvestment 

ETF is one of the options for Invester to get their investment as a Dividend reinvestment. 
In this assist class of indexes, sectors which include stocks are allowed by the investors to automatically reinvest their pay as a dividend. 

 Get pay them dividend value of investment will increase on the ETF Price, because dividend of stocks which was include this, index or sector add and reflect of the ETFs price, to help as a, provided for to low risk in it. 

 

 

  

  

2. Some kinds of Exchange-Traded Fund disadvantages??  

  

 ETFs may be good option for popular types of investment that offer many benefits to investors. 

As a financial goal invest wide range of options and investment strategies. 

In this way get some of disadvantages on ETF 

1. 1.Broker expenses. 

2. 2.Low trading volume 

3. 3 Not invest full amount 

4. 4.Capital gains tax 

5 Reinvestment dividend 

1. Broker expenses. 

ETFs buying and selling add the Brokerage Commissions. Broker opening price. Broker yearly annual maintenance charges. 

This kind of brokerage expensive add to invest of ETF worry about investor as a, especially impact on good return 

2.Low trading volume 

There is low volume trading, one of the disadvantages of ETF. 

A buyer needs to buy Exchange-Traded- Fund, when a seller wants to sell the same quantity ETF. 

On the other hand, a seller needs to sell his ETF. When a buyer wanted to buy equal quantity ETF, in the Treading Exchange. 

If a low trading volume, a buyer difficult to buy ETF. On the other hand, a seller to problem sells ETF. 

There is a Low trading volume impact both buyer and seller. 

ETFs are low volume treading as compared to stocks. 

 

3.Not invest full amount 

ETF are not invested to full amount of. 

In example if ETF price of 101 per one quantity, a buyer 100 on his treading account, he cannot buy this ETF, he had full amount of price per one quantity. 

If a buyer has 200 in his trading account, the price is 101 for this particular ETF, only 1 no's ETF to buy. 

These types of reason as an Invstor not able to full amount of amount in this particular ETF. 

 

4.Capital gains tax 

Different countries, are different tax slab. During the stock exchanges short term, long terms capital gain tax, somehow impact for buy and sell ETF. 

5. Reinvestment dividend    

As an investment of ETF pay them the dividend value of investment will increase of the ETF Price. 

The reinvestment dividend option reflects of the ETFs price to help as a, provided for too low risk. 

There are some kinds of ETFs not to provide for automatic dividend reinvestment option. 

 

3. Types of ETFs 

There are some types of ETFs treading on Exchange 

1.Index ETF 

2.Bond ETF 

3.Commodity ETF 

4.Currency ETF 

 

1, Index ETF 

Index ETFs invest of their assets as known in the securities underlying an index 

Index ETF likes Nifty 50 NASDAQ-100 S&P 500 

2. Bond ETF 

Invest in a list of bonds in exchange is called Bond ETF. 

Types of bond ETF

Short-term bond ETF 

Medium-term bond ETF 

Long term bond ETFs 

Total bond market ETFs 

Investment-grade bond ETFs 

High-yield Bond ETFs: 

Municipal Bond ETFs: 

Corporate Bond ETFs 

 

3.Commodity ETF 

An exchange-traded fund (ETF) that invests in some kind of assets. There are agricultural, metals, & natural resources like Gold Selver etc., as a known for commodity ETF 

 

4.Currency ETF 

Currency ETF is a well-known investment in currencies exchange (forex). So, through a portfolio of currencies, it offers investors strategic exposure to the currency markets. 

 

Factors to Consider When Investing in ETFs 

 

ETFs have become popular on account of their high liquidity, risk diversification, low costs, and easy-to-use trading system etc. 

 ETFs will continue to expand their amount of assets as they gain momentum, which will lead to more liquidity. Investors are going to benefit from it, along with the economy may also expand as a result. 

But also, there are some kinds of about Exchange-Traded Fund disadvantages 

As a Invester, when investing in ETFs it's important to understand the underlying assets that the, there are several factors for consider. 

• Performance on history.
• The expense ratio 
• Assets under management (AUM). 
•  Trading volume.
• Underlying index.

1. Reinvestment dividend.

Disclaimer It's advisable to consider thorough research before any decisions of consider for investment, consult with a financial advisor.

reference Wikipedia.com, Findelite.com or other websites