Golden Rules For Investing In ETFs

Before diving into an Exchange Traded Fund (ETF), define your financial goals, investment timeline, and risk tolerance.

This roadmap guides your fund selection, ensuring it aligns with your financial aspirations.

  1. Explore Different ETF Types:

Familiarize yourself with various ETFs. They come in many shapes and sizes. Here are a few.

  • Actively managed or Passive ETFs. Fees and costs are lower on Passive ETFs.
  • ETFs that invest in:

– Australian or Global shares.

– Cash & Bond funds.

Dividend-paying asset funds. Is it passive income you want?

– Commodities. Are you a gold bug?

– Multi-asset categories.

– Property assets.

– Sustainable assets.

Each type caters to specific risk profiles and investment goals.

  1. Scrutinize the Product Disclosure Statement (PDS):

Before investing, thoroughly review the PDS, which details the fund’s investment strategy, fees, risks, and performance history. This document helps you understand the fund’s inner workings and make informed decisions.

  1. Compare and Contrast Managed Funds:

Don’t settle for the first option. Compare funds based on certain criteria:

  • Active or Passive.
  • Fees. Understand the long-term impact of fees on your investment returns.
  • Performance. Analyze the fund’s performance over 1, 5, or 10 years. Compare it to index or managed funds within the same asset class. If it’s an income ETF, check out its yield.
  • Funds Under Management. How large is the pool of funds at the ETF manager’s disposal?
  • Asset class diversification: Spread your investments across different asset classes (e.g., stocks, bonds) through various funds.
  1. Seek Professional Advice:

Investing can be complex, especially for beginners. Consult a financial advisor to obtain personalized advice. They can analyze your financial situation, recommend suitable ETFs, and guide you through investment.

By following these golden rules, you can make informed and confident decisions when investing in managed funds, paving the way toward achieving your financial goals.

You might want to check out ETF FAQs.

 

Disclaimer

Data shown on Comparisons of EFTs is sourced by JustStocks employees from the websites of EFT providers, individual Product Disclosure Statements, and historical price data information. JustStocks. All rights reserved. JustStocks does not guarantee the data or content contained herein to be accurate, complete, or timely.

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