Discover Exchange-Traded Funds (ETFs)

Hola bellas! We’ve talked about mutual funds, however, there’s another type of investment option that is very similar, but offers more buying and selling flexibility.  These investments options are called Exchange-traded funds, more commonly known as ETFs.

Exchange-traded funds (ETFs) are a good investment option because they’re a basket of bonds, stocks, and other assets or a combination of these, which means that it’s a diversified investment.  You’re not just investing in one company.  So, if for some reason, one of the stocks in your ETF portfolio goes down in value, your entire portfolio value will not go down too much because your portfolio is made up of different assets.  ETFs are also a good option because you can buy and sell them, just like stocks.   Another plus of ETFs is that their administrative fees are lower than that of mutual funds, because ETFs are passively managed, unlike mutual funds.

If you’re ready to start investing in ETFs, you can easily start through an online broker.  Just make sure you look at their fees and other costs associated before saying si lo quiero (I do want it).  I would also recommend that if you’re new to investing, you keep your ETF long-term.  You want to allow your ETF some time to go up in value.  Plus, there are tax benefits when selling an investment that you’ve held long-term (when you sell the asset after owning it for more than a year) versus short-term.

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