More and more people decide to diversity their portfolio by becoming ETF investors. Why is that and should you also consider becoming an ETF investor?
The key to trading successfully is knowing how to diversify your portfolio and strive for the highest returns for the lowest risk. Too much risk is like a sword hanging over your portfolio’s head. One miscalculation and the value of your portfolio can evaporate into thin air.
ETFs are an excellent tool which investors use to diversify risk. This is due to the fact that Exchange Trade funds are made up of a number of stocks, bonds, or currencies. This means that although you hold one valuable: the share in the ETF itself, you’re holding a very diverse position.
But ETFs also allow you to enjoy high profits. As ETFs track financial sectors like oil, energy, commodities, or indexes, they can yield high returns. For instance, if you had invested in an oil Exchange Trade Fund over the preceding year, you would have profited in an impressive way.
One of the main advantages of trading ETFs is that they usually require less time than handpicking stocks. If you want to achieve a diverse portfolio of separate stocks, you need to analyze, monitor, and track each and every one of them. That can be a lot of work. On the other hand, with an ETF you can achieve diversification and need only choose one fund. This is why ETFs have become popular among small investors who trade from home.
Overall, Exchange Trade Funds are here to stay. I recommend that you make sure to invest in them as part of your overall strategy.