32ºF

How to take part in the hottest new investing trend

ETFs are less risk than individual stocks

One of the hottest trends in modern investing is exchange-traded funds.

When you invest into an ETF you’re buying an interest in an underlying basket of securities mirroring a specific index.

The idea behind the investment move is to better capture diversification through the indexes, improving on the mutual fund and have much less risk than individual stocks.

Some ETF options:

  • Diamonds (DIA) — tracks the Dow Jones industrials
  • SPDRS — tracks the S&P 500
  • Cubes or QQQs — tracks the Nasdaq 100

For the more sophisticated investor, ETFs can be purchased on a market exchange which means lower costs and allows for intraday trading and hedging through puts, calls and shorts.

ETFs are also great for investors with an IRA rollover looking to implement an asset allocation plan.


About the Author: