Difference between Active and Passive ETF Funds

A retirement ETF can be an ideal option for those who want to set aside extra money for when they retire. As many people already know, the cost of living is expensive and is constantly increasing. During your golden years, you don’t want to have to worry about money. Unfortunately, not everyone puts enough aside for retirement and may have to work to subsidize their living. That is why ETF funds are extremely popular, but which one is for you – active or passive ETF’s? See more!

What Are Passive ETF Funds?

Passive ETF’s are quite simple to run. If you want a long-term investment option, the passive ETF’s have to be the one for you. These funds are ideally suited for the people who want to buy and hold onto their investment for several years, instead of a few weeks or months. While it’s good to have a manager to oversee the funds, it’s not always necessary to have the same level of expert as that of an active ETF. ETF investing is quite unique however, in terms of the options available, so that even if one doesn’t suit you, there is another available. These funds do come with lower fees than that of active ETF’s since there are fewer trades being made, and is more tax-friendly!

What Are Active ETF Funds?

Active ETF’s definitely take on a more hands-on approach rather than the passive funds. Why is that? Well, there is a lot of short-term trading and investing and that means a professional portfolio manager is required. Remember, with long-haul investing, there is no need to constantly watch the market as it’s a long-term investment, however, active ETF’s require a lot of care and attention. It’s about investing short-term in the stock market and getting small returns. However, you build the returns up over time. These are flexile but can be costly since more transactions are being handled so more fees to worry about. They are a great option for many nonetheless looking for a retirement ETF. Click here for more information: https://en.wikipedia.org/wiki/Exchange-traded_fund

Which Fund Is Better?

Everyone needs something different and that can determine the type of funds they choose. For example, some investors may be happier to opt for long-haul investments and if that’s the case, passive ETF’s are the ideal option. However, there are also many who prefer to short-term investments, and that means active EFT’s are better. At the end of the day, it’s going to come down to what you need, want and desire. If you’re not comfortable with a long-term investment, short-term might be more suited, and vice versa. You have to carefully think about your options when looking into ETF investing.

Invest Wisely

You’re investing for your future, for your retirement, and ideally you want something that is easy to understand and profitable at the end of the day. When it comes to deciding, you should take the time to understand fully what options are available and what each ETF entails. You shouldn’t choose until you research both options fully so that you’re 100% sure you know which way to turn. Hopefully, you’re retirement ETF will be profitable for you during your golden years.

Why ETF Investing is Ideal for Young Investors

Welcome to the world of investment. If you are new to ETF (Exchange Traded Funds), it is probably time to analyze this as part of your investment portfolio. So, what is an ETF? An ETF is an Index Fund that is quoted on a stock exchange and traded intraday (you can buy and sell it at any time of the day just like a stock). Therefore, ETF can describe as a Mutual Fund trading like a stock. While there are some very important differences between them, it is easy to understand ETFs if you consider them as mutual funds.

Why do I propose that you should take a look at ETF as part of your investment portfolio in today context? Since ETF is relatively new as compared to mutual funds, also that means there are now few investors with the basic knowledge and skill investing in it, so providing a huge opportunity for young investors in this investment arena.

Who Issues ETFs?

Do you want to find a complete list of ETFs currently on the market? A pretty complete list is actually on Yahoo! finance. If you go there, you will find a section on ETF in the “Invest” tab. Deepen using the menu on the left until “View ETF” appears. It is not necessarily 100% current, but again, it is the best resource on the Internet at this time.

To get more detailed information about ETFs, you will want to visit the websites of the issuers of these ETFs. There you will find much more information that will help you identify the exchange-traded funds that you feel comfortable buying.

Some of the main issuers include:

  1. Barclays – iShares
  2. State Street Global Investors – SPDR (spiders) and streetTRACKS
  3. Merril Lynch – HOLDRSs
  4. Rydex Financial – Rydex ETFs
  5. Vanguard Group – Vanguard ETFs
  6. ProFunds – ProShares inverse and leveraged ETFs
  7. Bank of New York – BLDRS (based on ADRs).

Some of the Common ETFs:

Standard & Poors Depository Receipts, Series 1 (SPDR): A word about ticker symbols- each stock ETF or index mutual fund has an assigned ticker symbol. For example, the symbol for “Citigroup” is C and the symbol for “S & P Depository Receipts (SPDR)” is SPY. Every time you want to exchange security, you must type the ticker symbol.

The SPDR (also known as SPIDER) is an ETF that tracks the performance of the S & P 500 Index. They are listed on the AMX (American Stock Exchange) and you can buy and sell them as the shares of any other company.

The DIAMONDS Trust Series 1 aims to track the performance of the Dow Jones Industrial Index. They are listed on the AMX and can be bought or sold easily as the shares of any other company. Learn more.

Summary

ETF is an excellent investment tool that should not be lost at this time when the market is bruised after the credit crisis and is in a tendency to recover in the coming years. The beauty of ETFs is that they allow you to allocate money in the same way an institution does, that is, sector by sector. This used to be the Big Boy game, but with ETF, young investors like us can afford to join the game now. As I always said, this crisis is once in a lifetime so you can get a big profit on your investment portfolio, do not miss the boat this time, remember to accumulate any weakness and keep investing in the coming years. For more information visit: http://www.netpicksetfinvestor.com/start-here/learn-about-the-etf-portfolios/